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Simplifying Dispute Resolution in the Residential Market

Medico Legal

by Martin Burns, RICS

The process of buying a home is a significant event inthe life of many people. For first time buyers, it is usually the biggest investment they will have ever madeto that point in time. It is also renowned as being oneof the most stressful things that people do in theirlives. Buying a home is stressful, even when things gorelatively smoothly. When things go wrong, stress levels can rocket.

Buying, or renting, engages a consumer in relationships with a variety of parties, most, or all, of whichare more knowledgeable about the process. Theseparties include estate agents, surveyors, valuers,lenders, sellers, solicitors/conveyancers. The convolution of relationships and process means it is inevitable that things often go wrong in the housingmarket. Common issue for buyers include seeminglyunnecessary delays and costs involved in the salesprocess, repairs that never seem to be addressed andfailure to maintain common parts and communalspaces. Disputes in the residential sector will often below value and uncomplicated. A buyer will likely wishfor any dispute to be dealt with promptly, particularlywhen they are already anxious about being engagedin the lengthy and unfamiliar process of buying a firsthome.

There are many schemes available to buyers, andrenters, which enable complaints to be addressedthrough independent dispute resolution. For example, chartered surveyors dealing with sales and lettings of residential properties, are required by theirgoverning body, RICS, to offer independent ADR toresolve disputes. Moreover, all residential estateagents must belong to a government approved ADRscheme. If a buyer has a complaint about an estateagent when they buy property, they should be offeredthe option to refer the complaint to whichever ADRscheme the estate agent belongs to. An estate agentthat declines to use an approved scheme can be fined.Adverse publicity will probably result and this willmost likely be bad for future business.

However, accessing dispute resolution is not alwaysstraightforward. There are too many bespoke disputeresolution schemes, which are managed by variousbodies, some of which are well known, and somewhich are not.

Too much choice creates confusion and is not beneficial for buyers, renters, sellers or others involved inthe housing market. Each scheme operates differentpractices, and even with a wide selection of schemesavailable to resolve a wide range of issues, they do notnearly cover the entirety of problems that parties canencounter. In the housing market buyers can be forgiven for not knowing which scheme to use, and howto use it. Too many people involved in purchasing orrenting property have little option but to take theirgrievances through slow and costly litigation.

The current provisions for ADR are convoluted, slowand simply do not work efficiently. It is not the casethat existing ADR schemes need to be improved e.g.become speedier at handling complaints or applyingsimilar criteria/standards. ADR for the sector needs acomplete overhaul. It should be streamlined. Betterinformation needs to be developed for parties abouthow ADR works, how long it takes, how much it costsand how they can access it.

The Ministry of Housing Communities and LocalGovernment (MHCLG) has recently consulted on theeffectiveness of consumer redress in housing, and hasdeclared its commitment to ensuring consumers havespeedy and viable ways to seek redress when thingsgo wrong. The key objectives for MHCLG are to enable new and established home owner/occupiers tohave an efficient ADR service which will be easy to access and provides them with clear information aboutwhat they can expect.

It is apparent that MHCLG is exploring the idea of asingle housing supervisory body service, with a remitfor dealing with disputes that covers the whole of thehousing sector.

My employer, the RICS Dispute Resolution Service,has joined with other like-minded bodies to make theargument that buyers and renters would benefit fromgreater order and clarity if dispute resolution procedures are standardised. This would mean establishing a single ADR service for the residential sector,covering consumer complaints about housebuilders,estate agents, landlords, etc. Any ADR entity, which isset up and/or approved by government to provideservices to the residential sector, must furnish clearand useful guidance to inexperienced home buyersand occupiers, which is not long winded and overly technical.

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