To safeguard the public and provide the highest professional standards, all RICS-regulated firms must have a complaints handling procedure, and provide their clients and customers with an alternative dispute resolution mechanism. This is required under the RICS Rules of Conduct.

Alternative Dispute Resolution is a way to resolve disputes between clients/customers and firms after an internal complaints procedure has been exhausted. It is less costly and time-consuming than going to court. ADR provision must be free to consumers, with RICS firms paying the cost of the service.

RICS recognises a number of different ADR providers across the globe, and three are approved for firms to use in the case of consumer/client disputes. In the event a UK-based firm does not wish to choose a specific ADR provider, RICS has procured a default ADR provider to ensure that every UK firm can meet their obligations for ADR, and every consumer is protected.

The following information details the 2023 work of two of the three UK-based consumer/client ADR providers that are approved for RICS-regulated firms – CEDR and the Property Redress Scheme. We hope this information helps RICS-regulated firms choose a provider and understand more how alternative dispute resolution works.

The Property Redress Scheme (PRS)

2023 was a year in which the PRS saw the sales market slow as demand fell, but an already overheated rental market continued to grow. This led to an increase in increasingly fractious disputes. The PRS saw a 20 percent increase in complaint enquiries – across all their service, not just that relating to RICS-firms, in 2023, but maintained an average of completion within 40 days. PRS also use an early-resolution process, and around 50 percent of cases are resolved this way, with complaints settled more quickly.    

Learning lessons from dispute resolution

Cracking up…

A buyer viewed a property in October 2022 and was told by the agent that a slight wall crack was due to the hot summer, and that the seller was getting a full survey report. After some wait and pressure from the chain, the buyer arranged their own searches and survey. The buyer pulled out when these showed the crack had been investigated in 2016, was caused by subsidence, and damaging the roof.

The agent confirmed what they advised the buyer at the viewing. They claimed they could only provide information as they got it, and were only aware of the 2016 investigation in June 2022 after another buyer’s survey revealed the structural issues. The agent believed they kept the buyer fully informed and urged them not to proceed until it was clear what works were needed and a projected timescale.

The case officer found the agent should have made clear to the buyer that these cracks, and the May 2022 survey, had caused a potential buyer to withdraw. Had they been transparent about this, they could have made a more informed decision whether to proceed and avoid wasted costs. An award of £1,135 was made relating to the survey and searches carried out on the abortive purchase, and the distress and inconvenience caused to the buyer.

Top tips

• Make sure buyers’ questions are answered fully and without material omissions.
• Agents should always seek to ensure that only staff with personal knowledge of the property provide information beyond that stated on the written particulars.

More information about the PRS Alternative Dispute Resolution service

All property agents and professionals that carry out estate, lettings and property management work in the property industry have a legal responsibility to join an authorised redress scheme. The Property Redress Scheme (PRS) is authorised by the Ministry of Housing, Communities and Local Government (MHCLG) and National Trading Standards Estate and Letting Agent Team (NTSEALT) to provide redress for estate, lettings and property management agents. 

Find out more by visiting https://www.theprs.co.uk/PropertyAgent

PRS aim to resolve complaints as early as possible by being approachable right from the start. They do this through: 

• personal communication 
• open negotiation 
• mutual agreement 

As well as continuing to resolve individual complaints, their expertise: 

• increases understanding of what goes wrong 
• identifies emerging trends and problems 
• delivers educational resources to the industry 
• creates an opportunity to improve member practices for the future, across the industry 

They will be bringing RICS members more case studies from the PRS archives in future months, and you can check out their annual report by visiting https://content.theprs.co.uk/story/annual-report-2023

Fees  

Annual membership charges start from £155 ex VAT and joining the PRS online is quick and easy. Visit https://www.theprs.co.uk/propertyagent/joinnow/. 

Centre for Effective Dispute Resolution (CEDR)

2023 CEDR cases at a glance (as of 5 January 2024)

CEDR received 442 cases in the calendar year 2023, up from 421 received in 2022. 354 of these cases have received a final decision, with 42 still in progress as of 5 January 2024. 98% of cases were resolved by CEDR within 90 days.

Case resolution

After an independent adjudicator looks at the cases, they make a decision. Last year, 66 percent of cases were found in favour of the firm, with the remaining cases found in favour of the consumer either in whole or in part.  Of these latter cases found in favour of the customer, 81 percent of firms were ordered to pay a monetary penalty.

Learning lessons from dispute resolution

A customer engaged a surveying company to carry out a RICS Level 2 Homebuyers Survey on a property they intended to buy. The survey report concluded, amongst other things, that there was no significant dampness in the walls or floors of the property, and that the structural condition was satisfactory. Following the customer’s purchase of the property three months later, the flooring was found to be damaged due to dampness, and a damp specialist carried out an assessment and found that the cause of the damage was poor underfloor ventilation.

The customer wanted to recoup costs for cost of repairing the damaged floors and for the installation of new air bricks to improve ventilation, but the firm disagreed. Both parties agreed to resolve this disagreement by using Alternative Dispute Resolution.

