Letting agents not upfront about fees

Following an investigation Which? believes that major letting agents are acting unlawfully by not being upfront about the fees charged to clients

We sent mystery shoppers posing as potential tenants to four different London branches of each of Foxtons, Barnard Marcus, Martin & Co and Your Move. We believe that the fees tenants can expect to pay are not disclosed early enough. This means renters face unexpected charges, are unable to properly compare prices and don’t always know what they are signing up to until it is too late.

In our snapshot research we found:

  • None of the letting agents provided information about fees in any property listings on their website, on Rightmove.co.uk or after tenants had registered online.
  • Only one tenant (at a Foxtons’ branch) was proactively given fee information when they registered in branch or called to arrange a viewing
  • No tenant was provided with a written schedule of charges.
  • In some cases tenants were either not given fee information even when they asked, or they were not given the complete details.

Which? believes that by failing to disclose fees upfront or during their first contact with a customer, letting agents are breaching consumer law by not providing material information in a manner that is clear and timely. We have written to the companies to share our findings, demand improvements, and remind them of their legal responsibilities under the Consumer Protection from Unfair Trading Regulations (CPRs).

Richard Lloyd, executive director at Which? said:

“Renting is now the only housing option for millions, and with many households struggling to pay rent and bills, it is vital that letting agents are upfront about expensive fees in advance. People should know all the costs before they invest time and effort in viewings. Drip feeding fees is unfair and a major barrier to people comparing agents and properties.

“Despite its dramatic growth, there is also an alarming lack of consumer protection and redress in the rental sector. Tenants deserve much better.”

To improve the letting market for consumers, Which? is calling for:

·        An end to hidden fees – information about the fees tenants can expect to pay must be provided up-front, in adverts, on websites or at the first point of contact with an agent, so that people know what they are signing up to and more easily shop around.

·        Increased consumer protection and redress – renters must be given the same legal protections as people buying and selling property and letting agents should be covered by the same legislation as estate agents.

Which? supports an amendment to the Enterprise and Regulatory Reform Bill, expected to be debated in the House of Lords on 6 March 2013, which would require all letting agents to sign up to a redress scheme, as well as giving the Office of Fair Trading the power to ban lettings agents that break the rules.

Our research found that the average cost for mandatory administration and referencing fees across all agents was £310, and the highest was £420. Some tenants could also face check-in and check-out fees, bringing the total closer to £600.

As well as high and unexpected fees, previous research from Which? found widespread poor practice among some letting agents, dissatisfied tenants and poor consumer protection. The report also estimated that tenants are paying around £175 million in agent fees annually, and that not being able to shop around could be costing them as much as £76 million.

The private rented sector accounts for 4.7 million UK households with two-thirds of all private tenancies involving an agent. London accounts for around 20% of the total UK lettings market, which the Property Ombudsman estimates to be worth around £1 billion annually.

Notes to Editors

1               Mystery shopping was undertaken in February 2013 across London offices of Foxtons, Barnard Marcus, Martin & Co and Your Move. Foxtons branches: Camden, Wimbledon, Pinner and Blackheath. Barnard Marcus branches: Streatham, South Croydon, Sutton and Covent Garden. Martin & Co branches: Crystal Palace, Camden, Sutton and Ruislip. Your Move branches: Camden, Sutton, Beckenham and Bromley.

2               Which? believes that by failing to disclose fees upfront or during their first contact with a customer, agents are providing material information to consumers ‘in a manner that is unclear and untimely,’ which breaches the Consumer Protection from Unfair Trading Regulations 2008 (CPRs).

3               Researchers asked about fees for a one bedroom property with one adult on the tenancy. They called the agents, looked on their websites, called to arrange a visit, emailed to register, went into the agents to register and looked on agent adverts on Rightmove.

4               Estate agents are required to join a complaints scheme by the Consumers, Estate Agent and Redress Act 2007, but letting and managing agents are not.

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