The Government introduced the Consumer Rights Act 2015 to clarify and simplify consumer rights in England and Wales. An important provision of the Act for property agents affects letting fees charged by letting agents and comes into force on the 27th of May.
The bill aims to make consumers better informed and better protected when they are buying goods and services.
Although this was not the original intent of the bill, its scope was widened to include provisions for letting agent fees.
The new rules require letting agents to publicise their fees scales and state whether or not they are a member of a client protection scheme and the name of the redress scheme they have signed up to.
Clauses in the Consumer Rights Act state that a letting agent must display a list of fees:
- at each of the agent’s premises where the agent deals face to face with persons using or proposing to use the services to which the fees relate
- at a place in each of those premises at which the list is likely to be seen
- on the agent’s website (if it has one)
The list of fees must include:
- a description of what each fee covers or the purpose for which it is imposed
- for tenants whether the fee is per tenant of per home
- the amount of the fee (inclusive of tax) or a description of how that fee is calculated (e.g. the percentage of the rent)
In other word, all costs to landlords and tenants must be clearly stated and comprehensively outlined, including all fees, charges and any penalties that may be charged before, during and after a tenancy.
The duty for agents to publish fees would be enforced by local authorities. A maximum fine of £5,000 for breach of the duty is proposed.
The bill does give agents an opportunity to make representations and objections, before the local authority can enforce the fine.
What does this mean for letting agents in England and Wales?
Agents who are already complying with the guidance issued by the Committee of Advertising Practice in September 2013, are expected to meet the proposed requirements.
Private Landlords & Consumer Protection Regulations
The Property Mis-descriptions Act 1991 (PMA) only applies to estate agents, solicitors selling property and developers acting in the course of a business however, Consumer Protection Regulations and Business Protection from Misleading Marketing Regulations 2008 (BPR’s) apply across all sectors and industries which, is likely to include Letting Agents and Private Landlords.
Under the Consumer Protection Regulations and Business Protection from Misleading Marketing Regulations a person can be liable for concealing or omitting material information.
Under the CPR’s an agent or Landlord may be trading unfairly if they use any of the following:
- Misleading actions – providing false or misleading information to consumers
- Misleading omissions – hiding or failing to provide material information to consumers
- Aggressive practices – exerting undue pressure on consumers
- Failing to show professional diligence – not exercising honest market practice and in good faith
Any of these practises could be deemed to be unfair if they are likely to affect the buying decision of the consumer.
Under the CPR’s and BPR’s Landlords and agents are expected to make the ‘average consumer’ aware of fees and charges and anything in a property which may affect their decision. Things that could be included in this (but are not limited to) are…
- A damp problem in the property
- Knowing the property is to be sold during the course of the tenancy
- Knowing there is a problem with or lack of services to the property, TV, broadband, gas etc.
The overall intention of these regulations is that consumer are able to make a free and informed choice when deciding to enter into a contract for somewhere to live.
Therefore, when advertising a property or conducting a viewing, it is expected that all relevant information be given to prospective tenants by the agent or Landlord and that it is freely available, transparent and truthful.
Competition & Markets Authority: Guidance for lettings professionals on consumer protection law – helping you comply with your obligations
An Important Provision of the Consumer Rights Act 2015 will Affect Letting Fees & comes into force on May 27th – http://t.co/rzef6mCrNe
— LandlordZONE® (@LandlordZONE) May 21, 2015