Property Agent Register

If you are treating consumers, business customers and competitors fairly and honestly, then you are unlikely to fall foul of the regulations.

Nonetheless, we suggest that you use this guidance to review your commercial practices and ensure that they are compliant, and to decide for yourself what steps you should take. 

In this section, we set out some of the practical steps that we think would help you to demonstrate compliance with the regulations. 

• The Consumer Protection from Unfair Trading Regulations 2008 (CPRs)
• The Business Protection from Misleading Marketing Regulations 2008 (BPRs)

Following these steps should help you to show that you are acting in an appropriate way and doing what could be reasonably expected of you to treat consumers, business customers and competitors fairly. 

What is reasonable to expect of you will depend on the nature of your commercial practice, the services that you provide and the factual context (for example what stage of the marketing or sale process has been reached). 

• At the outset of the property marketing process, it is unlikely that a court would expect you to make detailed enquiries into the issues that a conveyancer or surveyor would look into, for example examining whether the seller has good title to sell or the structural condition of the property – unless, that is, you have led consumers and business customers to believe that these are part of the services that you offer. 
• Later on in the marketing or sale process, you may discover, or be put on notice about, such problems or difficulties with the property, at which point a court might well expect you to make further enquiries about these matters. 

Within the scope of your business activities, you need to consider:

• What systems and safeguards you have and should have in place and what steps you can take to ensure that they work in practice, including appropriate staff training.#
• What audit trails you should maintain to help you to demonstrate that you act in a suitably diligent way.
• What enquiries and checks it will be appropriate for you to carry out in particular circumstances. If you decide not to make enquiries or undertake checks, you will need to be able to show that you were justified in making that decision and that it was reasonable in the particular circumstances for you to act in that way. Similarly, where you rely on others for information, you need to be able to show that it was reasonable for you to rely on them and to the extent that you did. For example, while it may be reasonable for you to rely on some information supplied to you at the outset of the instruction process by your client, if later on you discover reasons to doubt its accuracy, you should take appropriate steps to check whether the original information supplied is indeed correct. 

There is a defence of due diligence to some criminal offences ...

under the CPRs

• misleading actions
• misleading omissions
• aggressive practices
• virtually all of the specific banned practices

... and BPRs

• misleading advertising

In order to prove that you have behaved with due diligence, you need to show that you committed the offence because of:

• a mistake, or
• reliance on information supplied to you by someone else, or
• the act or default of someone else, or
• an accident, or
• another cause outside your control

AND that you took all reasonable precautions and exercised all due diligence to avoid committing the offence. 

The key thing to bear in mind is that you need to be able to show that you acted appropriately to minimise the risk of something going wrong (due to a mistake, an accident etc). 

For example, where you rely on information supplied by someone else (such as your client), you must still exercise your own judgement before including it in your marketing. 

If you are prosecuted for failing to show professional diligence (which the CPRs prohibit generally) you will not have a due diligence defence available to you – what is listed above will not apply.

If you knowingly or recklessly allow your conduct to fall below the standards of professional diligence, and you do something that materially distorts the economic behaviour of the average consumer, you will be committing a criminal offence under the CPRs. 

It is therefore important that you review your conduct, processes and training regularly – and make all necessary changes to demonstrate that you are not behaving recklessly and are not knowingly engaging in conduct that is not professionally diligent. 

If you are a company officer, you should also note, in relation to any criminal prosecution under the CPRs or BPRs, that you need to exercise proper control and supervision of your staff. 

You can be personally liable if an offence is committed by your staff, and it can be shown that this was due to your consent or connivance, or to neglect on your part.

If someone else commits an offence (apart from failing to show professional diligence) under the CPRs or the BPRs, and they can show that the offence was due to your act or default, you will also be guilty of the offence. 

Alternatively, if the other person is able to avoid liability by relying on due diligence, you may still be guilty of an offence if it is shown that it was your act or default that led to the situation. To avoid liability, you would then need to prove your own defence of due diligence.

Ensure that any information you provide when marketing your services, in whatever form (for example:  flyers, websites, newspaper advertisements, verbal discussion), is true and accurate.

Take reasonable steps to check the facts stated in advertising, and be aware of findings being made by bodies such as the Advertising Standards Authority and relevant ombudsmen 

Ensure that any comparisons you make with competitors

... for example your record of selling properties compared with theirs or the benefits of clients using your services as opposed to theirs ...

are fair, objective and can be substantiated.

Ensure that any information you have made available is not liable to mislead potential new clients, for example that:

• details about the properties you have 'Sold' or 'Sold Subject to Contract', or
• statements about professional qualifications or membership of a professional body

are accurate and not out-of-date. 

When offering to sell services to consumers, you must state your charges and fees inclusive of VAT. 

Whether you charge a fixed fee or a percentage of an as yet unknown sale price, stating the fee or percentage inclusive of VAT is more meaningful for consumers. 

In all cases you should make it as easy as possible for consumers to work out how much they will pay overall. 

Make sure that you have a sound basis for your claims about market conditions and your advice on prices and prospects for sale.

If the market advice you are giving to potential sellers and buyers is inconsistent, despite relating to the same types of properties in the same area, re-examine and adjust your advice. 

Give clients the information they need to make an informed and efficient choice, before an agreement is made and at each stage of the process thereafter.

• Do not leave out or hide such information, or provide it in an unclear way that is ambiguous or hard to understand. 
• You should also always make sure that information is given in good time. 

Your terms and conditions should be clearly set out, and you should particularly highlight any surprising terms, both in the contract, and in brochures. 

It is good practice to present a tariff of fees and charges, and to explain clearly what services you are going to provide. 

Fees should be quoted inclusive of VAT to consumers, and in respect of property sales should be stated with an example based upon the marketing price, e.g. ‘Our commission is 1.2% (including VAT) - if your property sells for the asking price of £300,000 you will pay a fee of £3600’. 

You must also make sure that clients understand the implications of sole selling and sole agency rights. 

You should provide this information in writing, as this will help you to comply with the requirements of professional diligence. 

It will also protect both you and your clients should disputes arise later on about what was said. 

In the documentation you give to the client, make sure all material information is clear and prominent. 

• Draw this information to the client's attention before the agreement is signed.
• It is not enough to include material information in small print or in a bundle of documents handed to the client before a contract is signed.

For property sales businesses that are engaging in ‘estate agency work’ (as defined in the Estate Agents Act 1979) that Act requires you to inform the client about certain types of information prior to agreement.

Give clients adequate time to read any written information you provide. 

Before marketing a property we would expect a property sales business to gather sufficient information about the property in order to market it professionally and honestly. 

This information should be gathered carefully and in good faith, and you should not simply rely on information provided by others  ...

• if this is incomplete, or
• you suspect it may be wrong, or
• you have grounds to doubt it. 

The extent of the information you are required to gather will depend on the circumstances of your business and the services you offer (which should be made clear to a consumer). 

While the regulations apply to the full range of property sales businesses, the standards expected to comply with them, and to avoid liability, will depend on the circumstances and, in particular, the level of service that a business provides.

For example, at one end of the spectrum ...

• You may be carrying out a service simply of advertising property for sale by others (i.e. as a passive intermediary). 
• If so, you may have a defence to prosecution for any misleading acts or omissions in the advertisement, where you receive the advertisement for publication in the ordinary course of your business (that is, it is drafted by your client, not by you), and you do not know and have no reason to suspect that publication would amount to an offence. 

Another type of service may be ...

• Providing some kind of hosting service or platform through which prospective house buyers and sellers can contact each other.  
• In these circumstances you should make sure that the information templates you provide to sellers are comprehensive, so that all information reasonably likely to be relevant to meet the expectations of platform users is captured (thus avoiding a misleading omission). 
• You should also act promptly to investigate and, if necessary remove, content you are given to publish, where you become aware that it may be in breach of the regulations. Failing to do so may mean you are liable under the regulations. 

The following paragraphs are aimed at mainstream property sales businesses that: 

• inspect a property
• market it for sale
• arrange viewings
• communicate offers
• negotiate the sale

(although elements of these paragraphs may be relevant to business models which offer some of these services).

When you gather the information you need for marketing purposes, take reasonable steps to establish its truth and accuracy. The following framework may help you: 

In general we would expect property sales businesses to carry out an inspection of the property, and to take reasonable steps to gather relevant information to provide to prospective purchasers.

• If you decide not to undertake an inspection or you only carry out a limited one, you may still be in breach of the CPRs ...
• if there was material information that you could have discovered and should have disclosed in the marketing of the property, had you carried out an inspection or done a more detailed one.

