Letting agents across England have been accused of potentially breaching consumer law by demanding deposits before tenants even see a contract.
The accusation comes from consumer body Which?, following the use of undercover ‘renters’ who visited 20 letting agents across England, posing as prospective tenants and seeking to rent a property.
The mystery shoppers asked to see a copy of the terms and conditions they would be signing up to - but one in four agents failed to provide a contract.
Five letting agents - including a branch of Connells - required a commitment or a holding deposit before the tenants could view a sample letting agreement. “Connells told us that tenancy agreements should be freely available on request” says Which?
In some cases, the letting agent also requested a reference check to be paid for and completed before the prospective tenants saw the terms of the contract.
Which? claims that demanding a financial commitment before tenants can view the terms and conditions could fall foul of consumer law by trapping tenants in contracts they haven’t had an opportunity to review.
It says three of the letting agents that required a commitment or deposit before tenants could see a contract are members of the ARLA.
One letting agent in Leeds requested that the tenant visit their office to read the tenancy agreement. Whilst the agreement was accessible in this case, this practice could deter or place undue pressure on the tenant to read their contract quickly.
A report published last year by Which? revealed only two-thirds (65 per cent) of tenants read their letting contract in full before signing it. Nearly two-thirds (64 per cent) of tenants who used an agent during their searching process experienced problems, such as having to make decisions without enough information.
In 13 tenancy agreements collated and inspected from other letting agents, Which? says it found evidence of potentially unfair terms and clauses that could be in breach of the Consumer Rights Act.
In seven contracts analysed, tenants were required to seek permission or notify their letting agent or landlord before switching utility supplier, which may prohibit their right to choose for themselves and could mean they are stuck on rip-off tariffs.
Which? claims that what it calls “unclear language” could confuse tenants in at least eight contracts. These agreements included vague descriptions that tenants may be required to pay a “reasonable” amount or “a fair proportion of” additional charges.
The organisation says that without adequate explanation of what those charges would be for or what constituted “reasonable” or “a fair proportion of” tenants could risk being hit with extortionate fees during their tenancy.
All the contracts reviewed referenced statutes and legislation that were not attached or explained further within the agreement putting tenants, most of whom may not be experts in property law, at an unfair disadvantage.
In all but two agreements, Which? found a clause that allowed landlords or authorised workmen access to the property without prior consent, as long as 24 hours notice was given. It was not always specified that this notice should be in writing and these agreements gave no indication that landlords and letting agents would take their tenant’s objections into account.
Which? even found a problem in a template contract from the Ministry for Housing, Communities & Local Government. The consumer body believes that tenants’ rights to enjoy exclusive possession of their homes could be made clearer and they should be empowered to push back if landlords seek non-urgent access at inconvenient times.
Now Which? is calling on the Competition and Mergers Authority to investigate further issues relating to practices and tenancy terms and conditions in the rental sector and to take action where needed.
“The government must also move forward with introducing a mandatory code of practice for letting agents that is legally enforceable and ensures all agents are held to an agreed set of professional standards” says Which?
“It is outrageous that some agents are demanding cash up front before tenants are even shown a contract - committing them to agreements before they know what they're signing up to” says a spokeswoman.
ARLA has responded to the accusations, with chief executive David Cox saying: “There is currently no legal requirement in England or Wales to have a tenancy agreement, and as legal statute overrides contract, any unreasonable terms in a contract would be unenforceable in a court of law.
“As such, we would question the suggestion that agents are breaching consumer protection law. We have long been advocating for a legal requirement to have a written tenancy agreement, as they have in Scotland, to avoid many of the misunderstandings cited in this research.
“Which? implies that even MHCLG’s template tenancy agreement is in breach of their best practice; this demonstrates just how complex the issue around terms and conditions can be.”
In terms of the methodology of the survey, Which? says it sent mystery shoppers to 20 letting agents across England; using an external legal firm, Which? inspected each tenancy agreement “and found evidence of potentially unfair, misleading and confusing terms or practices.”