An independent adjudicator noted that the terms and conditions of a Level 2 Homebuyer survey state that it is a visual inspection only. Therefore, the company could not have been expected to have seen the areas of damage caused by water ingress and rot, as they were in the sub-flooring. However, the adjudicator found that the company incorrectly reported the walls, because the company had accepted that the external air bricks that were noted at the time of the survey were recessed and the external ground level had been raised over the years, possibly breaching the damp proof course. The adjudicator found that the company ought to have stated in the Report that the underfloor ventilation may therefore require further investigation.

The adjudicator’s ruling was that the company did not provide its services to the standard to be reasonably expected in relation to its conclusions about the walls, but did do so in respect of dampness. The adjudicator assessed that the customer was entitled to the cost of installing new air bricks to improve ventilation.

Top tips:

• Ensure customers understand the parameters of the service they are purchasing. In this case, ensuring the customer understood that Level 2 would be limited to a visual inspection only
• If surveyors note any evidence to suggest a trail of suspicion, they should use reasonable endeavours to identify the underlying issue. If this is not possible, surveyors should recommend further investigation be carried out. In this case, if the customer had commissioned a damp specialist before purchasing the property, they may have avoided this outcome.

A customer engaged a surveying company to undertake a Level 3 Building Survey of a property they wished to purchase. The survey report said that the main walls of the property were of solid brick and, despite some minor cracks, appeared satisfactory for a property of its age, with no signs of significant movement or distortion. A year following purchasing the property, the customer contacted the company to say there were problems with the walls and pointing which it had not identified and should have done. The company stated that the cracks visible at the time of the survey were minor and that the scope of the survey did not include destructive testing to ascertain the constitution of the pointing. The parties agreed to take this issue to alternative dispute resolution.

The adjudicator assessed the photographic evidence presented by the customer. It did show cracking to the walls, and they ruled it was possible that the pointing damage to the walls was due to a weak mix. However, given that these matters were reported one year after the survey was carried out, there was nothing to suggest that the cracks visible at the time of the survey required further action. The adjudicator also noted that the terms and conditions of the Level 3 Building Survey do not require the company to assess the constitution of the pointing. The adjudicator ruled that the company had provided its services to the standard to be reasonably expected. Therefore, the company was not required to take any action.

Top tips:

• The evidential burden of proof rests with the customer to show that the company ought reasonably to have identified something in a survey that later on proves to be a problem. This burden is harder for the customer to satisfy where a significant period of time has passed between the date of the survey and the date on which the problem was reported.
• Ensure customers understand the risks associated with purchasing property and that a survey can only be an assessment at a point in time.

More information about the CEDR Alternative Dispute Resolution service

CEDR is one of the largest providers of Alternative Dispute Resolution (ADR) in the United Kingdom and Europe. CEDR specialises in preventing, managing and resolving consumer-to-business and business to-business conflict through the use of alternative dispute resolution techniques. CEDR provides access to more than 200 conciliation, mediation, adjudication and arbitration schemes, resolving thousands of disputes each year. A not-for-profit organisation, CEDR also provides training in conflict prevention and conflict management to individuals, businesses, national governments and NGOs in over 60 countries. In the consumer sector in the UK, CEDR is approved to provide ADR by the Chartered Trading Standards Institute (CTSI), the Civil Aviation Authority (CAA), the Gambling Commission and Ofcom, as well as the RICS.

Fees

The RICS Rules of Conduct specify that ADR provision must be free to consumers. RICS regulated firms need to pay the case fees, regardless of the outcome of the case.

For CEDR, there is a fee for settled cases and a fee for adjudicated cases. If a case is deemed out of scope or withdrawn by a consumer prior to a decision being issued, then there is no fee applicable to the RICS regulated firm.

CEDR fees are listed below:

• Settlement (early resolution) fee  - £90+VAT
• Adjudication fee - £385+VAT

Ensuring consumers know about your ADR provision

RICS firms must ensure that their complaints handling procedures, and their ADR provider, are easily accessible for consumers. This ensures that consumers and the public can be confident firms will handle all complaints appropriately.               

If CEDR is your firm’s ADR provider, please ensure CEDR is listed in your Complaints Handling Procedure (CHP), with the correct details.

CEDR Services Ltd

Website: https://www.cedr.com/consumer/rics/overview/

Email: surveyors@cedr.com

Phone: 020 7536 6116

Post: 100 St Paul’s Churchyard, London, EC4M 8BU

If you are using another alternative dispute resolution provider, please ensure their details are clearly listed in your CHP.

Registering with CEDR

If you are using CEDR as your consumer ADR provider, please register with CEDR by following this link. Please still register, even if you have already used CEDR. There is currently no registration fee with CEDR.

Guidance notes and videos

CEDR has produced a Guidance Note for RICS firms. This is available from their website at: https://www.cedr.com/wp-content/uploads/2023/03/Guidance-Notes-for-Members-RICS-Adjudication.pdf. 

A copy of the CEDR Service Rules is available from: https://www.cedr.com/wp-content/uploads/2023/03/RICS-Service-Rules-Mar-2023.pdf.

CEDR has also produced a number of guidance videos explaining the adjudication processes. The videos are available on their website at: https://www.cedr.com/consumer/rics/guidance-video/.