Estate agents who charge hidden fees may be breaking the law

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Letting agencies who charge fees that have not been previously made transparent are not acting in accordance with the Consumer Rights Act 2015.

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This means that charging renewal fees that were not written into the contract is illegal.

The fairly new legislation was passed in May 2015, so individuals that have been paid these renewal fees since that date may in fact liable for compensation.  

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Our advice is to question all fees and seek advice from The Property Ombudsman if necessary.

 

Information published by The Property Ombudsman:

 

From 27 May 2015 new provisions in the Consumer Rights Act 2015 come into force which will impact on all English and Welsh letting and management agents.

Section 83 of the Act relates to the provision of fees, charges and/or penalties and is intended to create full transparency to enable consumers (both landlords and tenants) to ascertain exactly how much they will be required to pay before they enter into any form of contract or agreement.

Section 83 of the Act can be found here.

Act Summary

From 27 May 2015 letting and management agents will be required to display a list of all fees, charges or penalties (however expressed) payable by landlords and tenants for any letting agency or property management service. This includes any additional fees, charges or penalties which may be incurred during a tenancy as well as fees, charges and penalties which are referenced in Tenancy Agreements and in Terms of Business.

The only exceptions to Section 83 of the Act are tenancy security deposits (not holding deposits), rent payable to a landlord and fees, charges or penalties which the agent receives from a landlord under a tenancy on behalf of another person.

The main points to note are that:

·       The description of each fee must be sufficient to enable the person who is liable to pay it to understand the service or cost that is covered by the fee or the purpose for which it is imposed.

·       All fees, charges and/or penalties must be quoted inclusive of VAT.

·       Fees, charges and/or penalties must be displayed prominently (i.e. where it is likely to be seen by consumers) at all premises at which the agent deals face-to-face with potential and actual tenants and landlords. (The test of whether they are displayed correctly is likely to be whether the consumer had to ask to see the fees list). 

·       Fees, charges and/or penalties must be displayed in full on the agent’s website.

·       Surcharges and hidden fees must not be used.

·       It must be clear whether the charge is per property or per tenant.

·       If the fee cannot reasonably be determined in advance, it must be clearly explained how it will be calculated.

·       There should be no duplication of charges between tenants and landlords – although it is acceptable to split charges between those parties, provided this is clearly explained in relation to the total cost of the specific service.

·       English agents must publicise their TPO membership (through their website, office documents, window display, terms of business, fee list) and any client money protection scheme membership. (Please contact our membership team in relation to stationary and window sticker orders).

Trading Standards will be enforcing these new rules and have the ability to impose a fine on the letting or management agent of up to £5,000 if non-compliance with the Act is found.

Please also note that Section 83 of the Act is in addition to the guidance previously published by CAP in relation the Advertising Standards Authorities ruling on the displaying of compulsory fees, which can be found here and the inclusion of VAT within those fees which applies to estate and letting agents.

TPO will be updating its Codes of Practice in the near future to take into account the requirements of the Act and other legislation and regulations coming into force this year.

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