Take note of:

• the number and size of rooms
• the status of any services
• how the property is heated
• its general condition
• any significant and visible structural defects
• and other features that prospective buyers need to know about in order to decide whether or not to view a property.

Be observant. During an inspection you may observe things that put you on notice that further enquiries might be needed.

• This would include, for example, the fact that a property is (sub)let or is occupied by someone who may have rights to remain in the property after a sale. 
• You may also notice other facts such as applications for planning permission displayed at nearby premises, footpaths over the land itself or evidence of flooding.

You should make sure you are in a position where you can answer accurately the reasonable queries of prospective purchasers in relation to such matters.

Draw on your professional knowledge of the local market:

• for example the prices of comparable properties that have sold recently in the area
• any notable local features.

 For example, where a property is next to:

• a mobile phone mast
• a railway line
• a nuclear power station
• a sewage plant

these facts must not be hidden or left out. You should not, for instance, edit photos of the property to remove undesirable features.

It is clearly material information whether a property is freehold or leasehold, but you may also need to highlight particular features of the title, such as:

• the length of term left on a lease
• any unusual payment obligations under the lease
• or surprising and onerous restrictive covenants (if known).

Consider whether there is anything about the property and its sale that you should know but do not, or which makes you think that something is not quite right or that there may be a problem with you marketing it? If there is, then check things out. 

Ask your client.

• In some circumstances, it may be sufficient for you to rely on what your client tells you, for example where it puts your mind at rest on a small concern or is fully consistent with other reliable information that you already hold. 
• However, you should not simply rely on the client's information if it is incomplete or you suspect it may be wrong or it otherwise raises a doubt in your mind, for example because it does not fit with other information you hold.

Ask your client for supporting documentation. 

• This may give you the reassurance you need.
• If it does not, further checks may be necessary.
• If appropriate, probe further.

Consult official sources where appropriate. For example

• Land Registry
• Registers of Scotland
• Local authorities)

In addition, it may help you to: 

• Explain to sellers at the outset the importance of them providing honest, accurate and truthful information: that giving misleading or incorrect information is likely to be uncovered later in the conveyancing process and, potentially, could endanger the sale and leave both you and the seller open to legal action.
  
• Obtain a commitment (preferably in writing) from clients to tell you if anything changes, for example so a seller keeps you updated if planning permission expires or they learn of a planning application by an adjoining landowner, or a property developer keeps you updated if the estimated level of the service charge goes up or the planned services, which will be covered by the charge, change. 

It is important that potential buyers are able to access accurate information and property sales businesses play a crucial part in this process.

You should have taken steps to make sure that:

• you can answer likely questions and
• you are open about limits to the service you provide and
• you are open about any gaps in your knowledge. 

For example:

• if, for a good reason, you have not seen the property yourself and you have not been able to check basic facts, make this clear from the outset.
• if the information supplied by the seller is limited, as may be the case on probate or repossession sales, declare this upfront. 

You may wish to signpost potential buyers to where they can find out more detailed information, for example:

• environmental information such as flood risk maps
• public information about local amenities.

Consider what information the prospective buyer might reasonably expect you to provide (given the services you are offering) at the outset, when they are trying to identify properties that they would want to view.

This is likely to include the main characteristics of the property and any non-standard features (for example no electricity, no landline or broadband connection). Wherever possible, make this information available to them before they commit to view the property. 

You should also consider whether the particulars are adequate to contain all the material information the average buyer needs to know, and if not, what other means you could use to provide this information.

Consider especially what information the average consumer might reasonably expect you to provide (given the services you are offering) before they commit to paying money (for example for a survey or to retain a conveyancer), and, wherever possible, give them this information. 

If new information comes to light about the property that you are marketing, for example when a sale falls through, consider:

• whether any previous advice you gave to your client may need to be revised, and
• whether there may be implications for your marketing of the property:
• are there existing statements in the particulars or other marketing information that may need to be amended?
• could the new information be material information that must be disclosed to all future prospective buyers?

The reason why a previous sale fell through will not always be material, for example:

• where the buyer pulled out because they did not have the finance or
• did not like the findings of the survey even though those findings did not highlight any major issues. 

However, where a survey reveals significant problems and you are put on notice that these problems do or may exist, you would be expected to make appropriate enquiries. 

• If you have seen the survey (or a relevant extract), and the information is material, you will be expected to disclose it.

For example, if you become aware that Japanese Knotweed is growing in the garden of a property you are marketing, perhaps because a buyer pulls out of a sale and tells you, then you cannot ignore the problem:

• The appropriate action may be to talk to the seller and advise that an expert is brought in who can confirm whether there is a problem. 
• The presence of Japanese Knotweed is an example of the type of material information that you would be expected to disclose to prospective buyers once you knew of it.
• Japanese Knotweed (or other invasive non-native plants) may cause serious damage to outbuildings, conservatories, drains, garden walls, patios, paths and drives. They can be difficult to control and costly to treat, and their presence may affect property values and deter lenders.

You should use your professional judgement to assess new information, for example how credible it is, whether it needs exploring or whether it needs further corroboration. 

You should take proportionate and reasonable steps to check the information:

• If there is not yet enough evidence to satisfy you there is material information, but it nonetheless raises questions, then you should not ignore this, but should take steps to establish the facts.
• Where the evidence, or your further steps, clearly shows there is no material information, you will have satisfied yourself there is no new material information and would not therefore need to take any further action.
• Where there is strong enough evidence to satisfy you there is material information, you need to disclose the material information as a matter of course. 

Being thorough in the checks you take will help you to determine whether there is material information to be disclosed. 

It will also help you to demonstrate that you took all reasonable steps to avoid committing a breach. 

If your checks establish that there is:

• advice to clients to revise
• marketing information to amend
• material information to disclose

then act promptly to avoid misleading actions or omissions. 

Ensure that you keep clients informed about offers that are made, unless they have instructed you in writing not to do so.

It is good practice to keep a written record of all offers made and your related actions, in case there is a dispute later on about whether you passed on an offer (and how much it was) or not

Ask the prospective buyer how they would fund the purchase of your client's property, for example whether by

• a cash payment
• a cash payment once their own property is sold
• a mortgage

and give your client the answer. 

Ensure that you keep clients informed of the

• nature and extent of any personal interest you or a person connected to you may have in the transaction
• services that you are supplying to interested buyers and
• services you have arranged for the buyer that will lead to you being paid commission. 

To keep a sale on track for exchange of contracts and completion, you may wish to chase up your client. 

Where the process does not go smoothly, you should be careful not to put pressure on your client to accept a lower offer than they are willing to accept.

Ensure that you do not pressurise potential buyers into agreeing to receive services such as a mortgage or conveyancing work from you or a person connected to you.

For example, do not refuse to pass on their offers or restrict how you deal with those offers where potential buyers refuse to take out these services. 

Be open with them about any referral fees or commission you will earn if they take up your recommendation. 

Where a prospective buyer has made an offer, but the seller is waiting to see if any better offers are made, inform the prospective buyer promptly about the existence of any new offers. 

To keep a sale on track for exchange of contracts and completion, you may wish to chase up the buyer. 

If so, you should be careful not to put pressure on them to speed up the process – for example by dissuading them from having a survey done – or to encourage them to increase the price they are willing to pay by the use of any misleading information. 

It is an important part of business practice to have accessible, appropriate and user friendly procedures in place so that all consumer enquiries are dealt with in an honest, fair, professional and reasonable manner. 

Where staff:

• fail to handle legitimate consumer complaints properly, or
• place barriers in the way of a client exercising their contractual rights

this could be an aggressive practice under the regulations, and thus unlawful. It could also of course give rise to complaints under a redress scheme. 

You should have an effective customer complaints procedure that is understood and followed by all staff who may come into contact with the public. 

It is good practice to have a written complaints procedure that is available to the public. 

Deal with complaints promptly, effectively and in a professional manner.  

Make your best efforts to find a satisfactory solution to any complaints made. 

Ensure that the steps you take to satisfy the consumer or business customer meet with reasonable expectations. 

Keep a record of all complaints and note the final outcome. 

Cooperate fully with any appropriate representative or intermediary, consulted by a consumer in respect of a complaint against you. 

For example:

• a Trading Standards Service
• an Ombudsman
• a Redress scheme
• a Citizens Advice Bureau

We think that, in general, letting agents should treat their landlord clients as consumers except where it is clear that all those they are dealing with, are acting in the course of business. 

However, agents should also bear in mind that even when dealing solely with professional landlords that do not need to be treated as consumers, the BPRs, and many provisions of UCTA and SGSA are still applicable.

