The advertising watchdog has ruled that letting agencies must display their charges when advertising.
The Advertising Standards Authority (ASA) has ordered letting agents to display their compulsory fees and charges in all display advertising and property listings. This follows an ASA ruling criticising a misleading advert placed by a leading estate agency.
Your Move makes a wrong move
The ASA is cracking down on letting agents after it ruled against estate agency Your Move over a listing for a house in Surbiton, Surrey placed on property website Rightmove. The ASA decided that Your Move had broken the advertising code by not making clear in its advertising that a mandatory administration fee would be added to the quoted rent.
As a result, all letting agents must now clearly display all non-optional fees and charges in advertisements, or state that these additional fees and charges have been excluded from quotes. Failure to follow these guidelines will be ruled as treating potential tenants unfairly, opening the way for the ASA to ban unfair ads and fine persistent offenders.
As well as including this information in specific advertisements, letting agents must also display these details in all their publicity material and marketing literature. If fees cannot be worked out in advance, as they are based on individual circumstances, then potential tenants must be advised of this and given enough information to establish how fees will be applied.
This ban on hidden fees will be particularly good news to Brits at the low end of the income scale, such as students and young adults. Many of these people are shocked when they discover the host of hidden fees lurking in letting agents' small print.
Mystery shopping exposes problems
Last week Which? magazine unveiled the results of its latest mystery-shopping survey of letting agents. The consumer champion reviewed four leading letting agencies across London: Barnard Marcus, Foxtons, Martin & Co and Your Move.
Not one of these major firms included information about fees on any of its property listings, or when potential tenants registered on their websites. Clearly, agencies keep these charges hidden until the last minute, when tenants are desperate to move in and so make less fuss over fees.
Which? found that the typical mandatory 'administration and referencing fee' charged by these four firms is £310, with the highest coming in at £420. In some cases, extra check-in and check-out fees pushed this up to £600.
Overall, Which? claims that tenants are paying £175 million a year in agency fees.
Tough times for tenants
Just last month, the Office of Fair Trading (OFT) recommended that the coalition government draft new legislation covering lettings agents, as we covered in New letting agents laws needed. As well as improving the rights of tenants and landlords, this would require agents to provide a full list of fees before tenants sign rental agreements.
For some, this news can't come too soon, because the housing boom of 1995 to 2007 priced millions of Brits out of the property market. Even after the property crash of 2008/09, higher lending standards prevent many first-time buyers from reaching for the first rung of the property ladder, starved by an ongoing 'mortgage famine'.
As a result, more than 3.6 households in Britain are now privately rented -- more than double the 1.6 million households renting in 1999. In addition, rents have risen by almost a sixth (15%) in the past three years, adding £100 to typical monthly rents.
The 2011 Census revealed that more than a third (36%) of Brits now rent their homes, either from private landlords, housing associations or local councils. In the previous 2010 Census, this figure was just 31%, so there has been a strong push towards renting rather than buying.
What's more, with the market for buy-to-let lending taking off last year, the number of private tenants is sure to increase yet further. So it is high time that letting agents and other participants in this lucrative market started treating tenants fairly!
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