Two excellent guides have been published by the Property Redress Scheme to guide their agent members and their customers.
You can see the guides (and other helpful material published by the PRS) here.
However I thought it would be helpful to summarise the information given. We will look at the guidance for landlords fees today and will consider the tenant fees next week.
The guide starts out by saying that fees must be clear and not misleading, and include VAT.
The fees must include guidance on what is actually provided for the fee so landlords know what they are paying for.
The PRS give the example of stating that a fee is provided for a ‘full management service’ and then making extra charges for organising maintenance work.
Landlords should always know before they sign the agency agreement what they are going to have to pay and not get any ‘nasty surprises’.
Optional / non optional
The PRS make a distinction between optional / variable fees – such as an early termination fee, and non optional fees such as a tenant finder fee.
The non optional fees do not have to be included in all marketing but all have to be in the contract and not buried in the small print.
Worked examples of how fees are calculated should be provided.
My only criticism of this guide is that I am still a bit confused about these two types of fee and whet the difference is between them.
Landlords need to be told if agents are going to charge tenants as this may affect tenants willingness to rent their property.
Needless to say, double charging, where agents get a fee from both landlord and tenant for the same thing, is bad practice.
Unexpected / unusual fees
These should all be listed individually and carefully explained to landlords. The PRS list the following examples
- charges for providing a tenancy agreement
- charges for the Agent familiarising himself with a tenancy agreement provided by the Landlord
- any fees the Landlord will have to pay for a minimum period
- check-in’, or ‘check-out’, fees
- security deposit handling fees
- terms which require a landlord to pay ‘renewal commission’
- circumstances where there is no further work carried out after the introduction of the Tenant (let only)
Repair and maintenance fees
The PRS make the point that agents must tell landlords about any commission they receive and should not make any secret profit.
Note by the way that if this happens, under agency law, the secret profit actually belongs to the landlord and they can claim it back from the agent.
The PRS also make the point that agents must not charge where the work has not been carried out or is unnecessary.
Termination / cancellation fees
These must be clear so landlord know how to cancel agreements.
The PRS point out that it will be unfair for agents to make a cancellation charge where they are in breach of contract.
I would add that any such charges will actually be unenforceable as a landlord will normally be entitled to end the agency agreement where there has been a (non trivial) breach.
The fact that the PRS feel it necessary to point many of these things out in a written guidance, just goes to show how unfairly some agents are treating their landlords
However landlords do now have a remedy. So if you feel that YOUR agents are making unfair charges, you should complain, and ask for them to be removed or refunded.
If the agents refuse, unfairly, you should then make a complaint to the agents property redress scheme. You may be awarded compensation.
To read the full guide click here.
The Property Redress Scheme will be exhibitors at both the forthcoming Landlord Law Conferences where you will be able to speak to them about these guides and their service.
Note that my Landlord Law service has a guide for landlords who have experienced problems with their agents here.
Agents may be interested in David Smiths workshop in September on consumer and other regulations affecting agents.