Agents have just days to disclose referral fees as compliance requirements are stepped up

Among key changes amounting to an overhaul of the industry, agents will have to explain and display referral fees as from next weekend.

They must disclose their referral fees to consumers, making “previously hidden costs open and transparent”.

Agents will also have to be upfront about sales methods they may deploy, such as the modern method of auction, explaining both the pros and cons.

Agents will have to explain terms to landlords such as “guaranteed rent”.

There is also a requirement to be clear about situations where dual fees could be charged to consumers.

Additionally, agents are being told that they must clearly explain both the advantages and disadvantages of tenancy deposit replacement products.

All are among a number of changes to be embodied in The Property Ombudsman Codes of Practice.

Details were released only yesterday evening, only days ahead of what TPO itself says are “substantial” changes.

TPO said that as of next Saturday, June 1, its updated Codes of Practice will become effective.

The updates also incorporate the tenancy fees ban, plus mandatory Client Money Protection insurance.

The updated Codes of Practice are here:

https://www.tpos.co.uk/members/codes-guidance

Key revisions to TPO’s Sales Code include:

Leasehold, commonhold and managed freehold disclosure: Agents’ obligations to request and divulge information relating to leasehold have been widened. If material information on the tenure is not known, this should be made clear to the consumer at the outset of marketing.

Dual fees: In relation to the potential risk to sellers of being charged two commission fees when they sell their property, transparency obligations have been updated and expanded, together with a definition of effective introduction in the glossary.

Key revisions to the Lettings Code include:

England only: TPO Code of Practice for Residential Letting Agents is now an England only Code. The current 2016 Lettings Code will continue to apply to Wales and Northern Ireland until such time as Welsh tenant fee legislation becomes effective.

Tenant fees: The Code reflects changes imposed on agents by the Tenant Fee Act 2019, with new sections on holding deposits and the fees which are permissible under the Act.

Tenancy deposit replacement products: A further update takes into account the emergence of tenancy deposit replacement products, putting the onus on agents to clearly explain the potential advantages and disadvantages of that product prior to tenants and landlords committing themselves.

Client Money Protection: The Code also reflects the requirement to belong to a CMP scheme and to display the CMP certificate in agents’ offices and on websites.

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12 Comments

  1. ArthurHouse02

    I dont mind measure being updated, i have no issue with being compliant, but i would have though TPO would be more focused on an agent that has just closed supposedly running off with landlords rent and tenants deposits.

    Looking on TPO website they werent a member, yet were still trading???

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  2. Highstreetblues

    Bureaucracy galore. Someone must be enjoying the admin.

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  3. Another Brick in The Wall

    This is fine and acceptable as all good agents want to be compliant. What is unacceptable is the agents that don’t display fees and no doubt they won’t follow the latest TPO guidelines.

    Trading Standards aren’t interested and when poor agents are reported they want you to challenge it.

    We’ll continue to do the right thing, at further cost, but I only hope all these changes clear out the agents that created all these issues in the first place.

    I’m waiting for the day we can’t blink at a customer without being fined.

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    1. DarrelKwong43

      well said, that is half the problem, that without regular enforcement of the rules, either by the TPO or Trading standards, then such requirements fall on deaf ears

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    2. AgentLandlord

      Trading Standards are upping their game, at least in theory – recruiting a number of inspectors nationally, mostly with the intention of policing the Tenant Fee Ban, but also potentially to act on the massive level of non-compliance about displaying fees and CMP.
      But their recruitment is off the pace already, so don’t expect too much. Whether they will be alert to and therefore take action against the very substantial number (i.e. majority) of agents that have non-compliant sites is open to question.

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  4. Anthony Kerrigan

    6 days notice of massive changes, when the TPO must realise we are all really busy trying to rewrite our terms already. These types of changes need advance notice and they need to be rolled out with an opportunity for training. Very Disappointed.

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  5. IWONDER36

    The correct legislation is good as it protects those who could be taken advantage of, although I doubt the type that would take advantage of someone would be the kind of person to take notice, let alone adhere to legislation.

    The problem is that it is often thrown together by people who are either not involved in the industry, or are simply trying to win votes.

    It beggars belief that much of parliament is made up of people without experience in their field, who then through promotion to cabinet and shadow cabinet positions get to make decisions which effect businesses and livelihoods on a whim.

    Only last night on question time we had the actress turned politician Tracy Brabin who was elected a little over two years ago, now the Shadow Early Years Minister (what even is that)? 

    We have a cabinet reshuffle and the secretary for defense can become the secretary for education, or vise versa overnight, no training required. Yet an owner/director of a busy sales and lettings business of ten years plus can be forced to close or be given short deadlines to adapt to new legislation which is primarily vote winning.

    Again on question time, Damien Green said “MP’s are not good at at running businesses” when asked about returning British Steel to public ownership. If that’s the case should MP’s be meddling in business at all? Certainly they are complicit in breaking them up.

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  6. Anthony Kerrigan

    and 20 pages in size 8 font are you kidding, at 48 I am borderline reading glasses, but can’t read this

     

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  7. J1

    This is great news.

    When the likes of Purple whatnots need to tell their vendors they are creaming another few hundred quid out of them, they will surely think twice about using their really poor factory conveyancers.

    Stay local is the message now – the star of the quality local independent agent is on the rise again – long may it continue…..

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    1. The Future Is Tech

      Already disclosed in the legal quotes sent out what the referral fees are. Probably the only ones so far who have been open about their fees. I want to see agents disclose their commissions, now that is one to watch

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  8. Lil Bandit

    Cut the red tape and watch the lettings space thrive! I am sick of the fat cats in Westminster/Brussels trying to destroy the high-street.

     

     

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  9. forwardthinker

    The professional agencies in the industry, most on here, are likely to already comply with the above in the main so no drama.

    Difference is the time and resources it took to make business alterations in order to further demonstrate compliance to the public, who really don’t care. They just want to be served fairly. If you don’t have client money protection, were not transparent about fees and did not give detailed explanation of services offered or referral services in your terms, then sorry you should not be in the game.

    Point is there are immoral business owners who will remain. Including faceless, greedy boards of Directors. I’m sure they will find ways to circumvent the legislation or just flagrantly flout the rules and the powers that be will do nothing. Relying on the public alone to report is not enough.

    There has to be proper regulation of the rules and tough action, but this legislation sadly was just a cover to satisfy lefties and win votes.

    What is next?

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