The main parts of the Consumer Rights Act 2015 which affect landlords and letting agents are now in force for England and Wales.
Duty of letting agents to publicise fees etc
Chapter 3 of Part 3 to the Act requires letting agents to display a list of fees and certain other information in their offices and websites.
Where to display
A letting agent must display a list of fees—
- at each of the agent’s premises at which the agent deals face-to-face with persons using or proposing to use services to which the fees relate, and
- at a place in each of those premises at which the list is likely to be seen by such persons.
The agent must also publish a list of the fees on the agent’s website (if it has a website).
Furthermore, through changes made by the Tenant Fees Act, there are further duties where an agent advertises on a third party website.
Where a letting agent advertises a property to let on a third party website (such as on Rightmove, On The Market etc) or advertises letting agency work carried on by the agent (such as sponsorship), the agent must ensure that:
- a list of the agent’s relevant fees is published on the third party website, or
- there is a link on that website to a part of the agent’s website where a list of those fees is published.
List of fees
The list of fees displayed as required above must include-
- a description of each fee that is sufficient to enable a 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 (as the case may be),
- in the case of a fee which tenants are liable to pay, an indication of whether the fee relates to each dwelling-house or each tenant under a tenancy of the dwelling-house, and
- the amount of each fee inclusive of any applicable tax or, where the amount of a fee cannot reasonably be determined in advance, a description of how that fee is calculated.
Where the agent is required to be a member of a client money protection scheme, the list of fees must also include a statement that:
- indicates that the agent is a member of a client money protection scheme, and
- gives the name of the scheme.
If the agent deals with a tenancy in England (and as a result is required to be a member of a redress scheme), the list of fees must also include a statement-
- that indicates that the agent is a member of a redress scheme, and
- that statement must give the name of the scheme.
What fees must be shown on the list?
The items on the list must be all the fees, charges or penalties (however expressed) payable to the agent by a landlord or tenant—
- in respect of letting agency work carried on by the agent,
- in respect of property management work carried on by the agent, or
- otherwise in connection with—
- an assured tenancy of a dwelling-house, or
- a dwelling-house that is, has been or is proposed to be let under an assured or assured shorthold tenancy.
Therefore, for example, the list of fees that is to be displayed must not only include fees payable by a tenant but also all the fees payable by landlord clients such as commission rates.
It is unclear what the position will be if multiple rates of commission are charged for different clients but it’s likely that simply putting the highest commission rate will suffice.
The list of fees does not need to include-
- the rent payable to a landlord under a tenancy,
- any fees, charges or penalties which the letting agent receives from a landlord under a tenancy on behalf of another person,
- a tenancy deposit, or
- any fees, charges or penalties contained in regulations (of which none has been made at the time of writing).
Breach of the duty to display fees
The local weights and measures authority will enforce the legislation.
Before a financial penalty is imposed, a notice of intent must be served within 6 months of the authority becoming aware of any alleged breach.
The letting agent may make representations about the proposed penalty within 28 days after which the authority must decide whether to impose a penalty or not (this presumably allows the agent to comply within the 28 period and hopefully for the agent, the notice will be withdrawn).
If the authority decides to impose a penalty, a final notice must be served seeking payment within 28 days. The financial penalty can be for up to £5,000.
An appeal is available to the First-tier Tribunal in England or the residential property tribunal in Wales.
We have produced a template for the benefit of members which can be adjusted with your own fee structure.
The Unfair Terms in Consumer Contracts Regulations 1999 are basically imported into the Act. The regulations themselves are revoked.
There are a couple of minor changes from the original regulations.
The court must consider whether the term is fair even if none of the parties to the proceedings has raised that issue or indicated that it intends to raise it.
Although that only applies if-
the court considers that it has before it sufficient legal and factual material to enable it to consider the fairness of the term.
Secondly, the unfair terms provisions still apply to tenancy agreements as the old regulations did. However, there is now an exception and the provisions do not apply to (highlights added)–
any contract so far as it relates to the creation or transfer of an interest in land.
This will have very limited application for general purposes.
The unfair terms provision don’t just apply to contracts but also to notices too. They would therefore apply for example to a note pinned in a communal hallway requiring tenants to do something.
Otherwise, the Act is basically the same as the previous regulations and the guidance that was issued under the previous regulations will still apply.