Letting agents accused of breaking consumer law after mystery shop
Letting agents across England may be breaching consumer law by demanding deposits before allowing renters to see their contracts, a Which? investigation has found.
Which? visited 20 letting agents across England, posing as prospective tenants seeking to rent a property.
Its mystery shoppers asked to see a copy of the terms and conditions they would be signing up to, but one in four agents failed to provide a contract.
In some cases the letting agent requested a reference check to be paid for and completed before they saw the terms of the contract.
Duty by law
Which? emphasised that letting agents have a duty by law to provide prospective tenants with the key information they need to make an informed decision about the letting.
The consumer watchdog said it believes demanding a financial commitment before tenants can view the terms and conditions could fall foul of consumer law by trapping tenants in contracts they have not had an opportunity to review.
Five letting agents, including a branch of Connells, required a commitment or a holding deposit before the tenants could view a sample letting agreement.
A spokesperson from Connells told Your Mortgage sister title Mortgage Solutions this was not company policy and a draft tenancy agreement should be freely available on request.
“We certainly do not insist on a deposit being paid as a condition of providing the draft,” she said.
“Staff have clear directives on best practice and we would be keen to know the branch in question and circumstances surrounding the request in order to refresh our colleagues understanding of this and their obligations to the customer.”
Further, three of the letting agents that required a commitment or deposit before tenants could see a contract are members of the Association of Residential Letting Agents (ARLA).
However, David Cox, chief executive of Arla Propertymark, disputed the research’s findings.
He said there was no legal requirement in England or Wales to have a tenancy agreement, and as legal statute overrides contract, any unreasonable terms in a contract would be unenforceable in a court of law.
He added: “As such, we would question the suggestion that agents are breaching consumer protection law. We have long been advocating for a legal requirement to have a written tenancy agreement, as they have in Scotland, to avoid many of the misunderstandings cited in this research.
“Which? implies that even the Ministry of Housing Communities and Local Government’s (MHCLG) template tenancy agreement is in breach of their best practice; this demonstrates just how complex the issue around terms and conditions can be.”
Government code of practice
Which? also found evidence of unclear language that could confuse tenants in at least eight contracts, including vague descriptions that tenants may be required to pay a “reasonable” amount or “a fair proportion of” additional charges.
The investigation suggested tenants could not always trust letting agents to act in their best interests with some agencies apparently skirting the law.
As a result, Which? said it was is calling on the Competition and Markets Authority (CMA) to investigate further issues relating to practices and tenancy terms and conditions in the rental sector and to take action where needed.
Natalie Hitchins, head of home products and services, said that it is outrageous that some agents are demanding cash up front before tenants are even shown a contract, committing them to agreements before they know what they are signing up to.
She added: “The results of this Which? investigation show how vital it is for the government to introduce a legally enforceable code of practice to ensure all letting agents act in a professional manner.
“The CMA must also investigate the sector and take action where needed to tackle unfair practices and contract terms.”