Many letting agents will be familiar with the Competition & Markets Authority’s (CMA) guidance for lettings professionals on consumer protection law. This post will concentrate on section 5 of the guide, Marketing property: advertising and providing information to tenants and the recent update on page 49. Although the guidance has been around since 2014 the section on marketing received a small update at the beginning of October.
Section 5 concentrates on proper compliance with consumer law when:
- Marketing properties to prospective tenants; and
- Drawing up property particulars.
It is the agent’s responsibility to ensure that they have all the relevant information they need to advertise a property properly. This means contacting the landlord to obtain all the information a tenant may need and if necessary, making further enquiries where that information is incomplete. It is important that properties are not marketed where the information is known to be or suspected to be incorrect. Where specific features are advertised, such a sea view or parking rights agents should ensure that they verify this information prior to advertising it.
The information provided to tenants must be clear, accurate, and not misleading. The aim of this obligation is to ensure that tenants have all the information required to enable them to make an informed and efficient transactional decision. It is important that material information is therefore not omitted from any advertising.
The guide includes what the CMA consider to be material information and that includes:
- Costs and charges associated with the letting;
- Property characteristics such as location and number and size of rooms;
- Condition of the property including any defects which could affect a tenant’s decision;
- When will the property be available; and
- Any restrictions on the type of tenant, such as the requirement to have a guarantor or a mortgage or insurance term which prevents renting to a tenant on benefits. See further details below.
It is important that this information is given to a tenant whether or not it is requested at the outset. Any questions that the tenant may then raise in response should be responded to accurately and as fully as possible. Web links which obscure information should not be used, and information updated if and when necessary. Furthermore, information which an agent may discover is incorrect should be corrected promptly.
On 3 October this guide was updated in respect of the material information a tenant must be given where there is restriction to a letting. The CMA guide now states that any restriction on letting a property to a prospective tenant should be advertised from the outset. This means that if a landlord has an insurance or mortgage condition which prevents letting a property to a prospective tenant in receipt of benefits that information should be advertised from the outset. However, whilst the CMA acknowledges that such a restriction may exist it also makes clear that the existence of such a restriction for a specific property does not excuse or justify a blanket ban on tenants who are in receipt of benefits. The CMA is trying to walk a bit of a tightrope here between ensuring that tenants are informed of restrictions that will affect the availability of property for them and endorsing “no DSS” advertising.
Costs and Charges
This information should be full therefore inclusive of VAT, accurate, clear, and not misleading. Tenants should also understand clearly what service they will be receiving for the fees charged. Its rather disconcerting that this guide does not appear to have been updated following the instruction of the Tenant Fees Act. It currently states that only fees that a tenant is made aware of at the outset and are included in the tenancy agreement should be charged. That is clearly no longer the case so agents should bear that in mind when reviewing the guide or asking new members of staff to familiarise themselves with it.
The guide discusses non-optional, optional, variable and future contingent fees. Of course, these are all now subject to the Tenant Fees Act and as such many are no longer permitted. Where some fees are permitted, such as where a tenant is in default, certain restrictions apply, and evidence of the actual cost incurred will need to be provided prior to making a claim.
It is disappointing to note that whilst the CMA saw fit to make a small update to the guide in relation to tenants on benefits it did not take the opportunity to carry out a full review. Especially in the light of recent legislation. The guide is a useful source for those being introduced to the sector however care should be taken because of the CMA’s failure to update the guide as and when new legislation is introduced.
Published 24 October 2019