Lettings & The Law (Legal)

Over the past 12 months the private lettings sector has finally begun to see the fruition of attempts to clarify and improve relations between letting agents, renters and landlords, as well as the public perception of letting agents. The principle changes have come in the form of an Advertising Standards Authority (ASA) decision requiring letting agents to be up front about non-optional fees, as well as the guidance (in draft form) from the Office of Fair Trading (OFT) as to how the law as it stands applies to the lettings market.

All you have to do if you want to see some demonstration of the need for these changes is Google the phrase ‘I hate letting agents’ and you will see pages and pages of responses from websites, forums, blogs and chat rooms documenting how people feel the need to complain about a letting agent they have used – from these results it would seem that finding a good letting agent is almost impossible. However, in many cases, the issues are often caused by confusion on all sides and a serious lack of communication, which is why some sort of clarity is very much necessary. So, what exactly is taking place?

The ASA requirement

Essentially, the ASA ruled against an estate agent back in March 2013 for not being up front about admin fees. This was because the authority wants to “make sure that all quoted prices are transparent to ensure that consumers get a fair deal.” Essentially, the context for this was an advert posted by an estate agent that did not make clear that there was a separate admin fee to pay in addition to the rent. A subsequent Which? survey found that that this was common practice and some letting agents were not even providing information on their letting agent fees when asked directly.

Impact on tenants: Letting agents are now obliged to make clear what compulsory fees are charged when you want to rent one of their properties and this has to be done from the start of the process. So, for example, where a property is being rented for £1,300 pcm plus £130 admin fee, the advert should display this as ‘£1,300 pcm + £130 admin fee per tenant’ not just ‘£1,300 pcm.’

The OFT Guidance

The OFT Guidance is very much in embryonic form, with a consultation taking place at the end of 2013 on the draft of a document to be provided to letting agents to help them comply with the law. The draft guidance comes in the wake of the OFT’s Lettings Market report which indicated that clarification was much needed. Essentially, the guidance is a step-by-step guide that highlights how the law might apply at each stage in the lettings process, from letting agency advertising, to dealing with renters.

The major elements of the guidance focus on surveyed complaints that have been made that identify that both landlords and tenants are concerned about letting agents fees, about poor communication between letting agents and landlords and letting agents and tenants, as well as a rather low level of service being provided in general.

The OFT’s research found that many of the issues presented could be solved by compliance with existing legislation, rather than requiring new law. The existing legislation in question was the Business Protection from Misleading Marketing Regulations 2008, the Consumer Protection from Unfair Trading Regulations 2008, the Supply of Goods and Services Act 1982 and the Unfair Terms in Consumer Contracts Regulations 1999.

Impact on tenants: the consultation closed on 10th December and the next step is for the OFT to produce its official guidance, rather than a draft form. What this should enable is clarity on what is required of letting agents at each stage in the lettings process, which will allow tenants to identify where obligations are not being met. This is in contrast to the current position where it is very difficult to highlight an issue with a letting agent because of the confusion that affects both tenants and letting agents.

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