In our view, the practical effect of legislation such as the BPRs and UCTA is to provide businesses with a comparable level of protection to that enjoyed by consumers:

• in relation to misleading information, particularly in advertising
• as regards at least some major forms of contractual unfairness. 

Letting agents also owe landlords (their principals) duties under the law of agency. These include:

A duty to comply with lawful instructions. 

• These are likely to be set out in the contract, but may be supplemented by separate written or oral instructions. 
• There is, however, no duty to comply with an instruction to do something that is unlawful (either for the landlord or the agent) to do.
• So, for example, if you are an agent, you should not follow an instruction from your landlord client that would cause you to mislead a potential tenant, since this would put you, and possibly the landlord, in breach of the CPRs.

A duty of care and skill.

• This duty is similar to that implied by the SGSA. 
• It also requires the agent not to act negligently. 
• Landlord clients may look to you to guide them through the lettings process, so in carrying out your duties, you should do them with care and skill. 
• Where you give landlords advice, this should be accurate, to enable them to comply with the law.

A duty of loyalty. 

• The agent’s responsibility is to represent the interests of their principal, and not to allow any other interest (their own, or someone else’s) to conflict with this. 
• If a potential conflict of interest arises, the agent must make full and frank disclosure of this to their principal. 
• This duty also restrains agents from making ‘secret profits’, meaning money the agent is paid in addition to their agreed commission from the landlord client, and which the landlord client does not know about. 
• So, for example, you should tell the landlord of any sums you propose to charge potential tenants, and disclose any commissions or other benefits you receive from workmen for passing work to them.
  

A duty not to sub-contract.

• If an agent wishes to sub-contract, he must obtain the express permission of the principal, otherwise he will remain entirely responsible for any work that is done. 
• So for example you should take care to ensure that you are able to exercise sufficient control over the workmanship of contractors you instruct to advertise, clean or repair the landlord’s property. 

Although you may be entitled to contract out of these duties in some circumstances and if your landlord client agrees, you will need to ensure that any exclusions would be neither unreasonable under UCTA nor (unless it is clear your landlord client is a business) unfair under the UTCCRs.

In all circumstances, if you want to be sure that any terms you want to use to contract out of these duties will be legally effective, you will need to:

• flag them up clearly to your landlord client, and
• explain what their effect will be. 

You should ensure that any information that you provide when marketing your services, in whatever form (including flyers, websites, newspaper advertisements, and verbal discussion), is:

• clear
• accurate
• not misleading. 

You should also not mislead by omission whether dealing with:

• business clients: protected by the BPRs, or
• consumer clients: protected by the CPRs. 

The purpose of these requirements is to make sure prospective client landlords:

• are not misled in any way and 
• so they can make informed and therefore efficient transactional decisions about using your services.

For example, you should not give a misleading impression regarding the size of your business, the numbers of properties on your books or the amount of rent you think you will be able to obtain for a property. 

You should make sure that any comparisons you make with competitors, for example:

• your record of letting properties compared with theirs or
• the benefits of clients using your services as opposed to theirs

are:

• fair
• objective
• can be substantiated and
• are not misleading. 

You should ensure that details are accurate about:

• properties that you have let
• properties you are in the process of letting
• or statements about whether you hold professional qualifications or
• membebership of a professional body
• membership of a redress scheme. 

Where you are a member of a redress scheme, you should identify which one. 

Where you are a member of a professional body, redress scheme or code, you should ensure you comply with its rules. 

Failure to do so could result in you committing a banned practice, that is, claiming that you are approved by a body but failing to comply with the terms of that approval.

Your pre-contract information should provide a summary of the key features of your service.

• It should also draw attention to any terms or exclusions that are likely to be unexpected or surprising to a potential landlord client. 

You should not:

• Leave out material information, or
• Hide it by including it only in small print or
• Not making it as prominent as it needs to be.

Material information about your services is likely to include:

• what steps you will take to secure a tenant for the landlord and manage the property (if providing a management service)
• things you do not offer as part of your services, if these are significant and would or might usually be done by a lettings professional
• things the landlord will remain responsible for in terms of managing the rental property, if these are significant and would or might usually be done by a lettings professional · the timescale within which you will pass on rent to the landlord
• any minimum period to be covered in the contract with the landlord, or any restrictions the contract imposes on the landlord if they want to terminate their liability to pay fees to you.

Further examples of potential breaches of consumer law when advertising to prospective landlord clients

It may be a misleading action

• to claim you have a large number of tenants seeking property to rent, if that is not the case.
• to state you can get more rent for the property than you know you can actually achieve.
• to state that you are a member of a tenancy deposit protection scheme, or a redress scheme, when you are not. 
• to give the impression that you will find tenants of a particular quality, if you cannot guarantee this given the extensiveness of the checks you carry out.

It may be a misleading omission

•  if you fail to make sufficiently clear what is covered by any pre-tenancy vetting service you provide

To remove the risk of breaching consumer and other law, you should provide information about your fees and charges that is

• full
• accurate and
• not misleading

so that potential landlord clients can assess how much it is going to cost them to use your services.

It is likely to be misleading to provide information about some charges and not others, or only to reveal them gradually. All non-optional fees and charges should be set out up front. 

Your description of your services should fairly reflect the way you charge for them. 

For example, it may be misleading to state that you charge a specific percentage (eg 11%) for a comprehensive management service, when in fact you make extra charges for particular aspects of this service. 

It may also be misleading to describe your services as ‘let only’ or similar, if in fact you have terms providing for renewal commission to be paid should the tenant remain in occupation at the end of the fixed period of the tenancy agreement. 

Fees that are genuinely variable or optional should be clearly set out and brought to the attention of a potential landlord client early on, and not merely included in the small print of the contract. 

For example, we consider you are more likely to comply with the law if you provide, at the outset, a summary of fees and charges in a single tariff that landlords can easily access.

Where fees and charges are variable, or optional, such a tariff should outline the factors affecting the calculation of the charges involved. It will aid clarity if you provide worked examples of calculations of this kind.

Advertising that includes any fee information should:

• set out all the nonoptional fees that landlord clients will be asked to pay under the contracts you use, and
• indicate clearly where the landlord can find out further information about any variable or optional fees
• (for example, in on-line advertising, by means of a link no more than one click away from the initial fee information to a detailed tariff). 

Where a charge is likely to be unexpected, or to come as a surprise to a potential landlord client, you should highlight the details individually. 

We would consider renewal commission to be an example of a charge that should, in particular, be drawn to the attention of a client in this way.  (See below for more information on renewal and sales commission).

Further examples of charges that we consider should be given particular prominence in pre-contract information, as well as in the contract, include (but are not limited to):

• charges for providing a tenancy agreement
• charges for familiarising yourself with a tenancy agreement provided by the landlord
• any fees the landlord will have to pay for a minimum period
• ‘check-in’, or ‘check-out’, fees
• security deposit handling fees. 

You should also make it clear if you will only provide certain services on payment of an additional fee. 

This might include things such as

• dealing with call outs
• serving notices
• drafting renewal documentation. 

Because your clients are likely to include consumers and possibly businesses that will not be able to reclaim Value Added Tax (VAT), we consider that any charges you advertise should be inclusive of VAT (including charges that are expressed as a percentage, for example those expressed as a percentage of rent). 

This should not prevent agents from providing landlords with a breakdown of the VAT amount if requested. 

The CPRs require that an invitation to purchase should display the price inclusive of taxes. Where the price is stated to be a percentage of a future fee, we consider that the percentage stated should include any additional tax, and the resulting percentage may reasonably be calculated in advance. 

Further, we consider that a VAT exclusive percentage is more likely to mislead consumers about how much they will actually have to pay, and it is therefore less meaningful for them. There is a risk that this would constitute a misleading action under the CPRs.

You should fully disclose to your potential landlord client all charges that you will, or may, impose on prospective tenants, for example for carrying out pre-tenancy checks. 

This is important information since the level of any charges you ask tenants to pay you, may have an impact on the number of tenants who may be willing to rent the landlord’s property, and so affect a landlord’s transactional decision whether to use your services. 

In some cases, where a cost is shared between the landlord and tenant, it is important that each party knows what the other is paying, in order that each can assess whether the portion they are being asked to pay is reasonable. 

Examples of potential breaches of consumer law

It may be a misleading action:

• to describe your service as a ‘full management service’ or similar, or to emphasise the benefits of the comprehensive nature of your services, when you in fact make additional charges for certain management activities, such as organising maintenance work.
• if you fail to disclose fully to your client landlord what fees you may charge to any tenant for introducing them to the landlord’s property or, 
• in Scotland, if you give the landlord the impression that fees can be recovered from tenants, when in fact it is unlawful to charge such fees. 

