Competition and Markets Authority CMA

 

  • The CMA is concerned with consumer rights and Consumer Protection Regulations CPRs.
  • Landlords are both consumers and providers of accommodation to consumers.
  • Letting agents provide a service to both landlord and tenant consumers.
  • In April 2014 the CMA adopted some of the responsibilities of the OFT particularly in relation to fees.
  • Fees chargeable up front, or that are not within the control of a tenant, such as exit fees, must be published prior to marketing.
  • Late payment fees are within the control of a tenant so do not need to be published.
  • However, fees charged by the agent must be unambiguous and disclose any source of income from tenants and or tradespeople to landlords.
  • CMA also address unacceptable service levels and repairs.
  • CMA provide for 5 categories:

 

  • Consumer Protection – B2C
    • B2C = Business to consumer dealings.
  • Business protection – B2B
    • B2B = Business to Business dealings
  • Unfair Terms in consumer Contracts Regulations 1999(UTCCRs) – B2C
  • Supply of Goods and Services Act 1982(SGSA) – covers contractual terms
  • Unfair Contract Terms Act 1997 (UCTA) – B2C, B2B

 

  • Issues include distance selling.  The latter does not apply to tenants as housing is an essential service.  However, guarantors as well as landlord clients are protected by the act, with now 14 days cooling period, during which time consumers may withdraw from any agreement not face to face. See article: http://213.120.142.153/drupal/coolingoffperiod
  • As a consumer, tenants and landlords are entitled to protection from agents that must provide accurate property descriptions.
  • The tenant will normally be a consumer; however, a company let is likely to be a B2B dealing.
  • Large portfolio landlords are likely businesses.
  • Landlords with one or a few properties are likely consumers.
  • Whatever the category, regulations apply to greater or lesser extents with more progressively more protection offered to more vulnerable consumers.
  • Agent’s renewable fees to landlords are likely to be deemed unfair unless there is significant work or costs involved.
  • Agents charging landlords for tenant finder fees for continuing tenants is not a fair if no further work is involved.
  • Classic additional charges should be published upfront for landlord perusal:
    • Inventories
    • Check in
    • Check out
    • Credit checks
  • Honesty in dealing is essential:
    • “Ideal BTL ” is a misleading statement if located in a locality controlled by an Article 4 Direction.
    • “Tenants waiting!” or “Landlords waiting!” must be a statement of fact not merely an inducement.
    • Agents and landlord descriptions must not include or exclude “material” information. “minor improvements required” is a misleading description of a derelict property scheduled for demolition!
    • Transactional decisions must be based on true statements.
      • “Sea views” would be misleading if blocked by Dungeness power station – true analogy!
      • “Tranquil terrace” next to a noisy haulage company operating 24/7, likewise.
      • A tenant could sue for lost time and costs spent viewing such properties if they would not have viewed, but for the mis-description.
      • Claims to membership of a trade body must be true.
      • Rules of membership of such bodies must be adhered to if advertised as members.
      • Agents must not rely on landlord statements as true until proved.
        • Gas certificates held by landlord must be provided for verification to agents.
        • In the absence of such verification the agent is obliged to instruct another inspection to procure certification.
      • If a tenant fails a credit check but the tenant has not been dishonest and the landlord rejects the tenant then any payments made by the tenant must be returned.  The landlord is obliged to pay the costs if the landlord has been warned by the agent e.g. in the terms of business that he would be responsible for costs of such failure.
      • Tenants and landlords must be told before signing or committing, how to end an agreement and any costs associated.
      • Any AST deposit must be properly administered and protected with clear details of the scheme.
      • Landlords must not issue retaliatory eviction notices or operate in a vengeful or harassing or aggressive manner towards their tenants.  No fault evictions, in response to a complaint, is contrary to CMA guidance.
      • Landlords must not enter a tenant’s home to discuss rent arrears without their permission.
      • Refusing to return a holding deposit must be reasonable.
      • Tenants responsible for utility bills must be provided with the supplier details and not unreasonably prevented from switching.
      • Landlords providing bills packages and that are responsible for payment need not agree to switch.
      • Repairs and maintenance matters must be prioritised and conducted in a professional and timely manner.
      • Landlords and agents have a duty to disclose to prospective and current tenants within a reasonable time any serious defects at a property.
      • Furniture damage should be replaced with the same or better quality.
      • Client money should be ring-fenced in a client account and landlords ideally paid within 5 days of receipt but within one month in any event.
      • See more at Lettings Guide.

 

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