Agents told to consider displaying deposits as well as fees

The clock is now ticking for letting agents to ensure that all their adverts comply with the latest guidance on showing fees charged to tenants.

The deadline for compliance is November 1 and the advertising watchdog said it will be monitoring agents’ advertising across the media from then on. It is understood it already has a list of agents compiled from earlier this year and whose adverts did not mention fees.

Consumer organisation Which? also said it will be “watching carefully”.

Agents have been told they must “prominently” display the fees, and stick to both the spirit and letter of the new rules.

Agents will also have to grapple with the Advertising Standards Authority’s suggestion that they should show deposits in their adverts, and how these are calculated.

The new guidance does not, in fact, apply to deposits, but the organisation said: “The ASA ruling does not cover refundable deposits, which we categorise as something separate from a non-optional fee. 

“However, landlords and lettings agents are required, under the Consumer Protection Regulations (CPRs), to provide all material information to enable average consumers to make informed decisions.

“Material information is likely to include more than just the non-optional fees and charges, but also other financial information such as refundable deposits. We therefore encourage landlords and agents to include a note of the deposit and how it is calculated in their advertising.”

The new guidance was issued some six months after the ASA banned an advert by Your Move where a property was advertised with its monthly rent, but without any fees showing.

The ASA said the new rules “will help prospective tenants to make more informed choices and avoid being misled”.
 
It went on: “Non-optional fees, such as administration fees, charges for inventories and reference checks, can add a significant amount to the cost of moving into a property. It’s unfair if these costs are not clearly stated up-front.

“Residential lettings agents that aren’t already doing so must now make changes to ensure non-optional fees are clear on their websites, and in other media. 
 
“In practice this means that non-optional fees that can be calculated in advance will be included with the quoted asking rent. So, when an agent charges a non-optional fee that does not change according to individual circumstances, eg a fixed admin fee of £150 per tenant, ads should state “£1500pcm + £150 admin fee per tenant” or similar.
 
“If, however, the non-optional fees and charges cannot be calculated in advance, and are excluded from quoted prices, the advertiser must make this clear in the ad, and provide enough information to allow consumers to establish easily how further charges will be calculated.
 
“Where the advertiser is limited for space, for example in a tweet or in a sponsored search, they will provide information on additional fees through a prominent statement on either the website, a link or via a pop-up.

“Property portals will make clear when additional fees may apply by inserting a hyperlinked ‘fees apply’ statement, which will link to general information about the range of fees that could apply.”
 
ASA chief executive Guy Parker said: “Renting is a big financial commitment and it’s simply not fair to hide extra charges. This practice hits tenants in the pocket at a time when they need every penny they’ve got. 

“But this isn’t just an important win for them. It will also benefit letting agents and private landlords because their customers will trust them more when they’re up-front about non-optional fees.”

While the new rules do not apply to fees charged to landlords, or to tenants charged during tenancies or to renewals, the advertising watchdog looks as though it will have little patience with agents who do not make every attempt to comply in full by the deadline.

The ASA warned: “Agents should comply with both the letter and the spirit of the ruling: giving a fee a different name, grouping fees together and calling them something else, using generic statements like ‘see terms and conditions’, hiding the key information in small print or otherwise attempting to circumvent the spirit of the ruling, will not help achieve compliance.”

Property ombudsman Christopher Hamer said: “The ASA ruling is of great significance to the lettings industry.

“The TPO Code of Practice has always required that fees and charges are actively flagged to tenants, but this latest ruling is very specific about when and how this should be done.

“Disclosure of fees so that prospective tenants understand at the earliest opportunity what costs they will incur is important. The ASA ruling now provides consistency for agents and tenants as to how the fees will be displayed in a relevant and meaningful way.”

Which? executive director Richard Lloyd said: “Our investigation this year exposed letting agents acting unlawfully by not disclosing fees up-front, so we are pleased to see the ASA announcing new rules.

“Renting is now the only housing option for millions so we’ll be watching carefully to ensure all agents and websites are fully transparent about their fees.”

Ian Potter, managing director of ARLA, said: “ARLA has, for a long time, said that all letting agents should be clear and upfront about the fees they charge, and the services associated with those fees.

“We’ve worked closely with CAP and the ASA on the development of these guidelines, so the deadline and associated requirements will not come as a surprise to our members.
 
“As the private rental sector continues to grow, transparency around fees is vital to ensuring the letting industry is trusted by landlords and tenants alike. For this reason, transparency is part of our code of conduct and any member that doesn’t adhere faces investigation by either the relevant ombudsman or disciplinary action by ARLA.”