The government has confirmed that landlords will be required to maintain their membership in the new Private Rented Sector (PRS) Ombudsman scheme for a “reasonable amount of time” even after they have left the rental market.

Landlord organisations have slammed the move as “disproportionate and administratively unfair,” with one group labeling the requirement an “Exit Tax” for landlords who are selling their properties.

The Government’s Plan: Mandatory Membership

The PRS Ombudsman scheme is set to become mandatory for all landlords, with full implementation hinted for 2028, following the rollout of the PRS Database. The service is designed to independently and impartially investigate tenant complaints, providing a form of redress outside of the court system.

Key Rules for Landlords:

• Binding Decisions: Landlords who are members of the Ombudsman must abide by its decisions. If the service finds a landlord acted unreasonably, it can tell them to take or cease an action, issue an apology, or award compensation to the tenant.

• Tenant-Only Complaints: Only tenants will be able to complain to the Ombudsman, as the service is designed to protect consumer rights. The government is exploring separate options for landlord-initiated mediation.

• Agent Usage is No Excuse: Landlords must still sign up to the Ombudsman even if their property is managed by a letting agent. The Ombudsman is designed to cooperate with existing agent redress schemes to conduct joint investigations where both the landlord and agent are at fault.

The Post-Exit Requirement

The requirement for former landlords to maintain their membership is justified by the government on the grounds that things can go wrong for tenants at any point in the rental process. This allows tenants to seek redress for harm or inconvenience caused during the pre-letting period or at the end of a tenancy.

Landlord Concerns: ‘Unreasonable Obligation’

The industry has reacted with strong criticism, arguing that mandating continued membership after a landlord has legally exited the sector is unreasonable.

• Disproportionate Cost: Critics argue that being forced to pay for and maintain membership after divesting from a property is a clear example of placing the regulatory burden solely on one party.

• Indefinite Obligation: Landlords fear being trapped in an indefinite obligation without clear guidance on how long a “reasonable amount of time” is.

• Vexatious Complaints: There is concern that the policy could incentivize speculative or vexatious complaints long after a landlord has closed their rental business, requiring ongoing administrative involvement.

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, a policy that some fear will accelerate the pace of landlord exits from the market.