It may be a misleading omission:

•  if you fail to inform a landlord client that fees for drafting renewal documentation are not included in your standard/regular fee.

In order to comply with the requirements of the UTCCRs in your contracts with landlord clients, you should:

• Use plain intelligible language. You are more likely to achieve this if contracts are intuitively laid out, use meaningful headings, and are written in plain English. Landlords should be able to understand easily what their rights and obligations are.
• Avoid hidden pitfalls. Terms that are particularly significant or that are likely to come as a surprise to your prospective client, such as additional charges, should appear prominently in the contract, rather than appearing only in small print.
• Avoid creating a significant imbalance in the parties’ rights that operate to the landlord’s detriment. You should take care that protecting your commercial interests does not come at the expense of consumers’ interests. For example where you place obligations on consumers, you should be careful that they do not apply in surprising or unduly wide circumstances.
• Set out clearly what services you will provide, and what will remain the responsibility of the landlord.
• Set out clearly what the landlord has to pay under the contract and when these sums will fall due.
• Avoid requiring or allowing behaviour that would conflict with your ordinary legal or statutory duties to your clients, or interfere with your client’s ordinary legal rights.
• Avoid including terms that are prohibited by any code or redress scheme that you (the agent) belong to. 

We consider that renewal commissions and sale commissions deserve particular mention because they may surprise potential clients and because they have already been scrutinised by the courts under the UTCCRs. In OFT v Foxtons Limited the High Court analysed the fairness of certain commission terms used in a lettings agreement. In light of this judgment, the CMA considers the following terms, in particular, are likely to be found to be unfair. As such they would not bind consumers even if they had signed a contract agreeing to be bound by them, and therefore we consider they should not be used or relied upon in contracts with consumer landlords:

• Terms which require landlords to pay agents renewal commission after the sale of their property to a third party (‘third party renewal commission’) because the original tenant remains in occupation.
• Terms which require landlords to pay agents a ‘sales commission’ in the event that the landlord sells the property to the tenant, unless the agent is instructed separately, and in specific terms, to carry out estate agency services for that sale. 

In addition, terms which require a landlord to pay ‘renewal commission’ to an agent:

• in circumstances where there is no further work after the introduction of the tenant, or where the landlord may decide not to continue instructing the agent in relation to any work, or
• where this is contingent solely on a tenant (or an associate) remaining in occupation after the initial period, 

attract a significant risk of being found to be unfair as in the Foxtons ruling, which has also been followed in the County Courts. Agents who wish to charge renewal commission may therefore wish to seek legal advice to satisfy themselves that their commissions are structured and presented in a fair and transparent way. 

Where an agent provides a tenant finding service only, and does not provide any ongoing property management or other services after the introduction of a tenant, we consider that it would be a surprising contractual term to require the landlord to pay commission for any events that take place after a tenant has been introduced. 

We consider that this would be an unexpected term because it would not be clear what service the agent provided for this additional fee. Moreover, a term of this kind could give rise to a situation where a landlord would become liable to pay commission to two agents in respect of the same event, for instance where he has instructed a different agent to manage the property.

Any contractual provision requiring payment of renewal commission, must, as a basic requirement (as was emphasised by the High Court in the Foxtons case), be transparent and clearly brought to the attention of the consumer. If you wish to charge a renewal commission you should therefore, as early as possible, actively draw to your client’s attention the following:

• the fact that you may charge them this commission
• the circumstances in which it is payable, including making clear if commission will be payable even if you do no further work for the landlord
• the amount or rate of commission. 

We consider you may be more likely to be able to show that a renewal commission term is fair if you have obtained the landlord’s specific agreement to such a term and you have first given him the option not to pay it. For example, it will be more likely to be fair if the landlord is given the option to pay a lower initial fee, in exchange for agreeing to the obligation to pay a further commission if the tenancy is renewed. 

You are also more likely to be able to demonstrate fairness if your commissions are structured in a balanced way. For example, if your justification for taking a renewal commission is the benefit that you have obtained for the landlord by securing the income stream of the tenant’s continued rent, the contractual terms should also provide the landlord with a pro-rata refund of commission if the tenant defaults on the rent, or leaves the property, before the end of any period over which the commission is calculated (including any initial minimum period). 

Additionally, a renewal commission term may be more likely to be fair if the agent’s entitlement to commission decreases over time and ceases within a reasonable period of time (unless it is demonstrably linked to the amount of work undertaken by the agent and that work does not diminish). 

If a renewal commission is payable only when you are instructed to carry out work, it is more likely to be considered fair. 

We consider that renewal commission terms are likely to be unfair, and therefore should be avoided, if they require landlords to pay commission fees in circumstances where they have terminated the agent’s contract for good reason (for example where the agent has breached the contract or has not carried out services with reasonable care and skill).

Further, a failure to inform a landlord at the outset about the existence of renewal commission terms, including the amount and the circumstances in which they will have to be paid may be a misleading omission.

It may also be a misleading omission to fail to provide a reminder, in the period leading up to the renewal when the landlord is deciding whether to keep the tenant or change agent, that renewal commission will be payable.

Further examples of potential breaches of consumer law in relation to contracts:

• It may breach the UTCCRs if you include a contractual term that unfairly limits a landlord’s ability to change agent (for example a sole agency term for a period of time that cannot be justified) or makes him pay a fee when you do nothing in return for it (for example a fee you charge if the landlord terminates his agreement with you, even if you do no further work in finding a tenant).
• It may be a misleading action to give the impression that the landlord is paying purely for a tenant finding service if in fact the contract obliges him to pay any sum that relates to matters that take place after the tenant has moved into the property, for example renewal commission or rent collection fees.

This chapter aims to help you to comply with consumer law when you are:

• marketing properties to prospective residential tenants, including by way of online portals
• drawing up property particulars. 

You should ensure that:

• You have appropriate processes in place in order to gather and check information that you present to potential tenants, so that they are not misled, and you are able to answer reasonable questions they ask.
• Your advertising is clear, accurate and not misleading. It should provide all the information a potential tenant needs in order to make informed and therefore efficient decisions about the property being marketed.
• Your advertising provides potential tenants with sufficient information about costs and charges to enable them to compare the full cost of renting one property against another. All information about costs, charges and deposits should be presented together with information about the cost of rent.
• Information that cannot be included, due to restrictions on space, is clearly flagged and made easily accessible (for example no more than one click away on a website). 

You should have appropriate processes in place to gather and verify all the information that potential tenants will need in order to decide whether a property that you market is suitable for them. You should aim to collect all of the information that you will need to include in advertising and property particulars, and also any information that the average prospective tenant would need to be provided with during the letting process

If you are an agent, this is likely to require ensuring that you obtain sufficient information from the landlord, making further enquiries if information is incomplete or appears inaccurate, and satisfying yourself that the property is properly marketable. 

In some circumstances you may need to ask the landlord to carry out further work before you market the property. For example, if you are marketing a property with gas appliances, we consider that the property’s compliance with the Gas Safety (Installation and Use) Regulations 1998 is likely to be material information.

In order to comply with the CPRs, you should check that the landlord has complied with his obligations (such as obtaining a gas safety certificate), and if not, advise him of the steps he must take before the tenancy agreement is finalised.

Because you are responsible for the information you publish, you should not publish information that you know is, or suspect may be, inaccurate. If you provide inaccurate or misleading information about the property, you may have difficulty showing that you acted with professional diligence if you did not inspect the property for yourself. 

You should take particular care to verify any attractive feature that you intend to rely upon to advertise the property, for example, parking rights, surrounding amenities and views.

All information provided to potential residential tenants should be clear, accurate, and not misleading, and should not omit material information.

The purpose of the legal requirements applicable here is to enable consumers to make informed and therefore efficient transactional decisions about the property and any other product on offer. 

For example this could include whether:

• to click on a property displayed on a website
• to go into a letting agent’s premises to make further enquiries
• to arrange a viewing
• to take more formal steps such as paying over money or signing an agreement, or
• to exercise any legal rights the consumer has. 

Information that you provide is likely to have an impact on consumers’ decision making, so you should make sure it is clear. 

For example if you use phrases such as ‘fully furnished’, ‘unfurnished’ or ‘partly furnished’, you should explain clearly what you mean by this from the outset in terms of what principal fixtures and/or fittings may be provided, and indicate that a detailed list will be included in the inventory.

