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Compulsory costs and charges: Letting agents

Note: This advice is given by the CAP Executive about non-broadcast advertising. It does not constitute legal advice. It does not bind CAP, CAP advisory panels or the Advertising Standards Authority.

The pricing rules in Section 3 of the CAP Code apply across all sectors and marketing communications covered by the CAP Code. If marketers are not quoting prices they do not need to refer to additional fees.

Know which fees are which

If a price is quoted, non-optional fees must be made clear.  Non-optional fees that apply to all properties and can be calculated in advance must be clearly stated in the ad itself.  If the amount of the fee cannot be calculated in advance, the fact that the fee applies and how it will be calculated should still be made clear.  How much information needs to be included will depend on the circumstances and in the guidance below we give some examples of how non-optional fees might be described in marketing communications, including on property portals.

  • Clearly state non-optional fees in rental property ads
  • Clearly state the existence of fees that cannot be calculated in advance and explain how they are calculated
  • Examples of how non-optional fees could be described in marketing communications
  • Property portals should provide clear access to information about agent’s fees

    Clearly state non-optional fees in rental property ads

    Rule 3.18 of the CAP Code states “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 clearly 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.”

    Lettings agents should ensure that non-optional fees, such as administration charges, are clearly stated in ads for properties being let, for example reference fees (including credit checks, bank, guarantor, previous landlord); application fees; fees for drawing up tenancy agreements; inventory fees etc. Ads should make clear whether charges are per tenant or per property.

    A charge doesn't have to apply to everyone to be considered non-optional. As long as it's non-optional for those it applies to, the existence of the charge and information about how it is calculated should be made clear.

    Clearly state the existence of fees that cannot be calculated in advance and explain how they are calculated

    Rule 3.19 of the CAP Code 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”.

    The ASA upheld a complaint about online ads for a letting agent that did not make clear that an administration fee applied to the quoted prices, or explain how that fee would be calculated (Your-move.co.uk Ltd, 6 March 2013). The advertiser charged different non-optional fees depending on the consumer’s circumstances and the location of the property. The ASA told Your-move.co.uk to ensure future ads made clear when non-optional fees were excluded from quoted prices, and to provide enough information to allow the consumer to work out how those charges would be calculated.

    Examples of how non-optional fees could be described in marketing communications

    Marketers are reminded that all non-optional fees that can be calculated in advance and apply to all or most consumers should accompany the month rent. Including this information elsewhere is unlikely to be acceptable. 

    Further information about any fees which cannot be calculated in advance and how those fees are calculated could be provided on the landing page via clear link or, via a pop-up box. Alternatively, a prominent statement could be provided in press ads or leaflets or a webpages which refer to prices.

    Some examples of potentially acceptable wording to refer to fees alongside the headline asking rent:

    • For non-optional fees that are always the same and apply to each tenant: “£1500pcm + £150 admin fee per tenant”
    • If non-optional fees apply to all customers but can’t be calculated in advance: “£1500pcm + fees”
    • If non-optional fees apply to some but not all customers, the price statement could be: “£1500pcm + other fees may apply"

    Property portals should provide clear access to information about agent’s fees

    The ASA has not yet ruled on the presentation of non-optional fees on property portals.

    Property portals are used by a large number of estate agents, many of whom use different names for the type of fees they charge.  CAP therefore considers that for property portals, it is not necessary to include the non-optional charges next to the monthly rent.  However, that information does still need to be available to consumers and CAP considers that it is likely to be acceptable to provide it one step away from the monthly rent, such as through a pop-up box titled “fees apply” (or similar) which appears next to the monthly rent amount.

    CAP understands that the Consumer Rights Act 2015 indicates that landlord fees need to be included on Estate and Lettings Agents websites.  Although the ASA has not yet ruled on this issue, we would recommend that agents make sure this information is made clear.  The Competition and Markets Authority has guidance on consumer protection law for lettings professionals which is available here.

    See 'Compulsory costs and charges: General'.

    Updated 11/11/2015

     

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