Posts with tag: letting agent fees

Letting agents must publicise fees from today

Published On: May 27, 2015 at 4:33 pm

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Letting agents are being reminded that from today, it is a legal requirement for them to publicise all fees that they plan to charge landlords and tenants. In changes to the Consumer Rights Act 2015, letting agents must now prominently display all fees in all of their offices, as well as on their website.

Guidance

Assistance for the new laws has been provided by the Department for Communites and Local Government, which itself has received guidance from the Advertising Standards Authority.

The guidelines for agents states that: ‘All fees, charges or penalties (however expressed) which are payable to the agent by a landlord or tenant in respect of letting agency work and property management work carried out by the agent in connection with an assured tenancy. This includes fees, charges or penalties in connection with an assured tenancy of a property or a property that is, has been or is proposed to be let under an assured tenancy.’[1]

Additionally, all fees must be shown inclusive of VAT, but agents are not permitted to publicise rent payable to a landlord, nor the tenancy deposit taken.

Failure to comply could see letting agents facing a Trading Standards bill of up to £5,000.

 

Letting agents must publicise fees from today

Letting agents must publicise fees from today

Tough action

Sean Hooker, head of redress at the Property Redress Scheme, said that, ‘’lower penalties will only be applied in extenuating circumstances which will not include, ‘I did not know about the Law’ or I did not know what to do.”[1]

On letting agent requirements, Hooker said that, “fees should be clear and specific without surcharges or hidden costs. Generic terms such as, ‘administration fee,’ are no longer acceptable and all charges should be displayed inclusive of tax.”[1] Talking directly to agents, he said that, “in effect your customers should be aware what you intend to charge them as soon as they walk into your office or click on your website. If they have to ask, you’re probably not displaying them right.’[1]

Letting agents are now also required to make clear which of the three redress schemes they have joined. This will be either The Property Ombudsman, The Property Redress Scheme or Ombudsman Services Property. Moreover, agents are also warned that they must indicate whether or not they have Client Money Protection. Hooker warns that a lack of clarity on this will be considered a breach of legislation.

[1] http://www.lettingagenttoday.co.uk/breaking-news/2015/5/letting-agents-must-publish-fees-from-today

 

 

Letting Agents Must Display Fees Within a Week

Published On: May 21, 2015 at 9:39 am

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Lettings agents have less than a week to fully display the fees they charge to landlords and tenants. On Wednesday 27th May, this becomes a statutory duty under the Consumer Rights Act 2015.

Agents are required to publicise a list of their fees in each of their offices and the list must be in a noticeable place. Details of fees should also be put on the agent’s website.

Letting Agents Must Display Fees Within a Week

Letting Agents Must Display Fees Within a Week

The list must include a description of each charge, whether it applies to each property or each tenant and what it covers. All fees and charges payable to the agent must be shown. Agents do not have to display rent and deposits, but they must show holding deposits.

The fees must be advertised inclusive of VAT.

If the exact charge cannot be determined in advance, the description must explain how they are calculated.

If the agent will hold money on behalf of customers, the list must state whether the agent is a member of a Client Money Protection (CMP) Scheme. It must also specify if the agent is part of a redress scheme, and which one.

Furthermore, the agent must also list the fees payable by landlords.

Trading Standards will regulate the new obligations and can fine agents up to £5,000.

Initially, the agent will be given a notice of intent, detailing the proposed penalty and the reasons for imposing it. The agent then has 28 days to respond. If Trading Standards chooses to enforce the penalty, it will issue a final notice, demanding payment within 28 days.

The agent has the right of appeal through the First-tier Tribunal.

Managing Director of the Association of Residential Letting Agents (ARLA), David Cox, says: “We are reminding all our members to comply fully with the new measures. Relevant information should be placed prominently in offices where letting agents have face-to-face contact with clients, as well as on their websites.

“Any costs to landlords and tenants must be clearly defined and comprehensively outlined, including all fees, charges and penalties that may be charged before, during and after a tenancy.

“We urge all our members to make the necessary changes now before next week’s deadline, to ensure that they do not fall foul of this new legislation.”1

ARLA has created a template for displaying fees, which can be found here: http://www.arla.co.uk/news/may-2015/download-the-arla-template-and-display-your-fees/

1 http://www.propertyindustryeye.com/clock-ticks-down-towards-duty-to-publish-letting-fees/

Hamptons Estate Agents Breach Fees Code of Conduct

Published On: April 24, 2015 at 9:00 am

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Estate agent Hamptons has been identified by the Advertising Standards Authority (ASA) as breaching the code of conduct on displaying fees in advertisements.

