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Watchdog to Probe Five Issues Involving Agents and Landlords

The Competitioin and Markets Authority is to probe five activities involving letting agents and landlords and their responsibilities to private tenants.

Sarah Cardell, Chief Executive of the CMA, says: “The CMA alone can’t resolve the problems in the UK housing market. But we have a role to play and will do our part to help ensure the private rental and housebuilding markets work better for people and businesses.  

“For private renters, we’re taking action to provide updated guidance for lettings agents so that both tenants and landlords are really clear about their own rights and responsibilities. We’ve also identified areas of concern relating to zero deposit schemes, sham licences, onerous guarantee clauses, and possible unlawful discrimination. These warrant further investigation and we stand ready to take enforcement action if needed."


The CMA's statement this morning says: "While many landlords and letting agents are providing a good service, initial engagement by the CMA heard many complaints raised by stakeholders suggesting that a significant minority are not complying with consumer protection law. 

"To help letting agents understand their obligations, the CMA will update its guidance for lettings professionals. If any letting agency or landlord is found to be in breach of the law, then the CMA does not rule out launching enforcement action.

"Following its initial engagement, the CMA’s investigation will explore the 5 areas highlighted by stakeholder complaints:

​"Zero deposit schemes: These schemes alleviate the need for tenants to come up with a hefty deposit when they enter a tenancy, but the CMA has heard concerns that tenants may be unaware of their liabilities under such schemes, alongside reports of pressure selling and undisclosed commissions earned by letting agents.

"Sham licences: The CMA has been told that there are still landlords who claim that tenants have licences to occupy rather than assured tenancies and who fail to recognise the rights that consumers have under a tenancy.

"Guarantees: The CMA has seen examples of onerous guarantee clauses which impose wide obligations on tenants – such as requiring them to provide extensive evidence of assets. 

"Activity that could constitute unlawful discrimination: This includes, for example, looking at those who advertise properties as not available to housing benefit claimants (i.e. ‘no-DSS’).

"Retirement housing fees: The CMA’s initial engagement also heard concerns around so-called ‘event fees’ charged to vulnerable tenants entering specialist retirement housing. The CMA will review practices in the sector and whether some businesses are taking advantage of elderly consumers."

There will be updated guidance issued to agents by the authority.

The CMA has this morning issued a detailed 37 page interim report on its findings so far and why it has selected these five areas for further investigation.

A key section reads:

A consistent theme from stakeholders is that there is a lack of understanding on the part of consumers and landlords about their rights and obligations. Tenants need to engage early in the letting process with the steps necessary to protect themselves, for example by collecting their own thorough evidence of the condition of rented property and understand how to communicate with their landlord when they think things are going wrong. There is also consensus that tenants find it hard to exert their rights against landlords, despite the existing statutory and contractual protections that are in place. This is a significant shortcoming given the importance of the services supplied to over 5 million households.

We have been told repeatedly that avoiding the escalation of disputes is a very important element of maintaining a good relationship between landlord and tenant. We think revised guidance for lettings agents should help to raise consumer and landlord awareness of their respective rights and responsibilities because within the PRS the following practices, when undertaken by a landlord or letting agent acting as a trader, may amount to a breach of consumer protection law. For example (and highlighting in bold applicable legal standards):

(a) terms in tenancy agreements may be unfair if they purport to make the tenant liable for repairs that it is the landlord’s legal responsibility to carry out;

(b) it may be a misleading action to provide tenants with inaccurate information about their legal rights in relation to the tenancy;

(c) it may be a misleading omission to fail to mention that they receive a commission payment or other benefit for passing work to a third party;

(d) it may be an aggressive practice to use harassment, coercion or undue influence to convince a tenant to agree to certain contract terms, products or services; and

(e) it may be a breach of professional diligence to fail to comply with recognised standards, such as those set out in guidance or codes of practice, for landlords or letting agents.


You can see the full interim report here.

  • icon
    • A W
    • 25 August 2023 09:45 AM

    "Zero deposit schemes: Are pure garbage.

    "Sham licences: A licence is a legally acceptable contract and its use is perfectly fine.

    "Guarantees: You mean doing their due diligence and checking evidence of assets?

    "Activity that could constitute unlawful discrimination: DSS applicants fail on affordability concerns, a perfectly legal form of discrimination.

    "Retirement housing fees: As far as I'm aware an Event Fee is when a retirement home is sold or sublet... seems perfectly reasonable as that wasn't the intended use of the property.

    Looks like the CMA is joining the landlord hate bandwagon... and people wonder why landlords are selling up and leaving the sector.

    Barry X

    @AW - I agree with most of what you've said, especially about the CMA "...joining the landlord hate bandwagon..." (if they weren't on it already).

    Not quite in 100% agreement with you on retirement homes fees though... my still able bodied & impressively independant 89 year old mother lives on her own in a house that has become unsuitable for her - too many stairs, too much work to look after the place - so has finally decided to downsize to a much more convenient & attractive 2 bed flat/apparent in a posh new "retirement village". There are many absolutely excellent things about it but I'm concerned by a few things to do with charges & management of the site/estate, including some of the small print in the lease relating to "deferred fees" (that are in effect Event Fees)... these require an increasingly large percentage of the sale price (or worse still "deemed sale price" if the Freeholder decides you didn't sell it for enough) to be paid to the Freeholder - and it's like Stamp Tax in reverse only potentially even more expensive and unfair! It can hugely affect and limit the resale value and also delay a sale potentially by many months or even a couple of years if no buyer can be found who is willing to accept it.... but meanwhile the grieving family trying to sell the place after their relative died STILL has to pay extremely high service charges for all sorts of things no longer being needed or used by anyone! The Freeholder can't lose but the owner(s) most certainly can... and it's no good trying to sell it cheaply to get rid of it because they've got you there too!

    "Defered Fees" are typically 1% for 1st year (or part) of ownership, then 2% for 2nd (or part) then suddenly jump to 5% for even a day over 3yrs ownership up to 5yrs,then a stonking 10% from 5yrs and 1day and so on.... and on top of that there might be an "admin fee" of 1.5% +vat for selling it, even if you used a local agent instead of their selling team (for which you'd probably have to pay another 2% +vat) and so on.... They rely on subtle emotional manipulation to get away with all this, and making potential buyers feel either guilty or clever (when they are actually being deceived and exploited)... the very newest "villages" with the more reputable developers behind them are starting to moderate some of these very cheeky fees & terms but only to an extent.... I wouldn't mind the CMA looking into them, particularly the older more aggressive ones now blighting many of the earlier retirement homes in the UK (typically between 10 - 15 years old) otherwise stuck with these unfair terms.... especially as the management and facilities of these "villages" often start to get neglected & run down once the developer has finished selling all the units and also finished using that particular "village" to help sell their next one off plan.....

    It would probably be very difficult if not impossible for a developer to sell any other type of new build property with something like that built into it's lease... they've only been getting away with it for retirement homes because
    (a) there was originally such a shortage of them as it was a new concept in the UK that anyone who really wanted one originally had to accept it, and
    (b) it's the unusual situation where the buyer doesn't expect to ever sell it him or her self so they don't need to worry too much (they think, or are told to think) because it will be their children's problem and they can pay for it out of their inheritance!

    Personally I think it both unethical and cruel.


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