Yesterday (13 May) the Labour party sought to introduce an amendment into the Consumer Rights Bill to make letting agent fees to tenants unlawful. This amendment failed on a vote. However, the issue of fees to tenants is not going to go away any time soon.
These fees are unlawful in Scotland following clarification of the law last year. The law in Northern Ireland is in the same state as it was in Scotland before clarification and fees there may or may not be unlawful.
In England & Wales it is lawful to charge fees to tenants and is more than likely to remain so. However, there are some restrictions. Last year the ASA made a decision in which it criticised the manner in which some agents failed to make these fees sufficiently clear at an early enough stage. Following that decision the CAP published guidance on the proper manner for advertising fees that stated that all non-optional fees should be made clear to the tenant at the advertising of the property alongside the rent figure. I have written about this in more detail here. However, there have continued to be calls to ban fees in England & Wales as well.
In response to yesterdays amendment the Government announced new plans to add its own amendment to the Consumer Rights Bill at a later stage which will require agents to publish a full list of their fees on their website and in their office. They have not said though how this will be enforced, presumably through already hard pressed trading standards officers. This actually seems to be a little pointless. The OFT stated in its draft guidance to lettings professionals that in its opinion a failure to follow the CAP guidance on fees advertising is a breach of the Consumer Protection From Unfair Trading Regulations. This is something that is already enforceable by Trading Standards Officers and so the Government appears to be gold-plating an already existing system.
It remains to be seen how things will proceed from here. It is unlikely that the Labour party will simply stop after yesterday’s vote and the Consumer Rights Bill has yet to traverse the Lords. Agents should take this as a warning and make sure that they are being transparent on fees.