Painsmith Landlord and Tenant Blog

A practitioners landlord and tenant law blog from PainSmith Solicitors

Fees and the CAP Code

The Consumer Rights Act 2015 requires letting agents to publish a full list of their fees and charges on their website and in their offices. However, there is also a separate code of practice produced by the Committee on Advertising Practice (CAP) relating to how agents advertise non-optional fees alongside rent. These are the additional agency fees and other items (such as a deposit) that a tenant must pay as well as the rent before they will be permitted to rent a property.

 

There is CAP guidance for a range of advertising matters which must be followed by advertisers, agencies, and the media. It is enforced by the Advertising Standards Authority (ASA). A breach of CAP guidance can lead to criminal penalties and a civil claim by the tenant for the return of fees. In a recent ruling, the ASA has been critical of some large agency advertising because they had not been sufficiently clear in indicating that administration charges were excluded from the quoted prices and did not provide enough information to allow the consumer to establish easily how further charges would be calculated.

 

When tenants look at a property advert, they should be in a position to determine the total cost of renting the property. This means the total cost not only including the rent, but also the deposit, referencing fees and the cost of drawing up the tenancy agreement.

 

Letting agents advertising rental prices should include 2 types of fee information, pursuant to the CAP guidance:

 

  1. Rule 3.18 – Quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers.  However, VAT-exclusive prices may be given if all those to whom the price claim is addressed pay no VAT or can recover VAT. Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable.

 

Letting agents who charge potential tenants non-optional fees which can be calculated in advance need to include the fee beside the monthly rent. Fees applicable to all or most tenants should be clearly stated and in a prominent position of the advertisement. This of course means that fees in the ‘small print’ fall foul of this Rule. This Rule applies to all advertisements on websites, brochures and leaflets but not property portals which are outside the Agent’s direct control such as Rightmove, Zoopla, On the Market or others (see below).

 

  1. Rule 3.19 states – If a tax, duty, fee or charge cannot be calculated in advance, for example, because it depends on the consumer’s circumstances, the marketing communication must make clear that it is excluded from the advertised price and state how it is calculated.

 

Some fees can’t reasonably be calculated in advance, because they will depend on the consumer’s circumstances, but the fact that these fees apply or might apply needs to be made immediately clear.  The full fee information and how they are calculated should be included via a hyperlink or in the small print, this should be inclusive of VAT. This applies to all websites, brochures, and leaflets- including property portals. There is also a need to be careful of using the phrase “fees may apply” if the “may” is in fact inaccurate because everyone will pay a fee of some sort.

 

At present, property portals, only need to include a “fees apply” pop-up, identifying all applicable fees, beside the monthly rental price. However, there should be a link to the agent’s website which allows for all fees to be displayed clearly and this should be a single click from the portal to the fees.

 

Comment

 

Rent and agency fees should be advertised together where possible in a simplified format. Agents may consider the benefits of a single fixed fee per applicant per property, including VAT.

Filed under: England & Wales

One Response

  1. rrgarcin says:

    Not following guidance may lead to criminal penalties? How beautiful is that!

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