It’s all about transparency nowadays.
Renting property is a consumer service and landlords, and agents need to be aware that the authorities are stepping up the rules and regs to protect tenants from unfair practices.
One of these is the practice of quoting figures without mentioning that there is VAT to pay too. This is now illegal in two ways:
1. Agents fees and the Consumer Rights Act
This act came into force recently and under s83(4)(c) it specifically states that all fees must be inclusive of any tax.
This is enforceable by Trading Standards who can impose a fine of up to £5,000.
2. The Unfair Terms in Consumer Contracts Regulations
These regulations, which apply to all tenancy agreements, provide that if a clause is ‘unfair’ it will be unenforceable.
So if you include a clause in the tenancy agreement charging a fee, but give the figure payable without the VAT, then this will be unenforceable. Or if the clause is allowed, you will not be able to claim the VAT element.
And also for agents & property managers
If your charges are misleading, landlords and tenants will also be able to bring a complaint to your Redress Scheme.
So check over all your prices lists and make sure you are compliant.
NB Agents – note that under the Consumer Contracts Regulations you now need to display ALL your charges. ARLA have some useful templates to help you do this here.