In the documentation you give to prospective tenants, make sure all material information is clear and prominent and draw this to the tenant’s attention.  In general we consider that material information is likely to include:

• charges and costs associated with renting the property
• property characteristics such as the location, number and size of rooms, the type of energy supply and heating, sufficient information about council tax, for example, the amount payable or band
• the condition of the property, including any significant features that are likely to put a person off entering into a tenancy (such as defects, serious damp or potentially unsafe gas or electrical wiring)
• when the property will be available
• the terms of the tenancy agreement, and in particular any restrictions on the use of the property (such as whether smoking or pets are permitted), or any other unusual or onerous terms
• any requirement to use a particular third party trader (such as an energy or communications supplier)
• any restrictions on the type of tenant (such as housing benefit claimants), or circumstances in which a guarantor may be required (for example if required for student tenants, or tenants earning below a certain income level). 

Material information should be provided in all circumstances, whether or not the prospective tenant requests it, and it should be presented accurately from the outset.

Where tenants do have questions, you should of course answer them accurately and as fully as possible. This may mean asking someone for further information (for example the landlord if you are the agent). 

Be open about any gaps in your knowledge.

• Do not repeat information given to you if you think it may not be true or accurate, or that it is incomplete.
• You should, instead, take steps to establish the true, accurate and complete information that the tenant needs to know and communicate that information to him or her. 

Restrictions on space may mean that it is appropriate for more details to be given in the property particulars, or through the use of web links. However, web links should not be used in a way that would tend to obscure information that consumers need to know when looking at an advert.

While the property is being advertised for let, you should keep particulars and other marketing materials up-to-date, periodically checking or re-checking the details to make sure you have accurate information and do not mislead prospective tenants.

If you discover at any point during the marketing of a property to let that information is incorrect, you should act promptly to correct it. This includes information being displayed by others on your behalf, (for example, displayed on property portals).

• If you are a business that provides a platform or portal through which prospective landlords and tenants can contact each other, you are responsible for the lawfulness of the content that is displayed.
• You should ensure that the information you give to potential tenants is clear and presented in a way that they can understand easily. You should not include anything likely to mislead them and you should not leave out any material information.
• You should make sure that the information templates you provide to landlords and agents are comprehensive, so that all information reasonably likely to be required is captured.
• In particular, you should collect enough information from advertisers to enable the display of accurate fees that neither mislead by what they say, nor in what they leave out. 
• Where an agent or landlord charges specific fees that are known, these should be stated. We do not consider that a statement that ‘fees may apply’ would, in these circumstances, be sufficient to meet your obligations. 
• Where optional or variable additional fees may be charged, you should display the actual fees that landlords and agents charge, rather than giving general examples of what such fees might be. These fees should be presented in a tariff no more than one click away from the rental figure.
• You should act promptly to investigate and, if necessary, remove content you are given to publish where you become aware it may breach the requirements described above. 

Further examples of potential breaches of consumer law when providing information in advertisements and property particulars to tenants 

It may be a misleading action 

• to describe a property in a way that is literally true, but fails to reflect or take account of, an important factor or piece of information. For example, if you describe a property as being in a ‘quiet area’, even if this is literally true, where it is located above a late night bar.
• to use photographs that do not depict the property and fixtures accurately, or that give a misleading impression about what is included (for example the use of a garden that appears in a picture but is not actually included), or to alter images to leave out problematic features.
• to make broad statements about the condition of the property for example 'immaculate condition', 'recently decorated'; or about its features, for example 'double glazing', 'central heating', ‘security locks on all windows’, when the description is misleading and/or when such statements only apply to parts of the property.

It may be a misleading omission or a banned practice

• to offer for rent a property that cannot be rented. (For example, if you advertise a property that should not be let to tenants because it does not conform to the relevant housing safety standards).

It may be a banned practice

• to advertise to tenants that you have properties to rent at a specific rental rate, when you do not actually have enough properties on your books at that rental rate to satisfy likely demand. 

Information about charges provided in advertising and other promotional material should be:

• full
• accurate
• clear
• not misleading

It may be misleading:

• to include information about only some charges, whilst failing to disclose other fees that will be charged, or 
• only revealing additional charges gradually through the advertising and negotiation process. 

Rent and other charges should be presented inclusive of VAT, including where the charge is a percentage of something else.

We consider that the existence and size of fees of any description is likely to have an impact on the average consumer’s decision making, and we set out some more detailed guidance on making different types of fees transparent below. 

Fees should be accurately described, and clear information should be given about the nature and extent of the service being provided in return. This will help consumers to form a view on the reasonableness of the fees and to decide whether or not they wish to proceed on that basis. 

For example, you might charge a substantial fee (several hundred pounds) for drawing up a tenancy agreement.

• In some circumstances, this may involve a good deal of work and be commensurate with the fee charged. 
• However, if a substantial fee is charged but little or no work is done (for example merely printing off a standard contract) then it could be misleading not to make the extent of service clear.

Landlords and agents should not attempt to impose charges on a tenant or prospective tenant unless they are set out clearly in a contract the tenant has already agreed to, and the terms being relied on are fair.

Some types of fees are prohibited by housing-specific legislation.

• In Scotland, it is illegal to charge or receive any premium other than the rent, a refundable deposit (not exceeding two months’ rent) and/or any payment under a Green Deal plan, as a condition of the grant, renewal or continuance of a tenancy. A premium includes any fine or other sum and service or administration fee or charge. This includes, for example, fees for carrying out credit checks, taking up references, checking and preparing an inventory or arranging duplicate copies of the tenancy agreement. 
• The law in England, Wales and Northern Ireland does not prohibit agents from offering services to tenants and charging them money for these, except in some limited circumstances, for example where the Accommodation Agencies Act 1953 applies. It would be misleading under the CPRs (as well as prohibited under the specific law mentioned) to ask for such fees to be paid at all. Non-optional fees 

Where an advert provides details of the property and any other cost information (such as rent), all other non-optional fees and charges should be included there as well. You should include non-optional fees and charges, whether or not they can be calculated in advance. 

The Advertising Standards Authority (ASA), in a ruling that we consider reflects the legal position under the CPRs, has held that non-optional fees relating to consumers taking on a tenancy, need to be included in online adverts and there is also Committee of Advertising Practice (CAP) guidance on this.50 Following the ASA ruling, the CAP provided detailed guidance to lettings agents, advising them of the new requirements for residential lettings agents when advertising on their websites and placing advertisements on property portals and in other media.

Where you are advertising specific properties along with the rental costs, the CAP guidance advises that non-optional fees that can be calculated in advance (for example, a fixed administrative fee) must be included with the quoted asking rent (for example £1500pcm + £150 admin fee per tenant). 

If the non-optional fee cannot be calculated in advance, the CAP guidance explains that relevant advertisements must:

• make the existence of the charge clear
• note that it is excluded from the advertised asking rent
• provide information to allow consumers to establish easily how the charge is calculated. 

Although the ASA ruling deals with fees relating to taking on a tenancy, the CAP detailed guidance for lettings agents extends beyond this and includes as material information, other financial information a consumer would need in order to make informed decisions, such as refundable deposits.

Both the ASA ruling and the CAP guidance emphasise the importance of making sure you set out all the fees a tenant must pay clearly and up front and you should familiarise yourself, and comply, with this guidance.

Non-optional fees should always be presented up front and made clear. If a landlord or agent charges tenants for any services that do not apply to all tenants but are non-optional for tenants to which they apply (for example a guarantor’s fee), they should also be considered non-optional . 

Where you are promoting specific properties along with details of the rental cost, we consider it is likely to be a misleading omission for you to fail to include in your marketing materials, advertisements or other promotional literature, information such as:

• fees that the tenant has to pay for his application to be processed, such as the cost of any reference and/or credit checks
• fees for the initial setting up of the tenancy, including inventory costs or other administration fees
• fees which must be paid in certain circumstances, such as charges for additional tenants, the use of a guarantor, or pets
• any ongoing or future fees or charges likely to be incurred by the tenant, for example, costs to extend, renew or terminate the tenancy and inventory check out fees. Variable and optional fees

Fees that vary depending on the tenant’s circumstances and optional fees (namely those which any consumer could genuinely choose to pay or not to pay) should be presented up front and made clear, unless there are genuine restrictions on space. If there are such restrictions, you should clearly set out the fact there is a fee in addition to the rental figure, what the fee is for, and provide information that will make it easy for the prospective tenant to find out the detail and work out how the fee is calculated. 

For example, in online advertising, you could do this by providing a prominent ‘click through’ to a tariff of all fees and charges, or in the case of off line advertising, by making the tariff available in any of your offices that tenants might visit. We consider that you are more likely to comply with the law if this tariff is easy to find and clearly set out. You might, for example, consider grouping charges according to how much the tenant has to pay to move in, how much it will cost them per month, and how much it will be likely to cost them to move out at the end of the tenancy.

