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Posted on October 5th 2016 by admin-movingin

Industry regulator issues new guidance over membership of redress schemes

Original Author: Rosalind Renshaw

The industry regulator has issued supplementary guidance for estate agents as to whether legally they need to join a redress scheme.

However, the new advice from the National Trading Standards Estate Agency Team seems to stop short of spelling out whether self-employed agents – typically, Local Property Experts working for online agents – must belong to a redress scheme.

The advice does say that employees of agents do not need individual membership.

But it does not stipulate whether a self-employed person doing estate agency work for another business needs individual membership in order to comply with the law, or whether they would be covered by that other business’s membership.

Instead, it says that a “business, irrespective as to legal status, is itself a ‘person’ and, if engaging in residential estate agency work, would need to be a member of a redress scheme”.

One agent who has been pressing for self-employed local property experts to be treated as businesses in their own right said he interpreted it as meaning that LPEs must by law join a redress scheme.

Chris Wood said: “This clarification by NTSEAT adds weight to the claims that certain major companies and their sub-contractors, by failing to have their sub-contractors registered with an approved redress scheme, have been trading illegally and that the portals have failed to carry out the basic vetting procedures as they are contractually bound to do.

“As each Local Property Expert is an individual business, they must each belong to a redress scheme.

“Failing to do so is illegal and customers of those LPEs/the head company could well have a claim for a refund of fees plus, potentially, damages.

“As individual businesses, these LPEs must also have separate VAT, HMRC, Money Laundering and ICO registration etc. Failure to do so may also have separate serious consequences.”

In June, Property Industry Eye reported that self-employed Local Property Experts working for the likes of Purplebricks were being fast-tracked into The Property Ombudsman scheme.

The new guidance does specifically clarify other areas – for example, the need for letting agents who already belong to a redress scheme to register for sales redress if they handle any sales work.

It also makes clear that UK-based agents who only sell properties abroad must join a redress scheme.