Tenant Fees Are Not Being Displayed on Adverts for Let Property

Tenants in England and Wales are as in the dark about big letting fees as they ever were says David Lawrenson, founder of private rented sector consultancy, LettingFocus.com.

He says, the changes in the law in 2015 have comprehensively missed the target.

Well it has been law for about a year now (under the Consumer Rights Act 2015, see note 1), but tenant fees are still not being displayed on most of the adverts for rented accommodation that tenants will actually see.

This matters because many tenants are still routinely charged hundreds of pounds in “admin” and other fees by letting agents.

We think that in many cases they won’t know about these fees until the eleventh hour, when they are about to sign a tenancy agreement.

Basically, the law is not working because it was designed badly, in that it fails to take account of the way that most tenants now search for rented accommodation – which is by using the portals.

Tenant Fees Are Not Being Displayed on Adverts for Let Property

Why is this law not working?

It is not working because it only applies to adverts on letting (and managing agents) websites.

But these days, the vast majority of tenants will perform a search from their desk or hand-held that will begin and end at the big “portals”, the main ones being Zoopla and Rightmove.

They won’t visit the letting agents own websites and they won’t go into a branch, until they are about to sign the tenancy contract.

According to James Davis at online letting agent, UPAD, over 90% of tenants will just search online.

The letting agents know this too – which is why they pay over huge sums to the big portals to get their adverts for rented accommodation on the portals where they will actually be seen by tenants looking to rent a property.  

Tenant Fees at the Property Portals

So what information about fees do tenants see when they look at an advert for rented property at one of the big portals?

ZOOPLA

At Zoopla, we found lots of adverts where there is no information about fees at all. Zoopla seems to pass the buck to the letting agents. A Zoopla spokesman said….

“We make it very easy for letting agents to display their own fees on the site in a “fees apply” pop-up beside the price. 

 

When you do not see a fees apply link on the Zoopla listing you may find the fees details in the body copy of the listing. This is because the software that the agent is using may not directly support sending letting fees in a specific field in their data upload.”

I think the key word in that statement is “may find fee details”. In lots of cases, you cannot find any information about fees.

RIGHTMOVE

At Rightmove, you’ll see a “Fees Apply” box – but the amount of information on fees provided in each advert varies and can be very limited, other than stating that a range of fees may be charged.

Rightmove told us they try to police this – and ensure that fees are shown. But it seems, like Zoopla, they like to leave it up to the letting agents to decide whether to supply them with information on tenant fees or not.

At a typical Rightmove advert listing, we found this statement about fees, (when one clicks the box which says “fees apply”)…

“The asking rent does not include letting fees. Depending on your circumstances and the property you select, the letting agent may also apply the following up front fees…” (This is followed by a long list of possible fees).

So, fairly non-committal it would seem.

What is Wrong and What Should Happen

Under the law, the onus is only on the letting agent to display their tenant fees in their offices and on their websites.

But many tenants never visit either, (though some may go into a branch when they are about to sign a tenancy agreement).

This means they still have to seek out the fees, presumably by asking the letting agent what the fees are. Now, call me a cynic, but I’ll bet there are agents out there who are not exactly busily offering up this information early on in the process to time-starved tenants, who are desperately seeking rented accommodation.

So, on fees, tenants are as at risk of finding out about fees very late in the day, when they will already have invested much time and effort in their search that they may feel unable to back out.

What should happen is that the legal responsibility for showing fees should have been placed on the portals to display the correct fees in full via one click from their website.

I don’t blame the portals for their role in this. If one of them was to insist on agents always showing fees, the agents may just stop working with them. (New portal, On The Market, has already hugely increased the risk of agents opting to choose from either Zoopla or Rightmove. See Note 3).

What is required is a change in the law to include “any body concerned with the letting of private rented accommodation” – which would, of course, include the portals within the scope of this law. This would focus the portals on ensuring correct fees are always shown.

Landlords who use an online letting agent to get their property on a portal, and then do the rest of the tenant-find themselves should make it clear what their fees are – usually their fees will be a lot lower than many “full service” high street letting agents charge. Landlords should make it clear they don’t charge like the more rapacious letting agents do.

But I expect the government will soon typically over-react and ban all fees charged to tenants – which would be the wrong and unnecessary policy.

 

Notes:

Note 1: These notes are for the Property Ombudsman’s website.

https://www.tpos.co.uk/members/news-articles/item/the-consumer-rights-act-2015

“From 27 May 2015 new provisions in the Consumer Rights Act 2015 come into force which will impact on all English and Welsh letting and management agents.

Section 83 of the Act relates to the provision of fees, charges and/or penalties and is intended to create full transparency to enable consumers (both landlords and tenants) to ascertain exactly how much they will be required to pay before they enter into any form of contract or agreement.

Section 83 of the Act can be found here.

Act Summary

From 27 May 2015 letting and management agents will be required to display a list of all fees, charges or penalties (however expressed) payable by landlords and tenants for any letting agency or property management service. This includes any additional fees, charges or penalties which may be incurred during a tenancy as well as fees, charges and penalties which are referenced in Tenancy Agreements and in Terms of Business.”

Note 2: From the Guardian re how On The Market is forcing agents to choose between Zoopla and Rightmove:

http://www.theguardian.com/money/2015/jan/26/property-site-onthemarket-rightmove-zoopla-selling-houses

Note 3: In Scotland, the law is different. Letting agents and landlords cannot charge fees to tenants.

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One comment

  • We used to use an agent but now let and manage ourselves, the main driver for that was control of maintenance costs and standards.

    However, we also became aware of the aggregate charges being levied on both us AND tenants, I recently found a receipt for £600 that a single tenant had been charged against a monthly rent of £1000.

    We now DO charge fees ourselves but clearly broken down into specific elements and our tarrif is complete, clear, and clearly displayed on our only available web profile, our own basic website.

    There is no logic whereby the FSA/FCA has pushed for explicit fees and the abolition of adviser’s commission while housing seems to be moving toward total opacity and where unitary rents lead to “high-maintenance” tenants being cross subsidised by low maintenance tenants?

    Put simply, rent is for the use of the asset, charges should be for easily identified services (if you don’t need the service – you don’t incur the charge)

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