The ASA received a complaint regarding an online advert which stated: “£1,200 per calendar month + £216 incl. VAT admin fee per property + other fees may apply.”1

A hyperlink appeared in the text “+ £216 incl. VAT admin fee per property + other fees may apply” to additional details about the fees.

The complainant knew that there would be additional fees, but did not believe the information was clear.

Hamptons argued that the administration fee was the only fixed cost. It said that the hyperlinked text connected to a PDF entitled Charges and Information for Tenants.

Hamptons Estate Agents Breach Fees Code of Conduct

Hamptons Estate Agents Breach Fees Code of Conduct

This document detailed other mandatory charges that could apply, including the cost of references for tenants.

The document also said: “Other charges may be incurred as part of the application process”1, which allegedly referred to check-in fees. These fees vary from property to property depending on the charge imposed by the independent inventory clerk.

The Bristol branch of the firm uses a different fee system. They apply an all-inclusive fee, of the administration fee, referencing fee and check-in fee, which is either 35% of the first months’ rent or £420. Hamptons said it would amend the document with sufficient details of fees.

The ASA upheld the complaint, saying that Hamptons had breached CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising), 3.17, 3.18 and 3.19 (Prices). The ASA also said that Hamptons couldn’t use this advert again.

The ASA said: “The ASA considered consumers would interpret the claim ‘+ £216 incl. VAT admin fee per property + other fees may apply’ to mean that the administration fee was the only non-optional charge and there might be other fees depending on the situation.

“However, we understood that there were other non-optional fees that consumers would have to pay if they rented the property. These fees were a referencing charge and a check-in charge, which would be combined with the administrative charge into an all-inclusive fee for their Bristol branch.

“For other branches, the referencing charge was one of two fixed prices depending on whether the consumer was a tenant or a business, and the check-in charge varied depending on the size of the property.

“We noted CAP Code rule 3.19 stated: ‘If a tax, duty, fee or charge cannot be calculated in advance, for example, because it depends on the consumer’s circumstances, the marketing communication must make clear that it is excluded from the advertised price and state how it is calculated.’

“While we acknowledged details of the costs were included in a document which was hyperlinked to the claim, we considered non-optional fees were material information that was likely to have an impact on a consumer’s transactional decision. We considered, therefore, that the information about the non-optional fees was not sufficiently prominent. Because the ad misleadingly implied other fees might not apply, and the information about non-optional fees was not sufficiently prominent, we concluded the ad was misleading.”1

1 http://www.landlordtoday.co.uk/news_features/Hamptons-in-hot-water-over-fees

Green Party Will Abolish Letting Agent Fees

Published On: April 16, 2015 at 9:13 am

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The Green Party announced in its manifesto that it would abolish letting agent fees and insurance-backed tenancy deposit schemes, if it came into power.

Green Party Will Abolish Letting Agent Fees

Green Party Will Abolish Letting Agent Fees

It was also revealed that it would launch five-year fixed tenancy agreements and rent controls. The party would also encourage the introduction of local not-for-profit letting agencies.

The Green’s plans are similar to those in the Labour Party’s manifesto.

If the Green Party won the general election, there would also be obligatory licensing for all private landlords and the abolishment of tax reliefs that landlords can currently claim.

Favouring homeowners, owner-occupiers would be able to receive more tax-free rent from letting a room in their home, as the party would increase the Rent a Room cap to £7,250 a year.

The National Landlords Association (NLA) criticised the proposals describing them as an attack on landlords, giving “a one-sided view of the private rented sector.”

The NLA states: “The Green Party appears to want people to rent. However, it does not take into account the demands on landlords to provide safe and decent housing for those families. Rent controls have been proven not to work and many landlords will just sell up and leave the sector if they are introduced.

“Five-year tenancies will reduce the flexibility within the private rented sector that suits landlords and tenants alike, and this policy does not take into account the fact that tenants can ask for longer tenancies already under the current system.”1

1 http://www.propertyindustryeye.com/second-political-party-pledges-to-abolish-letting-agent-fees-and-bring-in-rent-controls/

Transparent Fees Ensure Fair Deal for Landlords and Tenants

Published On: May 15, 2014 at 4:54 pm

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Under new plans announced by Government ministers on 13th May 2014, letting agents are now required to publish full details of the fees they charge. Transparent fees ensure fair deal for landlords and tenants.

The obligation will ensure landlords and tenants receive fair treatment, and attack the rogue agents that enforce excessive and hidden charges on customers. This method also avoids unnecessary state regulation, which would increase rents for tenants.

Previously, the Advertising Standards Authority required letting agents to list obligatory charges to the tenant upfront, however, these letting agents have sometimes charged hidden fees, and face no more than being listed on the Advertising Standards Authority’s website.

