Competitions Market Authority to update guidance for lettings sector
Following complaints about a significant minority of landlords and letting agents, the Competitions Market Authority (CMA) is to update guidance for lettings sector.
Following complaints about a significant minority of landlords and letting agents who are not complying with Consumer Protection Regulations, the CMA will re-issue guidance, and investigations will then take place to check compliance followed by enforcement action where necessary.
The CMA Rented Housing Sector: Consumer Research Project, which Propertymark fed into, stated many tenants receive a good service, however, clarity on the rights and obligations of everyone involved in the rental process was still needed.
Stamp out poor practice
A range of stakeholders cited the lack of mandated ‘professional standards’ in the industry which makes it easy for almost anyone to enter the market without restrictions, allowing poor practice to continue. These rougue landlords and letting agents are a small minority, but their actions give the sector a bad reputation.
Propertymark supports the regulation of letting agents, mandatory qualifications for licensed agents carrying out certain reserved activities in the sector, and the creation of a new regulator. Regulation offers the potential to professionalise the industry, crack down on bad practice, create transparency and give consumers more control over who manages their property.
Five areas of concern have been identified, which will be explored in the next phase of the CMA’s rented housing sector consumer project covering the whole of the UK:
1. Zero deposit schemes – whilst these can be helpful to renters who don’t have access to a large deposit, it is important tenants properly understand the costs they may be liable for and that the terms of the schemes are fair. Agents should not use pressure selling techniques, should ensure tenants are given adequate information about the schemes and properly disclose any commissions paid.
2. Guarantee clauses – some evidence has been found of onerous clauses which require the tenant to provide extensive evidence of assets. There is concern that this may disadvantage less well-off people, or those without a network of support to be able to provide a guarantor. Requiring excessive up-front deposits or rent payments in advance may also be unfair and present a challenge for people who lack savings or a suitable guarantor.
3. Activity that could constitute unlawful discrimination – for example, advertising properties as not available to housing benefit claimants, or ruling out prospective tenants with children, pets or who have mental health difficulties or specific needs related to a disability.
4. Sham licences – this is typically when a landlord claims to ‘give license to occupy’ rather than providing an assured tenancy agreement and attempts to prevent tenants exercising their legal rights. This practice is likely to have a disproportionate effect on vulnerable consumers such as overseas students and other migrants.
5. Retirement housing fees – there may be problems with high or unpredictable fees charged to elderly residents when they try to sell purpose-built retirement properties.
What the CMA can do
Market studies look at why particular markets may not be working well for consumers. Where problems are identified there can be a range of outcomes, including recommendations for change being made to government, encouragement for businesses to self-regulate, or enforcement action against firms.
The CMA cannot impose fines, but it can enforce legislation through the courts, and where appropriate, obtain additional measures to improve consumer choice, drive better compliance with the law, or obtain redress for consumers.
Read the CMA’s Rented Housing Sector: Consumer Research Project Report
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