29th April 2016

Lettings agents and property management

Multiple boards

Housing is one of the main issues for London residents and over recent years there have been increasing concerns over unfair practices in the private rental sector.

London Trading Standards have risen to the challenge and are working together to tackle rogue landlords and letting agents who don’t comply with the law.

In 2018 London Trading Standards held its first ever lettings focused seminar entitled Agenda for Change – London Lettings Sector, in collaboration with various key partners. Read our news item about the event here.

We enforce a range of legislation intended to ensure fairness and transparency in the lettings and property market. There has been a number of high profile prosecutions and actions reported in the media which demonstrate our leading role in this sector. You can read about these outcomes here.

Redress scheme membership

Since October 2014 all letting and property management agents have been required to be a member of a Government approved redress scheme. This is similar to the schemes already in place for estate agents. The scheme enables an approved third party to arbitrate disputes between agents and tenants.

Your local council (usually theTrading Standards service) can issue a penalty notice of up to £5,000 to any agent who is not a member or who fails to clearly display a notice stating which scheme they have joined at their premises and on their website.

Display of fees

Since May 2015 all letting agents and property management companies must display their fees and charges to clients at their premises and on websites.

Agents must make potential customer, both tenants and landlords, aware of all compulsory and upfront charges. These are fees that are paid in addition to the rent or service charge.

The fee list must include a description of each fee, whether it is per tenant or relates to each dwelling, and the amount inclusive of VAT

Your local Trading Standards can issue a penalty notice of up to £5,000 to any agents that fail to display and describe fees, or their method of calculation correctly.

In 2018 a survey carried out as part of LTS week showed that over 30% of agents were not displaying fees correctly.

New legislation due to come into force on 1st June 2019 will mean fees imposed on tenants by landlords or agents will be banned from that date.

Client Money Protection

Letting Agents are not currently required to hold clients money in a separate account, but this this is due to change as new legislation takes effect on 1st April 2019. From then membership of a client money protection scheme will become mandatory and a penalty of up to £30,000 may be issued to agents who breach the requirement.

In the meantime agents must clearly state whether or not they are a member of a client money protection scheme at their premises and on websites. Failure to do so could result in Trading Standards issuing a penalty notice of up to £5,000.

It is important for to tenants and landlords to know this as it protects their money in the event of a business failing. If a letting agent holds clients money they must also state in the fees list whether they are a member of a client money protection scheme.

From the 1st April 2019 agents must display confirmation of membership of a client money protection scheme at their premises and on websites. Failure to do so could result in Trading Standards issuing a penalty notice of up to £5,000.

Misleading and unfair practices

Trading Standards enforce the provisions of the Consumer Protection from Unfair Trading Regulations 2008. These prohibit ‘unfair commercial practices’ which include a wide range of activities detrimental to the interests of consumers.

It is important to remember that tenants are “consumers” and buy services from landlords, usually via agents and that this legislation applies to the lettings sector.

Unfairness may arise from;

  • misleading actions – giving false or misleading information to consumers
  • misleading omissions – hiding or failing to provide material information to consumers
  • aggressive practices – exerting undue pressure on consumers
  • failing to show professional diligence – not acting with the standard of care and skill that is in accordance with honest market practice and in good faith
  • engaging in one or more ‘banned practices’

Examples of banned practices include displaying a trust mark (such as a logo) without authorisation and false claims about membership of a professional body or an approved redress scheme.

Your local Trading Standards can investigate complaints and, where appropriate and proportionate, prosecute agents and landlords for breaches of the regulations. On conviction fines or even a term of imprisonment can be imposed by the Courts.

Tenants may also be able to pursue their own redress remedy or seek damages where a landlord or agent has a committed a misleading or aggressive practice under the 2008 Regulations.

Unfair contract terms

The Consumer Rights Act 2015 contains provisions which means that unfair contract terms are not binding on consumers, which can include tenants. A term may be deemed unfair if it is contrary to the requirement of good faith, or it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.

Your local trading standards can consider complaints about certain terms and take legal action to prevent their use.

Energy Performance Certificates (EPCs)

Most properties being sold or rented require an EPC which gives information on the energy performance of a building in a sliding scale from A (very efficient) to G (least efficient). This enables potential buyers and tenants to consider a building’s energy efficiency and typical energy costs. The EPC can also contain suggestions of how to reduce the energy usage of that building.

Your local Trading standards service is responsible for the law regarding EPCs. If a landlord breaches any duty listed in the relevant regulations a penalty charge notice of £200 may be issued.

 

To report an issue with a letting agent contact us via the Citizens Advice Consumer helpline.