Letting Agent Fees

The Advertising Standards Authority require that advertisements placed by letting agents and private landlords in England and Wales must make it clear to tenants what their fees and charges are. The Consumer Rights Act 2015 (“the Act”) received Royal Assent on 26th March 2015 and now also makes provision for letting agents to publish a list of fees that are payable by landlords or tenants at each work premises and on their website. 

Section 83(4) states that a list of fees 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 the fee cannot reasonably be determined in advance, a description of how that fee is calculated.

Letting agents are also required, where they are a member of a redress scheme, to publish with the list of fees a statement that indicates that the agent is a member of a redress scheme and provide the name of the scheme.  Where an agent holds money on behalf of the landlord or tenant they must also provide with the list of feesdetails of whether or not they are a member of a client money protection scheme.

The provisions came into effect on 27th May 2015 for England and 23rd November 2015 for Wales.

Unfair Terms in Consumer Contracts

Part 2 of the Act sets out requirements for unfair contract terms in consumer contracts and notices. Part 2 came into effect on 1st October 2015 which amends the Unfair Contract Terms Act 1977 and revokes the Unfair Terms in Consumer Contract Regulations 1999.

From 1st October notices, not just contracts, will now be included in the test for fairness where the notice relates to obligations between a trader and a consumer or where it purports to exclude or limit the trader’s liability. The notice does not have to be in writing but includes an announcement or communication that is reasonable to assume that it is intended to be seen or heard by a consumer.

Under the Act a term or notice is ‘unfair’ if ‘contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations to the detriment of the consumer.’

Contract terms and notices will be exempt from the provisions where they specify the main subject matter of the contract or where the term sets the price payable. These terms are not subject to the ‘fairness’ test provided they are transparent (in plain and intelligible language and, if written, legible) and prominent (brought to the consumer’s attention in a way that an average consumer would be aware of the term). Under the Act a term can be considered unfair even if it has been individually negotiated. Three new terms have also been added to the ‘indicative and non-exhaustive list of terms in consumer contracts which may be regarded as unfair’ in Schedule 2 of the Act:

  • disproportionately high charges where the consumer decides not to conclude or perform the contract
    or for services which have not been provided even if the consumer cancels the contract;
  • terms allowing the trader to determine the characteristics or subject matter after the consumer is
    bound; and
  • terms allowing the trader to determine the price after the consumer is bound

The court is required under the Act to consider whether a contract term is fair even if none of the parties to the proceedings has raised that issue or indicated that it intends to raise it.

Further information is available in the Letting Handbook or you can download the Act at www.legislation.gov.uk