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Advertising Watchdog Gets Tough With Letting Agents

March 14, 2013 | Company News  

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The Advertising Standards Authority (ASA) has published a ruling against estate agent Your Move for an advert that appeared on property website Rightmove. Advertising rules were deemed to have been broken, as it was not made clear that non-optional fees and charges (the administration fee in this particular instance) would be added to the quoted price.

Although the law has not been changed, the ASA has sent a clear message that, from now on, advertisers will have to be completely open, stating in the quoted rental price if there are compulsory fees and charges. If, for whatever reason, the fees cannot be calculated in advance, then it is the responsibility of the advertiser to spell out to potential tenants that additional fees and charges are not included, and provide enough information to the consumer to establish how they will be calculated.

Guy Parker, chief executive of the ASA, said, “Hidden fees are not only unfair, they hit those who are struggling hardest. Our ruling today makes clear that letting agents need to get their houses in order and treat potential tenants fairly.

“Renting a property is a significant commitment. And for those who are new to the rental market, like students, navigating it can be particularly difficult. That’s why the ASA is clamping down on letting agents who hide fees.

“It is now our priority to make sure agents across the sector bring their advertising into line.”

However, the ruling may prove troublesome for letting agents, as Rightmove specifically bans fees from being mentioned on their site. Also, fees and charges are not always the same for everyone, as in the cases of tenants that lack guarantors or own pets.

The ruling brings yet more attention to the subject of letting agent fees, which are illegal in Scotland, and are the focus of an ongoing campaign to have them banned in England by housing and homelessness charity Shelter. The ban in Scotland hits landlords as well as letting agents, as it stops them from charging tenants for things like referencing and move-in checks. It is thought that this ASA ruling could affect landlords also.

Your Move said in a statement, “We strongly believe in the principles of the Consumer Protection from Unfair Trading Regulations 2008, as demonstrated by the fact that we provide applicants with information at a stage prior to them making their decision to enter into a tenancy agreement – the timing of which compliments the Office of Fair Trading guidance for estate agents, and that we have also actively engaged with the regulators, in particular the OFT.

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“In view of the findings, however, we will of course be reviewing our approach, and in support of this look forward to the OFT introducing official guidance for the lettings market as soon as possible to ensure greater clarity on matters of this kind.”

However, they made clear that they were not satisfied with the ruling, saying, “Your Move is committed to regulatory compliance as demonstrated by active participation in The Property Ombudsman scheme and the Association of Residential Letting Agents and is therefore disappointed by the ASA Council ruling.

“All material information, including tenant fees, is provided prior to tenants making their decision to enter into a Tenancy Agreement. This complies with the OFT’s Guidance for Estate Agents.


“Your Move also complies with the contractual requirements of Rightmove where publication of fees within advertisements is expressly prohibited.


“In view of the ASA decision, we continue to ask the OFT to produce official guidance for lettings urgently to ensure greater clarity and uniformity across the industry.”

Labour’s shadow housing minister Jack Dromney said, “Any step to improve the transparency of fees and make them more straightforward is a step in the right direction.

“But with the lettings market being described as the property market’s “wild-west”, it is clear more fundamental change and greater protections for renters and landlords are required.”

The ruling has presented a great problem to the private lettings industry. Not only due to the practical difficulties it presents, but also because of the ambiguity regarding its legal status. Lawyers are scrambling, trying to determine whether or not the ruling is effective immediately, which would result in a lot of headaches for the concerned parties. At present, it appears that the only action resulting from complaints regarding no fee information in advertisements would be exposure and bad publicity.

The case itself is something of a mystery, with zero information available as to the identity of the Your Move complainant. While it is not usual for a name to not be disclosed, there is usually an inkling of whether it was a consumer or another agent. More unusual still is the head of the ASA adding his own personal comment.

It also remains to be seen what will happen in the marketplace as a result of this ruling, whether it could inadvertently do more harm than good. Caroline Kenny of UKALA said, “Last week’s announcement by the ASA is well-meaning, but shows lack of understanding of the marketplace upon which it has passed judgement.

“It inadvertently risks hitting tenants with higher fees, as letting agents will have no choice but to specify a generic fee. In some cases, this fee may be higher than if a letting agent retained the ability to evaluate fees based on a tenant’s circumstance.”

Pressure is mounting in the private rented sector, with the OFT making fresh calls for regulation last month, The Property Ombudsman reporting the increase in complaints against letting agents, resulting in calls for legislation to protect tenants and landlords, and now this.

 

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