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More Details Emerge On Government Demand For Transparency Over Letting Agent Fees

More Details Emerge On Government Demand For Transparency Over Letting Agent Fees

More Details Emerge From Government
On Letting Agent Fees Debate

The Government have declared that all UK letting agents and property management agents must display full details of all fees charged to tenants on websites and in offices.

Deputy Prime Minister, Nick Clegg faced a tough grilling at his House Of Commons session from Labour MP Harriet Harman, who wanted the Government to back the ban on letting agents charging fees to tenants.

Ms Harman told MPs: “Not least because of the difficulties of affording to buy a home, there are now 9 million people renting, including 1.3 million families with children – security and continuity are particularly important for them. It is time to move from one-year tenancies with unpredictable rents to three-year tenancies with predictable rents. What we need to be sure is that letting agents do not rip tenants off by charging fees to the tenants, as well as charging the landlords.”

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3 Compulsory Redress Schemes To Investigate Lettings Complaints

3 Compulsory Redress Schemes To Investigate Lettings Complaints

3 Compulsory Redress Schemes
To Investigate Lettings Complaints

The Government have approved three compulsory redress schemes to offer landlords and tenants in the UK private rented sector independent investigation into complaints in the property management and lettings industry, bringing them in line with redress schemes already in operation for residential property sales.

The 3 lettings industry redress schemes are:

  • The Property Ombudsman
  • Ombudsman Services Property
    • The Property Redress Scheme 

The new schemes will consider all complaints made by tenants and landlords including non-disclosed fees and poor service delivery, and as with residential property sales where a complaint is upheld, tenants, landlords and leaseholders could receive compensation.

Two of the three redress schemes have been around for a while and The Property Ombudsman (TPO) is probably the most recognised of the two pre-existing schemes but little is known about the new Property Redress Scheme.

Most letting agents in the UK are already registered with at least one redress scheme, however 40% of the entire lettings industry, estimated to be around 3,000 agents, are to be encouraged to join up before membership is made mandatory later this year.

Housing Minister Kris Hopkins said that he hoped the new rules would strike the right balance between protecting tenants in the UK private rented sector and not harming the UK lettings industry with excessive red tape. The new redress schemes were just one part of the government’s efforts to secure a better deal for tenants in the PRS, stating: “All tenants and leaseholders have a right to fair and transparent treatment from their letting agent. Most tenants are happy with the service they receive, but a small minority of agents are ripping people off, and giving the whole industry a bad name. That’s why we will require all agents to belong to one of the official redress schemes. They will ensure tenants and landlords have a straightforward route to take action if they get a poor deal, while avoiding excessive red tape that would push up rents and reduce choice for tenants.”

The Property Ombudsman, Christopher Hamer said: “TPO experienced a 34.2% increase in consumer enquiries relating to unregistered letting agents during 2013, which really underlines the importance of mandatory redress. Whilst my role as Ombudsman means that I am not a regulator and I can only review complaints after a dispute has occurred, making redress a legal requirement for lettings is a positive move. Clearly it would be better if complaints did not arise in the first place and robust legislation to enforce controls was in place.”

There are thousands of decent letting agents in the UK but there are also a fair proportion of rogue agents who operate under the radar, that lack the much needed transparency on fees and who are fleecing both tenants and landlords alike.

Landlords should ensure their appointed property managing or letting agent is registered with the Association of Residential Letting Agents (ARLA) or the UK Association of Letting Agents (UKALA).

Most UK tenants are unaware that they could be leaving themselves open to exploitation if the agent is not a member of at least one of the regulatory associations.

Compulsory Redress Schemes For Lettings And Property Managing Agents New Government Measures Intend

To Regulate Private Rented Sector

The Government has announced that there are to be new regulations introduced in 2014 to provide private rented sector landlords, tenants and leaseholders with additional protection when working with lettings agents or property managing agents.

The Department for Communities and Local Government (CLG) want the introduction of compulsory redress schemes for lettings and property managing agents will ensure that they can be fully investigated where information is not made clear on additional charges, administration fees or any other property or tenant related issue. The proposed measures are intended to provide a cheaper, easier way for landlords, tenants and leaseholders to pursue compensation from lettings and property managing agents if they have a complaint.

The conditions that have to be met by lettings and property managing agents to be a part of a redress scheme have now been published by the Government.

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Rent paid in advance does not count as a deposit

Court Of Appeal Rules That Rent In Advance Is Not A Deposit

Court Of Appeal Rules That Rent In Advance Is Not A Deposit

The landmark Court of Appeal ruling means that landlords and their appointed letting or property managing agents are not obliged to treat rent paid in advance as a deposit, as that would require protection under the Housing Act 2004.

The Court of Appeal’s decision was made in respect of the long-running case of Johnson v Old, where the tenant was offered a six-month tenancy and was asked for six months’ rent in advance, because she did not have a guaranteed fixed income.

The agreement in the case provided a confusing element as the agreement stated that the rent should be paid monthly in advance, but also said that the rent should be paid six months in advance.

The tenancy was subsequently renewed on the same terms before becoming a periodic tenancy where the rent was paid monthly in advance.

The landlord attempted to gain possession of the property, by serving a Section 21 notice to the tenant, Anne Old.

The tenant countered the Section 21 notice, saying that it could not be legally served because she had paid the rent in advance, which she thought should have been treated as a deposit and therefore protected.

The tenant’s argument was successful at the first court hearing, but was then challenged successfully by the landlord at a second.

The tenant then appealed the judges 2nd decision, and with the help of legal aid, the case then went to the Court of Appeal, which gave its decision in favour of the landlord. 


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