There may be some situations where a charge could in theory be optional or variable, but in practice, because of its nature, it will in fact be paid by the vast majority of tenants at a particular rate. In such a case you should consider treating these as non-optional and foreseeable, in order to avoid the risk of misleading consumers. Future contingent charges

Some charges will be harder to predict because you may not know immediately whether a particular tenant will have to pay them. This is because the charge relates to costs you incur as a result of some future conduct on the part of the tenant and these costs may fall due a long time in the future. Where this is the case, you should make this clear, and indicate what the fee is likely to be, and how it will be calculated. 

Charges the tenant may become liable to pay after they have moved into a property (such as charges to compensate the landlord for damage to the property, for consents, or to discharge any other duty the tenant owes under the tenancy agreement) need not be set out in advertising. However we consider that all such fees do need to be provided for in the tenancy agreement (which the tenant should be given the opportunity to read in good time before being asked to sign). This type of charge can be assessed for fairness under the UTCCRs and you should ensure that they are set at a reasonable level to avoid a risk they are found to be unfair or a penalty and therefore not applicable. As a general rule a fee is more likely to be found to be fair if it simply covers a disbursement that you incur, and more likely to be found to be unfair if it is surprisingly high. 

Further examples of potential breaches of consumer law when providing tenants with information about the costs of renting a property 

It may be a misleading action:

•  to describe a fee as merely covering a disbursement at cost (for example in relation to carrying out of a pre-tenancy check) if in fact it includes a profit element.

It may be a misleading omission:

• to provide material information exclusively in a form that tenants cannot reasonably be expected to see. For example, even if you provide information about additional fees on your website, this may be insufficient if it is not prominent enough for consumers to find it easily

It may be both a misleading action and a misleading omission:

• to charge a substantial fee (for example, £300) to ‘draw up the tenancy agreement’, if in fact the agent simply prints off a standard form tenancy agreement. This could mislead consumers by misrepresenting (both through what is said and what is not said) the scale of the work involved, and the complexity of the task, such that it could cause a consumer to agree to pay more than they would have done had they known what work was actually involved. 

This chapter aims to help you to comply with consumer law when you are:

• conducting viewings
• starting negotiations with a prospective tenant
• carrying out pre-tenancy checks and explaining any guarantor requirements
• taking pre-tenancy and holding deposits
• arranging and signing the tenancy agreement.

You should:

• Ensure that prospective tenants understand the nature of your role and are treated fairly throughout the negotiations.
• Ensure that prospective tenants are given an accurate impression of the property’s characteristics and are able to view the property (if they so wish).
• Provide prospective tenants with clear information about pre-tenancy checks, including what they will cover and how much they will cost.
• Provide clear information about any guarantor requirements and about the roles and responsibilities of guarantors.
• Provide prospective tenants with clear information about why you are asking them to pay a pre-tenancy payment or holding deposit, the sum that is required and the circumstances in which it will/will not be refunded.
• Ensure that the terms of any tenancy agreement that you provide or recommend for use with a tenant are fair.
  
• Ensure that the prospective tenant has sufficient time to familiarise themselves with the tenancy agreement. 

Agents will usually be acting for the landlord and not the tenant.  It is important in these circumstances

• that agents do not give prospective tenants a misleading impression that they are acting for them where that is not really the case, and
• to make it clear that the agent and landlord are two separate parties.

As a lettings professional, you are required to comply with your consumer law duties where applicable:

• if you are an agent you should not seek to promote your landlord client’s interests in such a way as to jeopardise your compliance with these requirements.
• In particular you should not mislead prospective tenants, treat them aggressively or seek to get them to agree to unfair terms.

You should make sure prospective tenants are treated fairly and kept properly informed:

• throughout all of the negotiations
• during viewings
• when conducting pre-tenancy checks
• making any guarantor arrangements
• in concluding the tenancy agreement. 

Prospective tenants should be given clear information about what the process will involve (including any pre-tenancy checks) as soon as they have expressed an interest in renting a particular property. This should be made available before any viewing is arranged. 

In most situations, we consider that a prospective tenant will wish to view a property before deciding whether to rent it.  

Where a prospective tenant does view the property:

• All parts should be made available for inspection, wherever possible.
• If it is not possible for them to inspect all parts of the property, you should describe accurately to the prospective tenant the room(s) or part of the property not seen. If you do not do so, you may be committing a misleading action. 
• Defects or other factors that are likely to have an impact on the decision to rent the property should not be concealed.

There may be some circumstances where this does not happen:

• One such circumstance might be where the tenant is arriving from overseas or a distant part of the UK (as may sometimes, for example, be the case with students). 
• Where a tenant does not view the property, it is important for you to ensure that anyone authorised to view the property on his behalf, has received the material information needed to help them decide whether or not to rent the property.

It is important you make clear to prospective tenants what principal fixtures and fittings are included with the letting. For example, it could be a misleading omission if you fail to mention that white goods in situ at the time of viewing a property will not be included as part of the agreement.

It could be a misleading omission not to make the prospective tenant aware of key terms of the tenancy, or important restrictions on the use of the property, or to make information about costs or fees they will be asked to pay available only after the viewing has taken place. 

The information that agents give to tenants and landlords about pre-tenancy checks should be clear, accurate and not misleading. Material information should not be omitted.

Tenants should be given clear information about what any pre-tenancy check involves as soon as they have expressed an interest in renting a particular property. 

• Although a check may be designed to protect the landlord’s interests, because tenants often pay for the check, and because it involves analysis of their personal data, we consider there will be material information the prospective tenant requires, before they are able to make a fully informed decision as to whether to proceed. 
• They should be able to assess up front whether they are likely to pass the check, and so whether it is worth pursuing their interest in the property. 
• This is particularly important where the tenant is being asked to pay for the pre-tenancy check.

The material information a prospective tenant is likely to need includes:

• what criteria the check will assess, for example credit worthiness, unpaid judgements
• what data sources it will use
• what, if anything, it will cost
• what the potential outcomes could be, including whether other people are being checked at the same time and if so what the implication of this might be (for example whether someone else could be offered the property even if the prospective tenant passes the pre-tenancy check).

This information should be given before the tenant is asked to pay any fees, or a holding deposit (including a refundable deposit), and should be made available before any viewing is arranged.

If a prospective tenant does not pass the pre-tenancy check, or must take any additional steps in order to qualify for the property, you should inform them of the reasons.  It may be a misleading omission if you do not provide this information as the person may need it to help them decide whether to provide additional information to try and secure the property.

It is important to bear in mind that information about prospective tenants is personal data, and so there are rights and obligations around its collection and use.

If you are an agent, you should describe accurately to the landlord how comprehensive the check will be and if there are any restrictions on passing on information you find out (for example, because of data protection law). 

• The advice you give to the landlord as to whether a tenant is suitable to rent the property should be clear, accurate and not misleading.
• You should carry out the check with reasonable care and skill, and highlight any gaps in your knowledge. 

Where a guarantor is required, landlords and agents should provide the potential guarantor and the prospective tenant with clear, accurate and full information that is not misleading about what this involves. You should not omit material information.

Material information the tenant and guarantor need is, in our view, likely to include:

• any criteria the guarantor has to meet to be considered suitable, such as income level
• the extent of the liability the guarantor would be accepting, including the obligation to pay for rent arrears, damage to the property and any other breaches of the tenant’s covenants (with information about what these could amount to)
• the terms of the actual tenancy agreement the guarantor will be party to
• whether the property will be in joint occupation and if so whether there is a risk that the guarantor will be asked to pay the cost of rectifying damage, or pay any other money owed by anyone other than the tenant for which they are acting as guarantor, or that they will be asked to pay for other breaches of the tenancy agreement by the tenant or others.
• a requirement for the guarantor to continue to receive income that significantly exceeds the rent
• any terms included in a tenancy agreement that the guarantor has not seen or confirmed that they agree to be bound by (for example by signing the tenancy agreement as guarantor)
• terms requiring the guarantor to compensate for damage caused by occupants who are not joint tenants with the tenant they are acting for, or for damage to common parts. This may be particularly relevant in the context of student lets. For example where the property is let to a number of students, each student is unlikely to be able to control who else becomes a resident, or what damage they may cause to the common parts of the property. It may therefore be unfair to require guarantors to be responsible for paying such sums in these circumstances
• terms requiring the guarantor to pay sums that cannot be recovered from the tenant’s deposit (for example because the Tenancy Deposit Scheme has ruled against the landlord), or terms requiring a guarantor to compensate the landlord for damage caused, which allow the landlord or their agent to determine the extent of the damage. 

