Lettings agent fees must be more transparent

In a recent report the Office of Fair Trading (OFT) has argued that lettings agents should provide clearer information about the total number of fees landlords have to pay. The report highlighted surprise additional fees as a common problem for landlords and one that made it difficult for them to pick the best lettings agent.

It said: “Landlords who are unaware of all of the fees charged by letting agents before signing a contract and the likelihood of incurring these fees will be unable to assess the overall cost of renting their property through a letting agent. Landlords, therefore, may not be in a position to be able to compare the 'overall' price of one contract against another. In these circumstances landlords may take a contract that they may not otherwise have taken had they been able to compare contracts.”

The report recommended fees should be set out in a clear tariff of charges. It also said that a  redress procedure should be introduced to allow landlords and tenants to sort out problems when they occur, and an enforcement strategy for traders who did not comply with the law. Specific recommendations include, fees to be set out in a clear tariff before any contract is signed, Initiatives to make it easier for landlords and tenants to compare one agents service against another, prominently displayed logos which imply minimum standards are met, an independent redress procedure for both landlords and tenants, use of client money protection schemes, proper compliance with the tenancy deposit schemes, information to help landlords and tenants make informed decisions and an agreed enforcement strategy to identify where enforcers should concentrate their efforts to do the most good.

Many of the above recommendations are already there but are not being used or used well.
For example there are quite a few logos which imply minimum standards, SafeAgent and Property Ombudsman logos come to mind. However members of the public often do not know what they mean or their significance.

There is clearly enormous variation in the cost and scope of services provided by letting agents. There is also a widely held perception that they are crooks and rogues. I believe that the vast majority of letting agents provide a valuable service both to those landlords who do not want the hassle of dealing with letting or management of their rental property and to tenants who encounter problems in connection with renting property.

So what should Letting agents charge?  The answer to that question is they can charge what they like but they must make clear to both landlords and tenants what those charges are. All charges should be transparent and set out clearly. Unfortunately some agents hide charges such as tenancy renewal and additional administrative charges in the small print of agreements. Agents are entitled to charge both landlords and tenants. But those charges should be totally transparent and be proportional to the work carried out.

The OFT wants to be involved in future developments and has stated that it will be producing a guidance document for agents. They will be reviewing the advice on unfair terms in tenancy agreements and working with organisations to provide ‘quick guides’. The OFT will also set up an unfair terms in it's consumer contracts ‘Hub’ to provide extra guidance and agree an enforcement strategy with trading standards services, for those who do not obey the law. This report will add to the growing clamour to have something done about poor letting agents, which unfairly tarnish the reputation of the many excellent agents around.

Parkinson Property

18th March 2013

 

 
 
 
 
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