Tenants hit by unfair practices which could breach consumer law, Which? investigation finds

Letting agents across England are using potentially unfair terms and conditions – and may be breaching consumer law by demanding deposits before letting renters even see a contract, a Which? investigation has found.

The consumer champion visited 20 letting agents across England, posing as prospective tenants and seeking to rent a property.

Which?’s 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, which has almost 200 branches nationwide, 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.

In some cases, the letting agent also requested a reference check to be paid for and completed before they saw the terms of the contract.

Letting agents have a duty by law to provide prospective tenants with the key information they need to make an informed decision about the letting, and Which? believes 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.

Worryingly, three of the letting agents that required a commitment or deposit before tenants could see a contract are members of the Association of Residential Letting Agents (ARLA), a leading membership body for the letting agent sector.

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%) of tenants read their letting contract in full before signing it. Nearly two-thirds (64%) 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? 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? also found evidence of unclear language that 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.

But 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.

A template contract from the Ministry for Housing, Communities & Local Government included some examples of good practice, such as guidance notes explaining legal jargon. It also featured a note outlining how tenants have a right to quiet enjoyment of a property even if landlords provide 24 hours’ notice, so if visits are very frequent or do not have a good reason behind them, the landlord might be breaching those rights.

However, even in that case, Which? 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.

Which? is concerned many renters could be rushed into signing contracts they don’t fully understand and that contain potentially unfair clauses as they may feel pressured to secure a property quickly, particularly in areas where demand is high.

According to the latest results from the Which? Consumer Insight Tracker, just one in 10 (10%) people trust estate and letting agents, meaning only car dealers are trusted less.

Which? has heard complaints from tenants who had landlords that entered their property without prior notice or faced excessive charges for minor repair work.

The findings of this investigation suggest tenants cannot always trust letting agents to act in their best interests, and with some agencies apparently skirting the law, the consumer champion is calling on the CMA 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.

Natalie Hitchins, Head of Home Products and Services, said:

“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.

“The results of this Which? investigation show how vital it is for the Government to introduce a legally enforceable code of practice to ensure all letting agents act in a professional manner.

“The CMA must also investigate the sector and take action where needed to tackle unfair practices and contract terms.”

Notes to editor

• Which? sent mystery shoppers to 20 letting agents across England to understand whether tenants could easily access a tenancy agreement without a financial commitment. Using an external legal firm, Which? also inspected each tenancy agreement and found evidence of potentially unfair, misleading and confusing terms or practices.

• Of the 20 agents mystery shopped, thirteen agreements were collated including two sourced online. Six agents did not provide agreements and three agents were discounted, as the property was no longer available or the agent provided the landlord’s agreement. Which? also reviewed the template provided by the  Ministry for Housing, Communities & Local Government.

• The full report on the private rented sector can be found here: Reform of the private rented sector: the consumer view.

• Which? Consumer Insight Tracker can be found here. Populus, on behalf of Which?, surveyed 2130 UK adults online between 20th – 21st March 2019. The data were weighted to be demographically representative of the UK population.

• Please find a full list of the investigation findings below:

• Further details on each letting agent can be found below:

Rights of Reply

• Connells said tenancy agreements are freely available on request and do not insist a deposit is paid as a condition of providing the draft.

• Chappell & Matthew told us tenants are often given more than 24 hours notices of an intended visit by the landlord, letting agent or contractor and their staff understand the importance of not accessing a property if the tenant has refused access except in emergencies. They also said their tenancy agreements are designed to be clear and simple and confirms tenants should seek legal advice before signing if they are unclear about anything.

• Daniel James said they used the standard agreement that has been drawn up by a third-party, and has been classed by the now-defunct Office of Fair Trading as one of the fairest agreements.

• Hogans Estate and Letting denied their conduct was in “breach of the Consumer Protection from Unfair Trading Regulation”.

• Linley Simpon and Oakman Estate Agents told us they had robust policies in place with regards to deposits and issuing tenancy agreements to prospective tenants, so will be investigating further.

• Reed Rains and Temple Homes said they will review their tenancy agreement with their solicitor and will take Which?’s concerns into consideration when they next update their tenancy agreement.

• Madina Property Services did not provide a comment for publication.

Press Release