New Fee Transparency Rules for Lettings Agents
In recent years there has been a range of new legislation affecting the activities of lettings and property management agents. Last year it became compulsory for agents to join a redress scheme. Now we have new legislation requiring agents to provide clear information about the fees they charge.
What is the new duty regarding fees?
From 27 May 2015, when section 83 of the Consumer Rights Act 2015 came into force, lettings and property management agents must publicise a list of the fees they charge to landlords and tenants.
The fee tariff must be displayed prominently at the agent’s premises and must be published on the agent’s website (if the agent has a website).
What information must be given?
The list of fees must be complete and clearly explained. It must include all fees, charges and penalties payable to the agent by the landlord or tenant. This does not include the rent or any tenancy deposit paid by the tenant.
Amounts should be expressed inclusive of VAT. If the exact amount cannot be determined, the agent must give details of how the amount is calculated. For example, the agent’s management fee may be a specified percentage of the monthly rent.
If an agent holds money on behalf of landlords or tenants, the fee tariff must also include a statement as to whether the agent is a member of a client money protection scheme. This is a scheme under which compensation is paid if an agent does not repay money it has been holding.
If the agent is required by law to belong to a redress scheme, the name of the redress scheme must be included in the fee tariff document.
The fee transparency requirements are enforced by local authority trading standards departments. There are financial penalties up to £5,000 for agents who do not comply with the rules.
Our new Lettings Agency Fee List for Landlords and Tenants can be used to help your lettings or property management agency comply with these new obligations. Our template contains examples of services an agent might provide. The wording can be adapted to meet the needs of your particular business.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.