Which? finds letting agents in England using potentially unfair terms and conditions
Letting agents across England are using potentially unfair terms and conditions and may be breaching consumer law by demanding deposits before letting renters even see a contract, an investigation has found.
Consumer giant Which? sent mystery shoppers to 20 letting agents posing as prospective tenants and seeking to rent a property. They asked to see a copy of the terms and conditions they would be signing up to but one in four agents failed to provide a contract.
Five letting agents, including a branch of Connells, which has almost 200 branches nationwide, required a commitment or a holding deposit before the tenants could view a sample letting agreement. Connells told Which? that tenancy agreements should be freely available on request.
In some cases, the letting agent also requested a reference check to be paid for and completed before they saw the terms of the contract.
Letting agents have a duty by law to provide prospective tenants with the key information they need to make an informed decision about the letting, and Which? believes demanding a financial commitment before tenants can view the terms and conditions could fall foul of consumer law by trapping tenants in contracts they haven’t had an opportunity to review.
The consumer organisation said it was ‘worrying’ that three of the letting agents that required a commitment or deposit before tenants could see a contract are members of the Association of Residential Letting Agents (ARLA), a leading membership body for the letting agent sector.
One letting agent in Leeds requested that the tenant visit their office to read the tenancy agreement. Whilst the agreement was accessible in this case, this practice could deter or place undue pressure on the tenant to read their contract quickly.
In 13 tenancy agreements collated and inspected from other letting agents, Which? found evidence of potentially unfair terms and clauses that could be in breach of the Consumer Rights Act.
In seven contracts analysed, tenants were required to seek permission or notify their letting agent or landlord before switching utility supplier, which may prohibit their right to choose for themselves and could mean they are stuck on rip-off tariffs.
Which? also found evidence of unclear language that could confuse tenants in at least eight contracts. These agreements included vague descriptions that tenants may be required to pay a ‘reasonable’ amount or ‘a fair proportion of’ additional charges.
But without adequate explanation of what those charges would be for or what constituted ‘reasonable’ or ‘a fair proportion of’, Which? says that tenants could risk being hit with extortionate fees during their tenancy.
All the contracts reviewed referenced statutes and legislation that were not attached or explained further within the agreement putting tenants, most of whom may not be experts in property law, at an unfair disadvantage.
In all but two agreements, Which? found a clause that allowed landlords or authorised workmen access to the property without prior consent, as long as 24 hours’ notice was given. It was not always specified that this notice should be in writing and these agreements gave no indication that landlords and letting agents would take their tenant’s objections into account.
A template contract from the Ministry for Housing, Communities and Local Government included some examples of good practice, such as guidance notes explaining legal jargon. It also featured a note outlining how tenants have a right to quiet enjoyment of a property even if landlords provide 24 hours’ notice, so if visits are very frequent or do not have a good reason behind them, the landlord might be breaching those rights.
However, even in that case, Which? believes that tenants’ rights to enjoy exclusive possession of their homes could be made clearer and they should be empowered to push back if landlords seek non-urgent access at inconvenient times.
Which? is concerned many renters could be rushed into signing contracts they don’t fully understand and that contain potentially unfair clauses as they may feel pressured to secure a property quickly, particularly in areas where demand is high.
Which? says that the findings of this investigation suggest tenants cannot always trust letting agents to act in their best interests, and with some agencies apparently skirting the law, the consumer champion is calling on the Competitions and Market Authority (CMA) to investigate further issues relating to practices and tenancy terms and conditions in the rental sector and to take action where needed.
It adds that the Government must also move forward with introducing a mandatory code of practice for letting agents that is legally enforceable and ensures all agents are held to an agreed set of professional standards.
‘It is outrageous that some agents are demanding cash up front before tenants are even shown a contract, committing them to agreements before they know what they’re signing up to,’ said Natalie Hitchins, head of home products and services at Which?
‘The results of this Which? investigation show how vital it is for the Government to introduce a legally enforceable code of practice to ensure all letting agents act in a professional manner.
The CMA must also investigate the sector and take action where needed to tackle unfair practices and contract terms,’ she added.
However, David Cox, ARLA chief executive, said it is not clear that agents are breaking the law. ‘There is currently no legal requirement in England or Wales to have a tenancy agreement, and as legal statute overrides contract, any unreasonable terms in a contract would be unenforceable in a court of law. As such, we would question the suggestion that agents are breaching consumer protection law,’ he explained.
‘We have long been advocating for a legal requirement to have a written tenancy agreement, as they have in Scotland, to avoid many of the misunderstandings cited in this research. Which? implies that even MHCLG’s template tenancy agreement is in breach of their best practice; this demonstrates just how complex the issue around terms and conditions can be,’ he added.
The investigation reveals a need for better regulation for letting agents, according to the Chartered Institute of Environmental Health (CIEH). ‘The poor practices of some letting agents are truly shocking. The sad truth is that these poor practices are actually widespread, with at least one quarter of agents not providing a contract when asked by tenants,’ said Tamara Sandoul, CIEH housing policy manager.
‘Letting agents hold the key to better housing conditions and management of the private rented sector, with landlords and tenants relying on them to do the right thing and act according to best practice and the law. CIEH wants to see much better regulation and qualification requirements for letting and managing agents to help to professionalise this sector,’ she added.