The terms governing any guarantor agreement should be fair. Examples of potentially unfair terms include:

• a requirement for the guarantor to continue to receive income that significantly exceeds the rent
• any terms included in a tenancy agreement that the guarantor has not seen or confirmed that they agree to be bound by (for example by signing the tenancy agreement as guarantor)
• terms requiring the guarantor to compensate for damage caused by occupants who are not joint tenants with the tenant they are acting for, or for damage to common parts. This may be particularly relevant in the context of student lets. For example where the property is let to a number of students, each student is unlikely to be able to control who else becomes a resident, or what damage they may cause to the common parts of the property. It may therefore be unfair to require guarantors to be responsible for paying such sums in these circumstances
• terms requiring the guarantor to pay sums that cannot be recovered from the tenant’s deposit (for example because the Tenancy Deposit Scheme has ruled against the landlord), or terms requiring a guarantor to compensate the landlord for damage caused, which allow the landlord or their agent to determine the extent of the damage. 

Further examples of potential breaches of consumer law relating to pre-tenancy checks and guarantor requirements 

It may be a misleading action

•  to give a prospective tenant the impression that a pre-tenancy check is more extensive than it actually is, when he is being asked to pay for it, because the tenant needs to decide whether the amount being charged is reasonable, and therefore whether he will agree to pay it.
• to tell a guarantor that their role is a ‘mere formality’ or give the impression that it does not carry significant risks, responsibilities and obligations, since the guarantor needs to assess the risk they are taking in order to decide whether to proceed.

It may be a misleading omission

• if, where a number of people are separately interested in a property and you carry out pre-tenancy checks on them all, you allow any of them to assume that they are the only prospective tenant. 

It is unlawful to demand a fee for undertaking a pre-tenancy check in Scotland and doing so is also likely to amount to a misleading action under the CPRs because it cannot be charged.

Information about pre-tenancy payments should be clear, accurate and not misleading. 

• Material information should not be omitted and the terms governing the circumstances in which pre-tenancy payments are to be made, should be fair. 
• Tenants should not be pressurised into paying over money.
• Pre-tenancy payments should not be requested where they are unlawful. For example, in Scotland, the Rent (Scotland) Act 1984 prohibits the payment of ‘premiums’.

The purpose of any pre-tenancy payment should be made clear to the prospective tenant. 

• You need to be clear, for example, if its purpose is to indicate that the prospective tenant is serious about renting (but is otherwise refundable); or alternatively if it is to protect the landlord from loss if the prospective tenant pulls out later in the process.
• Where the purpose of the payment is to cover specific disbursements the landlord or their agent has to pay to process the tenant’s application, money should only be spent on disbursements if this has been clearly explained to the prospective tenant and he specifically agrees to this.
• It could be a misleading action, for example, to describe a payment as a ‘deposit’ if it is not refundable, or is used to cover disbursements.

The tenant should be given all of the material information that he needs to make informed transactional decisions, including decisions about whether to pay any pre-tenancy payment, and also whether in the circumstances he wants to pursue renting the property.  Material information is likely to include:

• The details and sums of any costs and disbursements to be taken out of the deposit, and the approximate dates or stages in the process when these will be incurred.
• Whether or not payment of the deposit means that the property will be taken off the market. We consider it likely that many prospective tenants will assume that once they have paid a holding deposit, they will be able to take up a tenancy and move in as long as they pass the pre-tenancy checks and complete all the formalities. If this is not the case, it should be made clear.
• Whether the holding deposit, or any part of it, is to be used as payment towards future rental costs in the event that the tenancy agreement goes ahead.
• The circumstances in which the deposit (or any part of it) will or will not be refunded, including whether a refund would be made if the tenant simply changes his mind about renting the property.
• The tenant pulls out of the deal before the relevant costs or disbursements covered by the pre-tenancy payment have actually been incurred by the landlord or agent.
• The agent continues marketing the property and the landlord has not suffered any loss by the property being ‘held’.
• Any loss the landlord suffers is smaller than the amount of the deposit or pre-tenancy payment (in which case the amount left over should be refunded).
• The property is not ready on the date the tenant was told it would be, and the tenant therefore needs to pull out to rent somewhere else.
• The property does not conform to its description, or its condition does not comply with the requirements of housing legislation60 when the tenant is due to move in. ·

The terms on which a pre-tenancy payment or holding deposit is taken should be fair. 

• Terms that allow the landlord or their agent to retain a holding deposit without a clear rationale or justification are likely to create a significant imbalance, and so be unfair. 
• We consider that a term that makes a pretenancy payment or holding deposit non-refundable in all circumstances is likely to be found unfair. This is because there are likely to be at least some circumstances in which these sums should be refunded.

The following are examples of the types of circumstances in which we consider that holding deposits or pre-tenancy payments should, in principle, be refundable:

• The landlord decides not to let the property to the prospective tenant because the landlord decides the tenant’s pre-tenancy checks are unsatisfactory, even though the prospective tenant has been truthful and not misled the landlord or agent.
• The tenant discloses, in the pre-tenancy check, information that means they are not suitable to rent the property but before carrying out the pretenancy check, the landlord or agent failed to explain clearly that these matters would be checked and to give the prospective tenant the option not to proceed.
• The landlord decides not to let to the tenant for any other reason, but the tenant is still prepared to proceed.

A landlord or agent’s practices should not place the prospective tenant under undue pressure to pay a deposit or any other pre-tenancy payment. For example it could be an aggressive practice to require a deposit from a prospective tenant before they have been given the opportunity to inspect the property or the tenancy agreement.

Landlords and their agents should also take care to treat tenants fairly in situations where the deposit is taken a long time before the tenancy is due to commence. 

• For example in the context of student lettings it can sometimes be many months between when the tenant looks for a property and they are able to move in. 
• In some situations the ability to go ahead with the tenancy may also be dependent on what grades students attain. 
• It may be an unfair term (by creating a significant imbalance) to require a deposit that is nonrefundable where there is a significant likelihood that the prospective tenant will have to pull out in circumstances where the landlord can still let the property to someone else without incurring any loss. 
• Using such a term to generate a financial advantage may be an unfair commercial practice.

Further example of potential breaches of consumer law relating to pre-tenancy payments or holding deposits

It may be a misleading action:

•  to take holding deposits from more than one prospective tenant for the same property, whilst giving each of them the impression that their deposit has secured the property.

It may be an aggressive practice:

• to get a prospective tenant to act quickly to rent a property by misleading them into thinking they have to decide early, or into thinking the property is about to be rented by someone else, when this is not in fact the case.
• to delay or refuse returning a holding deposit where the prospective tenant is entitled to it, in particular where this may have the effect of denying the refund.

It may be unfair:

• Where pre-tenancy checks are carried out on several tenants, and the landlord selects one because he has a higher income level, any term that prevents the unsuccessful applicants from getting their holding deposit back in full may be unfair. 

In our view, if you are a landlord or agent presenting a tenancy agreement to a prospective tenant you should:

• Ensure: that the terms of any contractual agreement are fair, and written in plain and intelligible language.
• Check: that the terms in any agreement you use, or recommend for use, are fair and do not include any terms that you know are, or may be, unenforceable. Lettings professionals are likely to find it helpful to have 65 regard to the OFT’s guidance, (now adopted by the CMA), on unfair terms in tenancy agreements64 when drafting, recommending or enforcing terms.
• Explain: the nature of the agreement to prospective tenants before they sign, so that they are able to navigate the paperwork and understand their rights and obligations under the tenancy agreement. We consider that it is likely to be particularly helpful in ensuring your compliance with consumer law, to explain to them how either party can end the tenancy, and what steps and formalities are required to do so.
• Highlight: any terms that are likely to be surprising to the prospective tenant or are unusually onerous. These should be brought specifically to the tenant’s attention before they sign the agreement. In our view tenants are likely to assume that the ‘small print’ is standard, so surprising clauses (for example to do with payments, restrictions on use or treatment of the property) may take consumers by surprise unless you take care to ensure that they are aware of them and understand their impact.
• Provide: prospective tenants with a copy of the tenancy agreement so that they can decide if they are happy with the obligations it would place on them, and so that the tenant has sufficient time to familiarise themselves with the agreement, before signing it or paying any money in relation to it.

You should not assume that consumer law does not apply where a term is ‘individually negotiated’. This is only true of certain elements of the law on unfair contract terms, and in any case only applies where there is an actual negotiation (rather than the tenant being presented with a choice between alternative standard clauses). We consider it most likely to apply only where a term is inserted at the tenant’s specific request. 

