Advertising Standards Authority Ruling

[Grampa]

Recent Advertising Standards Authority Ruling

There has been a recent ruling of the Advertising Standards Agency where advertisements posted by an agent on its website did not include details of a compulsory administration charge which would be payable by a tenant, in addition to the cost of rent.

The link to the ASA’s news of the ruling is:

http://www.asa.org.uk/News-resources/Media-Centre/2013/ASA-clamps-down-on-hidden-letting-agent-fees.aspx

The detailed ruling can be found at:

http://www.asa.org.uk/Rulings/Adjudications/2013/3/Yourmovecouk-Ltd/SHP_ADJ_201575.aspx

Background

The ASA administers the Codes of Advertising Practice in the UK. The basic requirement is that all advertisements are ‘legal, decent, honest and truthful’. In theory compliance with the ASA’s rulings is voluntary given that the system is one of self-regulation, but the ASA does have a range of sanctions available where an advertiser does not comply with its Codes, including the possibility of referring the matter to the Office of Fair Trading which may take legal enforcement action. In practice it is wise to comply with the ASA’s rulings and we will be arranging an early meeting with the OFT to consider this matter further.


Implications and Advice

The key elements of the ruling are summarised by the ASA as follows:

“The advertiser did not make clear that administration fees were excluded from the rental price on the property, and an insufficient amount of information was provided for the consumer to establish how further charges would be calculated.
In future we expect all letting agents to make clear what compulsory fees are charged when letting a property, and they should do this from the start. For example a property advertised at £1,500 per-calendar-month (pcm) which requires each tenant to pay a £150 administration fee should be advertised as £1,500 pcm + £150 admin fee per tenant.
Our ruling makes clear that advertisers must include all compulsory fees and charges upfront in the price quoted. If the fee cannot be calculated in advance because of, for example, an individual’s circumstances, then the advertisers must make clear that compulsory fees and charges are excluded and provide adequate information for consumers to establish how additional fees are calculated. This means that potential tenants will have all the information they need in the first instance to help them make an informed choice and to avoid being drawn into contracts they haven’t budgeted for.”

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In Scotland I dont think agents are allowed to charge tenants admin fees which i guess includes check in/out and ref fees etc and there is talk of that being brought to England and Wales. If that happens I can only foresee a reduced agent service and agents fees increasing for the landlord and as most of agents income structure includes those fees and they (the agent) wont be able to swallow them.

This could have a knock on effect of a reduction of buy-to-lets as the figures dont stack up for the landlord. Or it may result in the quality/condition of the letting properties going down.

[Richlist]

I think the ASA ruling is entirely appropriate and gets my vote.

[Geezah]

You are on the money, Grampa.

Here in Scotland, all tenant fees have been outlawed. With the extra burden of compulsory registration, tenancy deposit schemes, Tenant information packs, EPCs, blah, blah,blah, rents have increased to cover the admin costs incurred - no one likes to work for nothing.

I suppose in a way it's a good thing because, right upfront, tenants know exactly where they stand and can shop around on a level playing field. It is quite wrong that the likes of Foxtons and Yourmove have been ripping off tenats by hidden charges (which occur everywhere - just booked a holiday on line using debut card, a charge was levied for this on the very last page!).

Hidden charges everywhere should be outlawed in my opinion.

[Grampa]

I take the view it is a free market and agents should be able to charge what them want to whom, as long as all the fees are transparent and therefore agree with the asa ruling. Tenants can then chose or not to use a certain agent and landlords should also be aware that their properties may have longer vacant periods if their agent has excessive fees.

But for an 10% agent to claw back a £100 ref/check in fee on a £500 pcm tenancy over a 12 month period the rent would need to increase to £583. Which is not reasonable and lets face it in reality the the ref fees are likely to be at least double that for a lot of agencies so either service will suffer or agents fees to landlords will increase.