The ruling by the Advertising Standards Authority that letting agents must show their fees in adverts is causing behind-the-scenes havoc in the industry.
It is understood that not one of the industry bodies knew that the ruling was in the offing, and are in talks not only with each other but with their lawyers. All, including the Property Ombudsman, are so far unable to give any guidance to agents.
Rightmove, which stands to be affected because at the moment it specifically bans the mention of letting agent fees in its adverts, has yet to make any statement.
ARLA’s Ian Potter was among those caught off-guard as he was on holiday at the time. He told LAT: “We are trying to work out guidance to members and will get this out as soon as we can get sufficient substance to it.”
Nor is the legal status of the ASA ruling clear. It is understood that all the stakeholders – including both sets of ombudsmen – are also concerned about the timescales for action, given that Your Move has already been told not to repeat advertising without including fees. This would suggest that from now onwards, letting agents must not advertise properties without fee information.
It would also appear that if letting agents are slow to include fee information, then further complaints to the ASA will simply result in similar high-profile cases, resulting in bad publicity.
Notably, too, there was no clue given as to the identity of the complainant in the Your Move test case to the ASA. While it is usual for complainants not to be named, there is usually some idea as to who the complainant might be – for example, another agent, or consumers. What is highly unusual is that the head of the ASA added his own comment to the case.
Also notable is the fact that Your Move is a major name and a compliant agent – hardly a fly-by-night operation that has made off with tenancy deposit money.
Meanwhile, the case is throwing up practical difficulties. The various stakeholders, along with agents, are trying to work out how they can show their fees, given the variations according to the tenant who takes the property advertised, and in a format that would not be too wordy.
One solution could be to show a generic flat fee (for example, £750 per month rent plus £250 move-in and £100 move-out fee). But if agents do this, could there be a fee-cutting war? Alternatively, if agents choose to go the generic route, isn’t there a risk that some tenants – perhaps the majority – would end up paying higher fees?
Caroline Kenny, of UKALA, believes that the idea of transparency over fees is laudable – but that putting them into adverts is simply not feasible. See today’s blog
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Comments
paid all admin fees at start of tenancy and now tenancy is due for renewal just received letter from agent stating further admin fees payable for £105-00p for tenancy renewal,does not cost that much to simply print existing agreement from their computer file and change last digit on year start/end date and postage to send out and never informed that further fees would become due. RIP OFF
It does seem basically fair to show fees up front.
If it does start a race to the bottom then it will be Online vs. the Highstreet that gets interesting.
Online agents (think OpenRent, MakeUrMove, UPad) have very low fees already (around the £20 mark) and are probably in a position to scrap them altogether.
This is a very interesting issue and one that deserves more attention.
Firstly is the judgement even sensible? It goes further than the professional bodies, it goes further than the independent ombudsman and it goes further than the Office of Fair Trading who previously approved the TPO code. This is a great example of where the various professional bodies should get together and start lobbying for what is no more than common sense. After all, do solicitors have to display their hourly rate in adverts (I don't mean before being instructed, I mean in the advert)? If not then why are they suggesting Agents should?
Rightmove will not need to charge for an upgrade to the web site, all agents need to do is upload a scan of the fees page as a picture and the job is done. However, this judgement does not say this only applies to web sites. Hyperlinks etc are easy for web sites. It applies to adverts. What about your newspaper or yellow pages adverts? Quite where is the line drawn? In this case the agent had included the deposit, surely this is another element and it would be breaching the ruling not to include the deposit figure in all adverts?
What about the fees that are charged through the tenancy agreement such as writing chasing later rent or a missed move out fee?
Don't misunderstand, I think agents should make the fees right in your face simple, but that does not mean they should go in adverts.
Although consumer rights bodies think this would exert market forces to drive down agent fees, is this really true? If a single agent is instructed to let a property is it not true that regardless of fees the tenant has to rent through that agent. Rented property is, in many areas, in short supply and is not a commodity that the tenant can rent from any agent they choose. They may be forced to use a specific agent based on the property available through that agent. Indeed if all fees were disclosed might not cheaper agents look to raise their fees knowing they would not be loosing any business through such action?
I have no problems with it being a legal/professional body/TPO requirement to state in adverts that fees are payable. However, to include all the fees is simply unworkable if you take it to the logical conclusion. Here is an agent doing more than most (voluntarily signing up to standards) and the enforcers are completely ignoring the worst offenders who won't join any voluntary scheme.
Look at the Which? report out the day before, look at the OFT recommendations for the letting industry out in February, look at the amendment the House of Lords took through last week, all calling for letting agents to be regulated by a body such as TPO. Your Move was signed up to TPO, complied with their code and yet was criticised. Does this mean that all these calls are a waste of time because even existing members of such schemes cannot be trusted? I think not, I think it shows what a ridiculous judgement this is.
UKALA seem to have a handle on this issue.
I don't agree that detailed fee listings should have to be included in adverts. I do however believe that an applicant should be made aware of all fees that may be applicable, once they have registered an enquiry on a property.
Are now putting our fees in each of our property ads on Rightmove - if they complain we will tell them we are abiding by the law.
Quickly point by point:-
No reason anyone should know such a complaint was being considered. The ASA does not publish 'Court lists'
Complainants names are NEVER divulged and even an anonymous complaint has to be investigated if found to have any substance. Not knowing who approached them does not change the ASAs 'duty'.
ARLA has stated it is taking Counsel opinion. This is sensible but it would be amazing if ARLA or any body came out saying it is all hogwash and can safely be ignored - because it can't.
What has deposit money got to do with anything - this is about advertising, fees and transparency not client accounts. Let's stick to a complicated subject.
Right Move - easy they will, if the ruling sticks, have to change their T&Cs and publish fees. Or of course if they remain as arrogant as always can advertise without them and be fined by the ASA.
RM will of course increase fees twice this year - once as usual and once for this one off 'added cost' to them.
The problem is not generic flat fees, or different fees in different areas. The problem is the need to disclose all fees that might become payable at any stage in the process from first meeting a prospective tenant to going to Court.
This is what the OFT has always wanted - a complete tariff list of fees made known in advance of taking any money of anyone and if a fee is subsequently charged that was not on the tariff, or was but at a different level, it cannot be made.
This will be interesting but as usual and assuming it is not withdrawn and abandoned by the ASA (which would mean a massive loss of face) my advice is instead of as usual sopending hours and hours trying to find creative ways of getting around this ruling, instead invest the time wisely in working out how to ccomply with it, difficult and frustrating though that may be.
Don'w aste energy and time venting spleens about how ludicrous this all is, which of course it is.
Some agents are already displaying fees (of a sort and to a limited degree) in their websites. This just strengthens the ASAs position of course.