Transparent Fees Ensure Fair Deal for Landlords and Tenants

Transparent Fees Ensure Fair Deal for Landlords and Tenants

However, the Government wanted to do more, and will now oblige all letting agents to publish a complete list of fees on their websites and offices. Those that do not observe the rules will face a fine.

The new plan enhances the Government’s work to provide stronger protection for landlords and tenants in the private rental sector, whilst avoiding extreme regulation.

Kris Hopkins, housing minister, says: “The vast majority of letting agents provide a good service to tenants and landlords. But we are determined to tackle the minority of rogue agents who offer a poor service.

“Ensuring full transparency and banning hidden fees is the best approach, giving consumers the information they want and supporting good letting agents.

“Short-term gimmicks like trying to ban any fee to tenants means higher rents by the back door. Excessive state regulation and waging war on the private rented sector would also destroy investment in new housing, push up prices and make it far harder for people to find a flat or house to rent.”1

The Government will make the amendment to the Consumer Rights Bill at a later date, when they have reviewed the operation after 12 months to ensure that it is providing the predicted benefits.

The Government previously introduced new legislation that requires all letting and management agents in England to belong to an approved redress scheme. Housing minister Kris Hopkins has approved three schemes that must be joined later this year.

The three schemes, the Property Ombudsman, Ombudsman Services Property, and the Property Redress Scheme, offer independent inquiries into complaints about hidden fees or poor service. Tenants and landlords could receive compensation if a complaint is defended.

More measures being proposed include:

  • A code of conduct for managing property in the private rental sector.
  • A how to rent guide for tenants to know what to expect from their letting agency and/or landlord.
  • A voluntary, model tenancy agreement, which could be sued for longer tenancies.
  • More guidance for local councils on challenging rogue landlords, defending tenants from illegal evictions, and pushing for harsher penalties before magistrates for housing offences.

The Government is also raising investment in building houses, and also institutional investment in private rental accommodation.

The £1bn Build to Rent fund will provide finance for large-scale private rental homes, and could build up to 10,000 new houses for private rent.

The Government’s housing guarantee scheme supports up to £10bn worth of investment in large-scale private rental projects and further affordable housing.

1 http://www.landlordexpert.co.uk/2014/05/14/fees-transparency-to-ensure-a-fair-deal-for-landlords-and-tenants-2/

Campaign on letting fees labelled anti-landlord

Published On: January 9, 2014 at 11:34 am

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A campaign from charity group Shelter concerning the abolishment of tenants’ fees has come under fire from the Residential Landlords Association.

Anti-Landlord

 This claim is based on the proposal that landlords should fit the bill for costs of setting up a tenancy agreement.

Alan Ward, head of the RLA, was scathing in his attack of the charity’s campaign, saying that, “once again we have Shelter peddling the same anti-landlord rhetoric, seeking to place yet more costs on the shoulders of landlords.”[1]

He went on, saying, “with almost 90% of landlords being either individuals or couples renting out just a few properties, Shelter seems to think that landlords have a bottomless pit of money to spend.”[1]

Campaign on letting fees labelled anti-landlord

Campaign on letting fees labelled anti-landlord

Concern

Ward points to an ill-fated scheme north of the border for one of the reasons for his concern, stating that, “a similar scheme in Scotland has put many letting agents out of business, thereby reducing choice for tenants and landlords.” Furthermore, Ward believes that the Shelter campaign will introduce, “excessive and unneeded red tape,” for landlords and associated costs will “drive up rents for the very same tenants them try to serve.”[1]

Opposition

Jonathan Monjack, is media lawyer and founder of landlords’ collective Happy Tenant Company. The group operates a £500m portfolio in Greater London and utilizes group-buying power.

Monjack observes that, “many landlords-particularly those who aren’t professional property investors-get ripped-off by letting agents who not only charge huge commissions for finding a tenant but also huge renewal fees simply for keeping the tenant in the property.”[1]

One landlord has suggested that landlords are paying agents roughly £1.7bn per year. Monjack though, fears this figure could be even more. He says, “the £1.7bn figure relates only to the amount that landlords are paying to secure and keep a tenant. In actual fact, they often end up paying significantly more to agents via management fees, ambiguous and ubiquitous administration fees and hefty mark-ups on any maintenance works that need doing. Agents often earn yet more revenue via fees charged to tenants and backhanders from contractors.”[1]

He goes onto suggest that landlords need to get out of the mind-set of seeing agents as a “necessary evil.”[1]

[1] http://old.lettingagenttoday.co.uk/news_features/Shelter-campaign-on-letting-fees-blasted-as-anti-landlord?tickertape=yes