Crackdown on 'unfair' letting ads

Updated: 
Housing estateLetting agents and private landlords have been given a deadline of November 1 to put an end to "unfair" adverts which hide extra charges tenants will have to pay.

The Advertising Standards Authority (ASA) has sent letters to trade bodies across the letting sector to help them comply with the deadline to make sure that compulsory charges such as administration fees, reference checks and inventory costs are clearly stated up front.

Calls have been made in recent months for a stronger clampdown on agents which behave badly and charge rip-off fees.

The Royal Institution of Chartered Surveyors (Rics) recently likened the sector to ''the property industry's Wild West'' and c harity Shelter recently branded letting agents' fees as ''truly out of control'' after finding that tenants are having to go without food or turn off their heating to cover the costs.

Recent research from Shelter found that tenants were being charged £350 in fees on average to set up a tenancy, on top of deposits and up-front rent. These costs were in spite of agents often receiving separate fees from landlords to set up a new tenancy on their behalf.

Letting agents must make changes to ensure non-optional fees are clear on their websites and in advertising across the media, the ASA said.

To give tenants a clearer idea of the "full asking rent", adverts should state, for example: " £1,500pcm (per calendar month) plus £150 admin fee per tenant."

If some compulsory fees cannot be given in advance, this must be made clear in the advert, to give tenants enough information to easily establish how further charges will be calculated.

When space is limited, for example if the advertiser is using Twitter, they must provide information on additional fees through a prominent statement on their website, a link or via a pop-up.

The ASA said it will be monitoring compliance closely after November 1. It can refer those who do not comply to the Office of Fair Trading (OFT) for legal action. The OFT can seek undertakings from a company that it will change its ads as well as court injunctions to prevent companies from making misleading claims in their ads.

ASA chief executive Guy Parker said: "Renting is a big financial commitment and it's simply not fair to hide extra charges. This practice hits tenants in the pocket at a time when they need every penny they've got.

"But this isn't just an important win for them. It will also benefit letting agents and private landlords because their customers will trust them more when they're up-front about non-optional fees."

A lack of homes for tenants to choose from means that demand in the rental sector is still strong, despite some people finding it easier to make the move on to the property ladder as the housing market gathers pace.

The deadline announcement was welcomed by the Association of Residential Letting Agents (Arla), which said it had worked with the ASA as the guidelines were developed.

Ian Potter, managing director of Arla, said: "As the private rental sector continues to grow, transparency around fees is vital to ensuring the letting industry is trusted by landlords and tenants alike.

"For this reason, transparency is part of our code of conduct and any member that doesn't adhere faces investigation by either the relevant ombudsman or face disciplinary action by Arla."

Christopher Hamer, the property ombudsman, said: " Disclosure of fees so that prospective tenants understand at the earliest opportunity what costs they will incur is important.

"The ASA ruling now provides consistency for agents and tenants as to how the fees will be displayed in a relevant and meaningful way."