Competition and Markets Authority guidance for lettings professionals

The Competition and Markets Authority issued guidance last year to help letting professionals comply with consumer law.  The guidance is aimed at anyone who is managing a rental property, whether they are an agent, an accidental landlord or a landlord with a large property portfolio.  The CMA decided to issue the guidance in response to the Advertising Standards Authority's ruling on the need to disclose fees in property advertisements.  Letting professionals should be aware of all the housing legislation that sets out their legal obligations to tenants, but may be less familiar with how consumer law impacts on how they run their business. 

The guidance is broken down into different areas.  Below, we’ve summarised some of the main points that govern how an agent should behave when setting up a new tenancy.

Advertising & providing information to tenants

When advertising a property to rent, agents should

• be able to answer all reasonable questions asked by potential tenants
• ensure adverts are clear, accurate and not misleading
• ensure adverts include sufficient information about fees, costs and charges
• ensure that any information that can’t be included in the advert, due to space restrictions, is easily available elsewhere
• check that the landlord has Gas Safety Certificates for all relevant appliances
• verify any attractive features mentioned in the advertising, parking, views etc
• clearly explain what principal features/fittings are included, rather than simply describing the property as fully furnished, unfurnished or partly furnished.

Negotiating, conducting viewings and arranging and signing the tenancy agreement

During a viewing or any discussions with a potential tenant before they sign the tenancy agreement, agents must

• be clear that they are acting for the landlord and not the tenant
• treat prospective tenants fairly and give them clear information about any pre-tenancy checks or requirements before arranging a viewing
• not conceal any defects or factors which are likely to have an impact on the decision to rent the property from prospective tenants
• clearly explain what principal fixtures and fittings are included with the lettings.  If items, such as white goods, belong to the current tenant and will not be included in the letting, the agent must disclose this

Information to guarantors

Agents must provide potential tenants and guarantors with clear, accurate and full information to explain what being a guarantor involves.  This should include

• what criteria the guarantor must meet to be considered suitable
• the extent of the guarantor’s liability
• the terms of the tenancy agreement which the guarantor will be party to
• whether the guarantor’s liability will extend to rent owed or damages caused by other joint tenants

Tenancy agreements

When drafting or issuing a tenancy agreement agents must

• ensure that all terms are clear and written in plain and intelligible language
• check that the terms are fair with regard to the OFT’s guidance on unfair terms in tenancy agreements
• explain the nature of the agreement to prospective tenants before they sign so they fully understand their rights and obligations; this should include explaining how either party can end the tenancy
• highlight any terms that are likely to be surprising to the tenant or are unusually onerous
• provide prospective tenants with a copy of the agreement and allow them time to familiarise themselves with this agreement before signing it.

Property handover

During the property handover meeting, the agent should

• take a detailed inventory of the property
• allow the tenant an opportunity to review the inventory and challenge any points of disagreement
• provide the tenant with a copy of the final, agreed inventory
• provide the tenant with any important information, such as gas and electricity meter readings
• provide the tenant with the landlord’s contact details and all legally required paperwork
• ensure the tenant knows who to contact for help with specific problems in the property.

We'll look at the other obligations placed on landlords and agents by consumer laws in May.  Sign up to our email bulletin so you can keep up to date with the latest housing news.

We have a course Renting Privately - The Rights of Tenants that will examine the key stages of a tenancy.