Letting fees must be disclosed when advertising rental properties

The Committee of Advertising Practice (CAP) has announced that, from 1 November 2013, letting fees must be disclosed when advertising rental properties. The announcement followed a ruling made by the Advertising Standards Authority (ASA) in March 2013. This ruling was prompted by a tenant complaint about adverts for rental properties posted by an estate agent on rightmove.co.uk. The complainant objected that the adverts were misleading because they did not detail the existence of a compulsory administration or letting fee. This ruling meant that changes had to be made to the way letting agents and private landlords advertise their rented accommodation, and as a regulator, the ASA has the power to enforce this new advertising requirement across the whole of the UK.

Housing Rights Service concerns

Concern about the lack of transparency surrounding letting fees was shared by Housing Rights Service and many of its clients. As a result, we carried out a mystery shopping exercise with the NI Private Tenants Forum in March 2013 and found that the great majority of letting agents in Northern Ireland do not advertise these costs on their websites – in fact only 10% of the sample made references to these costs.  We recommended in the report that there should be ‘a requirement for letting agents to present landlord and tenant fees on their websites, in adverts and in all promotional material in a way that is easily comparable across agents’.

So we are pleased to see this long awaited announcement, particularly as CAP represents advertisers and professional organisations in the advertising and sales promotion industry. It also writes and enforces the UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing (the CAP Code). ASA and CAP are recognised by government and the Office of Fair Trading as the first line of control in protecting consumers and businesses from misleading advertising.

ASA Guidance

The following guidance has been provided by ASA to letting agents and landlords:

1. The ruling applies to ads placed by lettings agents and private landlords.
2. The ruling does not apply to fees which an agent charges to a landlord.
3. Although the investigation referred only to non-optional administration charges, it also applies to other non-optional charges that could affect the transactional decision of deciding whether or not to arrange a viewing. Those charges include, but are not limited to:

• general administration fees
• reference fees (including credit checks, bank, guarantor, previous landlord reference fees, etc)
• application fees
• fees for drawing up tenancy agreements
• inventory fees, including check-in and check-out fees
• guarantor arrangement/application fees
• additional occupant fees
• pet disclaimer fees/additional pet deposit.

Adverts should also make clear whether the charges are per tenant or per property. The ASA ruling covers (non-refundable) charges that relate to consumers taking on a tenancy. The ruling does not cover those charges that might be levied during the tenancy or at the point of tenancy renewal.

Tenancy deposits

The ASA ruling does not cover refundable deposits; which are categorised as something separate from a non-optional fee. However, landlords and lettings agents are required, under the Consumer Protection Regulations (CPRs), to provide all material information to enable ‘average consumers’ to make informed decisions. ‘Material information’ is likely to include more than just the non-optional fees and charges, but also other financial information such as refundable deposits. ASA has therefore encouraged landlords and agents to include a note of the deposit and how it is calculated in their advertising material.

Further information

CAP will be closely monitoring adverts in all media from 1 November 2013 and will consider appropriate follow-up action against non-compliant ads after this date. In making this announcement, CAP has worked closely with industry stakeholders such as the Association of Residential Lettings Agents and The Property Ombudsman and has written to letting agents and private landlords to outline the new requirements. Landlords and advertisers are also encouraged to seek free, confidential advice on their advertising from the CAP Copy Advice team at: www.cap.org.uk/Advice.aspx