Landlords must stay signed up to Ombudsman as scheme set to become mandatory

The government has confirmed landlords will need to stay signed up to the Private Rented Sector Ombudsman, even after they’ve left the rental market, as it releases further guidance.

However, landlord organisation says the move is “disproportionate and administratively unfair” and claims it amounts to an “exit tax for landlords.”

The scheme will be mandatory for landlords, with implementation hinted for 2028, although the government has pledged to provide “sufficient notice in advance.”

As previously reported by Property118, the government claims the Ombudsman will not be able to make a profit and that the fee will be “proportionate and good value.”

Ministers have also suggested the possibility of combining the PRS database registration process with Ombudsman registration, though they have not confirmed whether landlords will be required to pay separate fees for each scheme.

Ombudsman service will independently and impartially investigate tenant complaints

According to the government’s roadmap for the Renters’ Rights Act, the introduction of the PRS Database is set for late 2026, and the Ombudsman will be implemented after the Database goes live.

The government says only tenants will be able to complain to the Private Rented Sector Ombudsman, but it will also support landlords with tools, guidance and training on handling complaints from tenants early.

In the Renters’ Rights Act guide, the government explain more about the Ombudsman service.

The guide says: “The Ombudsman service will independently and impartially investigate tenant complaints. If the service determines that the landlord acted unreasonably or unprofessionally when handling a tenant’s original complaint to the landlord, the ombudsman will be able to tell a landlord to take or cease taking an action, issue an apology or explanation, and/or award compensation to put things right. Landlords who are members of the ombudsman must abide by the ombudsman’s decisions.

“We expect tenants will be able to contact the ombudsman online or by telephone and we will work to ensure that all tenants, including those who are vulnerable, can access the service.”

The guidance adds only tenants will be able to complain under the Ombudsman scheme.

The guidance says: “It would be unprecedented and inappropriate for landlords to seek binding decisions from the ombudsman service, which is designed to protect consumer rights. Therefore, only tenants will be able to seek redress from the service.

However, we are committed to ensuring that landlords, like tenants, have appropriate access to alternative dispute resolution. We are exploring options for landlord-initiated mediation for landlords to resolve issued with their tenants.”

Expect landlords to remain members for a reasonable amount of time once they have stopped being a landlord

The government also confirms in the guidance that landlords will need to keep their Ombudsman membership for a period after leaving the private rented sector.

The guidance says: “When a property is marketed for letting, the landlord will be required to be a member of the ombudsman service. We will also expect landlords to remain members for a reasonable amount of time once they have stopped being a landlord.

“This is because things can go wrong for tenants at any point in the rental process, so it is reasonable for tenants to have the opportunity to seek redress for harm or inconvenience caused during the pre-letting period or at the end of a tenancy.”

Property118 has contacted the Ministry of Housing, Communities and Local Government to clarify whether landlords will still be required to pay the fee during this period after they have ceased being landlords.

Disproportionate and administratively unfair

However, landlord organisation iHowz has slammed the government, claiming the requirement amounts to an “exit tax” for landlords.

Peter Littlewood, chief executive of iHowz, told Property118: “The policy raises several landlord concerns.

“Firstly, we acknowledge that tenants should have access to redress for issues arising at the beginning or end of a tenancy. However, the government’s position, that landlords should continue paying for and maintaining membership after divesting from property, is disproportionate and administratively unfair and is an Exit Tax.

“It is unreasonable to charge someone for participation in a regulatory scheme after their business activities have legally ended. In most regulated industries, obligations cease upon cessation of trading, except in cases involving active enforcement or unresolved complaints.

“The guidance also does not define how long former landlords must remain members. Without certainty, landlords fear being trapped in an indefinite obligation, creating anxiety for those selling up or transferring properties.”

Property118 has contacted the Ministry of Housing, Communities and Local Government to clarify how long “a reasonable amount of time” will be for former landlords to remain members of the Ombudsman service and whether they will still be required to pay the fee during this period, as the guidance does not provide a definitive answer.

Landlords will see this as yet another example of the government placing the regulatory burden on one party only

Mr Littlewood adds: “There is concern that this requirement could incentivise speculative or vexatious complaints long after a landlord has exited the sector, requiring ongoing administrative involvement long after their rental business has closed.

“Many landlords already view the Renters’ Rights Act as shifting power heavily towards tenants and councils. The idea that obligations continue beyond ownership reinforces the perception that the system is becoming punitive and one-sided.

“Landlords say disputes at the “pre-letting stage” typically involve agents, not owners, and that end-of-tenancy issues can already be addressed through deposit schemes or existing legal frameworks. Mandating continued membership appears to duplicate systems already in place.

“Overall, landlords will see this as yet another example of the government placing the regulatory burden on one party only, even when that party no longer participates in the market. We fear it will accelerate the pace of landlord exits, ultimately shrinking supply and pushing rents higher.”

Landlords and agents will remain responsible for their own actions and behaviours

Landlords should also be aware that even if a property is managed by a letting agent, the landlord will still need to sign up to the Ombudsman.

The government guidance says: “Landlords and agents will remain responsible for their own actions and behaviours, as well as the respective services they have agreed and are legally bound to provide to tenants. Tenants and landlords will still be able to complain about agents and receive redress through the existing agent redress schemes.

“If the landlord and agent are both at fault, the provision for cooperation in the Act will allow the PRS Landlord Ombudsman to work with the existing agent redress schemes to conduct joint investigations and, where appropriate, issue joint decisions.”

The government has not yet appointed an administrator for the Ombudsman scheme, but this will be announced in due course.