Agents beware – failure to show letting fees is resulting in penalties being issued all over country

The obligation to display your letting agency fees on your website and within branches has been a requirement for almost two years now, through section 83 of the Consumer Rights Act in 2015.

Amazingly, a substantial minority of agents are still not complying.

There are some who are still unaware of the obligation and that is quite worrying in itself. There are some who know about the requirement, but refuse to comply. There are some that partially comply, by displaying applicant/tenant fees, but refuse to display landlord fees.

I have heard all kinds of excuses from agents as to why they are not doing it, but not one of your excuses will hold water. We all know the real reason – you don’t want your competition to know what fees you are charging landlords!

Basically, all your fees to landlords, applicants and tenants must be displayed. There is no “due diligence” argument you can put forward either, because it is a statutory obligation and any failure leaves you open to action by Trading Standards.

There have been no prosecutions through the courts for breaches and so you might think “Why bother”.

Well, you should bother, because enforcement of this obligation is far simpler for Trading Standards than enforcement of many other obligations. Plus it is financially beneficial to local authorities for them to enforce the obligation.

I said two years ago that agents should be wary, because it wouldn’t take local authorities too long to work out the benefits of positive enforcement.

Officers don’t need to go through the hoops and over the hurdles for issuing summonses – they simply identify the lack of a fees list and issue a Penalty Notice. The process is very straightforward and they can issue penalties of up to £5,000. In fact, the government has made it clear that the £5,000 figure is the default figure and that a lower penalty should only be considered if the enforcement authority is satisfied that there are extenuating circumstances. What these extenuating circumstances might be is anyone’s guess, but to date I am not aware of any agent that has successfully argued the point!

Add to this the fact that Trading Standards retain the penalty money to spend as they see fit and you can see that it is a no brainer for them.

Well, it has taken them a while, but they have seen the light and penalty notices are now being issued around the country. Reading, Milton Keynes, Thurrock, York, Camden … and more.

My advice to you is to check now to make sure you are displaying your fees correctly to avoid these penalties. A token effort by displaying some fees will not be enough. Make sure your branch display is ‘likely to be seen’ by consumers entering the branch and that the fees are displayed somewhere on your website.

The display must show ALL the fees you may impose on landlords, applicants and tenants and include VAT in the figures and percentages you quote. You must explain in the display what services you supply for the fee. It will not suffice to simply state “Application Fee – £150”. You must outline what you will do for £150.

And I am afraid penalty notices are not just confined to fee display breaches. Local authorities can issue them for any of the following, although the penalties vary –

  • Failure to be registered with an Ombudsman  or redress scheme;
  • Displaying boards illegally;
  • Not removing boards at the correct time;
  • Adding incorrect statements to boards;
  • Failure to obtain an EPC.

This enforcement route is the way most new compliance legislation will go, and so compliance becomes far more important.

* David Beaumont, a former Trading Standards officer who has been advising on compliance for agents for many years, is running EYE’s newly launched compliance helpline. This is absolutely free and is exclusive to our subscribers, whether your query is to do with sales or lettings. The number to call is 0161 727 0798.

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8 Comments

  1. Chris Wood

    Good news for the many of us who obey the law but, with major companies seemingly exempting themselves from prosecution in some cases and TSOs’ woefully underfunded, I suspect it will be a few easy target ‘little’ companies that will be the ones who will be made the examples of.

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  2. Will

    Another money spinner for local authorities.  It is fundamentally wrong that any enforcement body should retain money made from enforcement as it gives an unsatisfactory incentive.  Not all local authorities sufficient integrity and will do anything for more money in their coffers.

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    1. AgencyInsider

      Sorry Will, I can’t agree. It is really very simple. Comply with the law and they can’t touch you.

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      1. Will

        AgencyInsider – I also don’t have a problem in everyone playing by the same rules but I do have problems with things like Property Licensing etc where councils use it as a fund raiser and this is another opportunity for certain councils.  I think it is poor practise for those who  police such matters to benefit from the fines – it unduly incentivises excessive enforcement rather than helping those who might unintentionally deviate from the straight route. The problems have been seen with parking fines being incentivised. Lets face it we all break the law sometimes without knowing the law exists (and yes I know that is no defense) but £5000 fines is excessive as a penalty. Fines into a central government fund and I would have less of a problem with it.

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  3. Eric Walker

    To reinforce David’s wise counsel, we had an office fined last year. They did not intend to flout the Law and have always been compliant.

    The circumstances were that they were being redecorated and displays were removed for one day whilst the walls were painted.  Nevertheless, Trading Standards said there was no room for mitigation and if you trade, you must display fees. This resulted in a fine of £5000 which, in fairness, was reduced on appeal to around £1250. (I assume this included VAT, but they didn’t specify 🙂 )

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    1. Ding Dong

      Really Eric, i think the legislation states promintely displayed in office, so in theory can be just left on a desk.
      Name the company and the council please? 
       

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      1. Will

        Must also be on your web site  here is s83
        83Duty of letting agents to publicise fees etc(1)A letting agent must, in accordance with this section, publicise details of the agent’s relevant fees.(2)The agent must display a list of the fees—(a)at each of the agent’s premises at which the agent deals face-to-face with persons using or proposing to use services to which the fees relate, and(b)at a place in each of those premises at which the list is likely to be seen by such persons.(3)The agent must publish a list of the fees on the agent’s website (if it has a website).(4)A list of fees displayed or published in accordance with subsection (2) or (3) must include—(a)a description of each fee that is sufficient to enable a person who is liable to pay it to understand the service or cost that is covered by the fee or the purpose for which it is imposed (as the case may be),(b)in the case of a fee which tenants are liable to pay, an indication of whether the fee relates to each dwelling-house or each tenant under a tenancy of the dwelling-house, and(c)the amount of each fee inclusive of any applicable tax or, where the amount of a fee cannot reasonably be determined in advance, a description of how that fee is calculated.(5)Subsections (6) and (7) apply to a letting agent engaging in letting agency or property management work in relation to dwelling-houses in England.(6)If the agent holds money on behalf of persons to whom the agent provides services as part of that work, the duty imposed on the agent by subsection (2) or (3) includes a duty to display or publish, with the list of fees, a statement of whether the agent is a member of a client money protection scheme.(7)If the agent is required to be a member of a redress scheme for dealing with complaints in connection with that work, the duty imposed on the agent by subsection (2) or (3) includes a duty to display or publish, with the list of fees, a statement—(a)that indicates that the agent is a member of a redress scheme, and(b)that gives the name of the scheme.(8)The appropriate national authority may by regulations specify—(a)other ways in which a letting agent must publicise details of the relevant fees charged by the agent or (where applicable) a statement within subsection (6) or (7);(b)the details that must be given of fees publicised in that way.(9)In this section—    “client money protection scheme” means a scheme which enables a person on whose behalf a letting agent holds money to be compensated if all or part of that money is not repaid to that person in circumstances where the scheme applies;    “redress scheme” means a redress scheme for which provision is made by order under section 83 or 84 of the Enterprise and Regulatory Reform Act 2013.

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  4. DavidCompliance

    The reality is that penalty notices do work on all fronts, which means legislation should be enforced  – (1) they reduce the cost of enforcement down from thousands of pounds to a few hundred pounds, (2) the risk of losing a prosecution is eliminated, (3) Trading Standards get to retain the money.

    As I said in the article it is really a no brainer, but the problem is that  some authorities are on the ball and others not and so inconsistency will continue.

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