What rules do agents have to follow regarding their fees (England)

On 27 May 2015, the Consumer Rights Act 2015 (section 83 onwards) came into force (in England only) to bring in rules regarding letting agents fees.

These are intended to create full transparency – so landlords and tenants know exactly how much they will be required to pay before they enter into any form of contract or agreement.

Under the new regulations, agents are required to display details of all their fees, charges or penalties (however expressed) payable to the agent by landlords or tenants for any letting agency or property management work they may do.

The only exceptions are:

• rent payable to a landlord
• tenancy deposits
• fees, charges or penalties which the agent received from a landlord under a tenancy on behalf of another person

These regulations do not apply to landlords, but they do apply to property managers (if you make a charge).

Note that it’s not what you call yourself (ie agent or property manager) that matters but what you actually do. So if you find tenants for a landlord or deal with the management of their property for a fee, you are covered by the regulations. But not if you just publish the advert or provide a way for landlord and tenant to contact each other in response to an advert etc.

Here are some more points to note:

• All figures must be quoted inclusive of VAT
• The fees need to be displayed at all premises where you deal face to face with the public, and the list must be somewhere it is likely to be seen by customers – i.e. they must not have to ask to see it
• It must also be displayed on your website
• There must not be any surcharges or hidden fees, and vague phrases such as ‘administration costs’ must not be used
• It must be clear whether each charge is made per property or per tenant
• If the fee cannot reasonably be determined in advance you must describe how it will be calculated
• There is no legislation on what an agent actually charges (to landlords) as this is a commercial decision for each agent to take
• Note that fees charged to tenants are now  strictly regulated under the Tenant Fees Act.  See our separate information on this.
• You must also publicise whether you are members of a client money protection scheme and
• Say which Redress Scheme you belong to

These new rules are in addition to guidance published by the Advertising Standards Authority and any other relevant consumer regulations

ARLA have created templates for ARLA members to use to display your charges.

Enforcement issues

The new rules will be enforced by Local Authority Trading Standards, who can impose a fine of up to £5,000, although they have to give you written notice first and there is a procedure they have to follow.