Top agents slammed for 'breaking law' on fees

A report out this morning from consumer watchdog Which? claims that major letting agents are breaking the law.

Today’s Which? investigation adds fresh fuel to the controversy over letting agents’ fees. It claims that the agents are not being upfront about the fees they charge – and that is unlawful.

It names Foxtons, Barnard Marcus, Martin & Co and Your Move.

Last month, Which? sent mystery shoppers posing as potential tenants to four different London branches of each agent.

It claims that the fees were not disclosed sufficiently early, so tenants “face unexpected charges, are unable to properly compare prices and don’t always know what they are signing up to until it is too late”.

The investigation found that none of the agents provided information about fees in any property listings, on their websites or on Rightmove, or after tenants had registered online.

Only one tenant (at a Foxtons’ branch) was proactively given fee information when they registered in-branch or called to arrange a viewing.

No tenant was provided with a written schedule of charges, and in some cases tenants were either not given fee information even when they asked, or they were not given the complete details.

Which? said it believes that by failing to disclose fees upfront or during their first contact with a customer, letting agents are breaching consumer law by not providing material information in a manner that is clear and timely.

Which? has now written to all four of the agents to demand improvements and remind them of their legal responsibilities under the Consumer Protection from Unfair Trading Regulations (CPRs).

Richard Lloyd, executive director at Which?, said: “It is vital that letting agents are upfront about expensive fees in advance. People should know all the costs before they invest time and effort in viewings. Drip-feeding fees is unfair and a major barrier to people comparing agents and properties.

“Despite its dramatic growth, there is also an alarming lack of consumer protection and redress in the rental sector. Tenants deserve much better.”

Which? is now calling for an “end to hidden fees”, for increased consumer protection and for letting agents to be covered by the same law as estate agents.

An amendment to the Enterprise and Regulatory Reform Bill, which is expected to be debated in the House of Lords tomorrow, would require all lettings agents to sign up to a redress scheme, as well as giving the Office of Fair Trading the power to ban letting agents that break the rules.

Martin & Co has so far been the only agent to react publicly to Which?’s claims.

In a statement yesterday evening, it said: “Martin & Co are all for operating a transparent business model to both landlords and tenants; however, current industry practice is not to publish fees.

“All applicants wishing to take a property via a Martin & Co office are provided with terms of business which clearly provide information on any fees that they may be liable for, and of course they can be requested before a viewing is conducted.”

It said that one simple way of making it industry practice to publish fees was for portals such as Rightmove to insist on it.

Ian Wilson, managing director, said: “If all properties advertised on the big property web portals such as Rightmove and Zoopla had to display the fees and charges attached to applying for a tenancy, then all agents would be competing on an equal footing. Currently the practice is not to publish fees when advertising properties to rent and the first agent who bucks this trend risks being selected against by consumers who may assume (wrongly) that the other agents do not charge.
 
“Currently, transparency may work against an agent in this age of voluntary membership to better practices in the industry.

“A letting agent is a commercial business and as is the case of any other business in any other field, businesses are run to make a profit – i.e. charges being made to an applicant in return for the services which are provided.

“We should also remember that publishing fees could have a positive or a negative impact on the consumer – some may raise their prices to bring them in line with others, but adversely the fees could be driven down which may result in a lower level of service by some agents.
 
“Martin & Co do not take money from tenancy applicants before the applicant is made aware of the fees and charges that they will incur.  If Martin & Co staff believe that an applicant will not pass a credit reference and be approved for a tenancy then we will warn them of this possibility to avoid wasting their time and money.”