Ombudsman quits ‘broken’ housing market – but consults on new scheme

6 February 2018
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Ombudsman Services has announced that it will no longer handle complaints in the property sector because it believes the current system is “broken’.

The not-for-profit organisation – which is one of a number of bodies that handles property disputes – plans to launch a “major dialogue” with consumers to help tackle an “imbalance in power” in the property market. It says it wants to understand key “pain points” for renters, tenants, and home buyers.

Lewis Shand Smith, chief ombudsman at Ombudsman Services, says: “Redress in the housing sector is a really confusing picture for all involved. The patchwork of ADR [alternative dispute resolution] and ombudsman schemes is a mystery to consumers and, therefore, is incredibly difficult for them to navigate.”

It will now work with consumer groups, property professionals, charities and members of the public. Its goal is to produce a report focusing on the launch of a single housing ombudsman, which will be submitted to the Ministry of Housing, Communities and Local Government in the spring.

Ombudsman Services plans a managed withdrawal from the current schemes it runs for consumers, surveyors, managing agents, estate agents and letting agents by 6 August 2018. 

In the meantime, consumers will need to check whether their estate agent belong to one of the other two main government-approved redress schemes: The Property Ombudsman or the Property Redress Scheme.

Mr Shand Smith adds: “We are ceasing what we’re currently doing in the housing sector in a professional and planned way because we believe it is not adding value. Rather than continue to offer a broken solution to a broken market, we are stepping away to listen to what consumers actually want.

“There are models in other sectors that work far better – for instance, the single ombudsman model in financial services and the scheme we operate in energy, which handles around 40,000 complaints every year.”

In a speech to the National House Building Council in November 2017, housing minister Sajid Javid had called for a single ombudsman for the housing sector, which would echo the models currently used in the finance and energy sectors.

“We fully support Sajid Javid regarding the need for a single ombudsman for housing – only then will the housing sector be able to restore trust and ensure that consumers get a much better standard of service,” Mr Shand Smith says.

“Housing is one of the biggest issues we face as a nation and a fair, balanced, redress system will make sure that it serves the whole of society. We want to work to develop a model that works for everyone.”

‘The current system does not work’

Mark Hayward, chief executive of NAEA Propertymark, welcomes the move. He says: “We applaud anything that will give transparency and guidance to the consumer across all housing matters.”

Paula Higgins, chief executive of consumer group Homeowners Alliance, adds: “There is no doubt that the current system does not work. Homeowners are often at a loss as to where to turn when they encounter problems and the redress schemes available fall well short of those offered in other sectors, such as the Financial Services Ombudsman. As such, we fully support the mission to create a single and powerful ombudsman service for the property industry.” 

However, Ms Higgins is concerned that consumers will be left high and dry until the new scheme is set up.

“Now that the biggest redress scheme in the sector is withdrawing from handling complaints the government will have no choice but to act fast. I hope in the interim, however, that consumers are not left with nowhere to turn to until the new ombudsman is created,” she says.

More details of the dialogue will be announced in March.

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