Katrine Sporle, Property Ombudsman (Published 1st December 2016)
The announcement by the Chancellor that the Government intends to remove letting agents’ ability to charge fees to tenants came as a surprise to many in the industry.
The fact is, however, that tenant fees has been one of the headline issues in the sector for an extended time (the other being Client Money Protection), and there are many who hold strong feelings on the subject.
The Government will now need to consult on the issue, and draft and pass new regulations. In the meantime, the obligations on English and Welsh letting agents to display fees (along with redress and CMP scheme membership) remain.
More than anything else, this is an example of the industry needing to prove that it will do all it can to get things right. So please display your fees, making sure that the description of each fee is 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.
Also ensure that:
• All fees, charges and/or penalties are quoted inclusive of VAT
• Fees, charges and/or penalties are displayed prominently 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 are displayed in full on the agent’s website
• Surcharges and hidden fees are not to be used
• Clearly state whether the charge is per property or per tenant
• Explain how fees that cannot be determined in advance will be calculated
• There is 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.
Once the Government has decided exactly how it intends to prevent tenant fees from being charged, TPO will amend its Lettings Code of Practice to reflect the practical application of the new regulations.
However, until that point TPO will continue to work with CTSI and local Trading Standards teams to ensure our member agents comply with the law by displaying both their landlord and tenant fees.
For agents who want to download a fee template, ARLA has produced a comprehensive document that can be found here.
To read the Ombudsman's latest 'Hot Topic' article - please visit Property Industry Eye's website.