Further examples of potential consumer protection breaches relating to fairness of the tenancy agreement

Examples of potentially unfair terms include:

• unusual or overly restrictive requirements the tenant will have to satisfy
• unreasonably high charges for permissions (for example keeping pets) or conducting repairs, where the level of the charge is likely to come as a surprise to the tenant
• terms that require tenants to pay charges, the amount of which can be set at the trader’s discretion or varied unilaterally
• terms which require the tenant to use a particular third party such as a specified energy or telecommunications supplier throughout the whole of the tenancy
• standard charges for breaches that do not reflect the landlord’s actual loss, or which require the tenant to pay charges to the agent that are not invoiced to the landlord
• a requirement that imposes longer notice periods for ending the tenancy on the tenant than the landlord
• fees that apply in surprising circumstances or relate to matters that would not usually attract a charge (for instance rent collection, or processing the rental payment)
• terms that the tenant has not had the chance to read before being bound by them
• terms that require the tenant to carry out repairs that are the landlord’s responsibility.

Additionally, it may be a misleading omission to fail to inform prospective tenants of any important obligations under the tenancy agreement, for example, a requirement to undertake maintenance of common areas (for example a garden in shared student accommodation).

This chapter aims to help you comply with consumer law when you are:

• getting the property ready and making it available for occupation by the tenant
• giving tenants the information they need immediately before and on entering a property
• taking a security deposit
• handing over the property.

You should:

• Ensure the property is made available on the date agreed, and the tenant is kept informed of any delays.
• Ensure that when the tenant moves in, the property conforms to all statements previously made to the tenant about its specification (including furniture, fixtures, fittings and any works that had been agreed).
• Provide the tenant with all the information required by law about the condition of the property, along with other material information such as information relating to energy suppliers.
• Ensure that any security deposit is properly protected and the tenant is given information about which scheme it is with.

The information you give to tenants about the condition of the property when they move in should be accurate, clear and not misleading.

You must provide a tenant with all the material information they need about a property (including information required under housing-specific law), so they can make an informed decision about whether to proceed with the letting.

You should ensure that in the time between the tenant agreeing to take a tenancy, and actually moving in, they are kept properly informed. If material information that was accurate and given in good faith at the time it was given ceases to be true at a later date, it must be corrected if it remains material information for the tenant at that point.

You should check in particular that:

• The property has any items the landlord has agreed to include in the tenancy (this is particularly important where these are items that the tenant has expressly requested during the course of negotiations).
• Any work the landlord has agreed to carry out, or is required due to housing legislation, is done.
• The property is ready on the date agreed with the tenant.
• pay last minute fees that were not previously discussed and agreed with them,
• agree to a tenancy condition that was not previously discussed and agreed with them (for example, that they use a particular energy supplier).

It may be a misleading action if in the course of negotiations about the tenancy, the landlord promises to provide certain pieces of furniture, but then fails to do so.

It may be a misleading omission not to keep a tenant properly informed about progress and appraised of risks that the agreed moving in date would change. 

Care should be taken not to mislead tenants about their contractual or other legal rights in the event of any failure, or delay, in making the property available, or carrying out agreed work to the property prior to them moving in.

Where a tenancy agreement has been signed and arranged, it could be an aggressive practice to refuse to let a tenant enter the rental property unless they:

• pay last minute fees that were not previously discussed and agreed with them,
• agree to a tenancy condition that was not previously discussed and agreed with them (for example, that they use a particular energy supplier). 

Certain information, for instance about the condition of the gas and electrical appliances, is required to be given to tenants by housing-specific law. 

• Sometimes it also has to be given in a particular form (such as a gas safety certificate). 
• This is also material information that the tenant needs in order to decide whether to exercise their rights under the tenancy agreement (for example whether to require the landlord to rectify a problem with a gas appliance).

In Scotland there has been a legal requirement since 1 May 2013, on landlords who provide assured or short assured tenancies, to provide new tenants with a tenant information pack by the tenancy start date.

• The pack is a standardised document which contains information about the tenancy agreement, the property, the responsibilities of the tenant and the landlord and where to get further advice and support. 
• All of this information is likely to be material information under the CPRs.

Further examples of potential infringements of consumer law

It may be a misleading action if in the course of negotiations about the tenancy, the landlord promises to provide certain pieces of furniture, but then fails to do so.

It may be a misleading omission not to keep a tenant properly informed about progress and appraised of risks that the agreed moving in date would change. 

Landlords and agents should make sure tenants have the material information they need so they can make informed decisions about energy suppliers. This is likely to include information such as:

• in what circumstances the tenant can change energy supplier (when the tenant is responsible for paying the bill),
• whether they need to get the landlord’s consent before changing supplier,
• whether the tenant will need to return the account to the original supplier at the end of the tenancy.

If tenants are required to seek the landlord’s consent, landlords should not unreasonably withhold or delay their consent and any terms of an agreement between landlords and letting agents should not have the effect of preventing or unreasonably delaying the landlord’s consent.

You should make sure that if you take an inventory of the property, it is carried out and recorded accurately. Providing the tenant with an incorrect inventory could be a misleading action. One way to mitigate this would be to give the tenant sufficient opportunity to review the inventory, challenge any points of disagreement, and agree a final version. The tenant should be given a copy, together with other important information such as the gas and electricity meter readings, and contact details for the landlord and their agent

A tenant is entitled to expect the landlord or their agent to prepare any inventory with reasonable care and skill so that it accurately reflects both the condition of the property and its contents.

Material information the tenant needs will include information as to who to contact if there is a need to discuss the property and (or) the tenancy agreement. The tenant should be given clear information about the circumstances in which they should contact the agent or landlord, and have sufficient information to get in touch with them. For example, the tenant will need to know who he should contact if the boiler stops working, if repairs to the property are needed and who he should contact to give notice. Contact information needs to be kept updated and any changes notified to the tenant.

Further examples of potential breaches of consumer law

• When taking the inventory, the landlord does not record several stains on the carpets, and describes the dining chairs as in good condition, when in fact there are scratches on the woodwork. Making these statements could be misleading actions, particularly given that the inventory is likely to be used to recover money from the tenant’s deposit in the event of a dispute about the condition of the property at the end of the tenancy.
• It may be a misleading action to inform the tenant that the landlord’s preferred energy supplier is cheaper than a competitor, when this is not the case.
• It may be an aggressive practice and also a banned practice under paragraph 25 or 26 of Schedule 1 to the CPRs, to repeatedly contact tenants to try and persuade them to use a particular energy supplier, for example pressurising the tenant to retain the supplier that is the landlord’s choice.
• It could be a misleading omission to fail to give the tenant contact details and clarity about when they should contact the landlord or when they should contact the agent to resolve an issue, as it may hinder the tenant from exercising their contractual rights in relation to the tenancy agreement. 

In many cases, landlords may wish to take a security deposit to protect themselves in relation to risks such as breakages and unpaid rent. If a security deposit is taken, it must be protected in accordance with statutory requirements and registered with a statutory scheme. Landlords and their agents must comply with the rules of the scheme.

Tenants should be given full, clear and accurate material information about any requirement to provide a security deposit. We consider that material information is likely to include:

• an explanation of the purpose of the security deposit
• details of what, exactly, the deposit protects, and the nature of the protection that it offers
• confirmation as to whether it is the landlord or his agent who will be protecting the deposit
• details of exactly where, and by whom, the deposit will be held
• information about when the tenant can expect to receive the statutory prescribed information about the scheme that is being used to protect the security deposit.

It may be a breach of professional diligence to fail to register a deposit taken from a tenant with an approved tenancy deposit scheme.

It may be a misleading omission not to tell the tenant that their deposit is not (as it is legally required to be) protected, and that the effect of this is that the tenant can recover the deposit, with compensation, through the courts.

It may be a misleading action to inform the tenant that their deposit is protected, when you know it is not or you have not checked.

It may be a misleading action for an agent to tell a landlord they have protected the deposit, if in fact they have not. If you mislead landlords about whether or not you would protect deposits, you may also breach the BPRs. 

Tenants should not be given any misleading information about their rights in relation to repayment of security deposits. If a deposit is not properly protected, the tenant should be informed of this as soon as possible.

Landlords will usually have primary responsibility for protecting (in accordance with the statutory requirements) any security deposit they take. Letting agents cannot be considered to be meeting any duty they may have to advise their landlord clients if they fail to take reasonable steps to ensure that the landlord understands his obligations in relation to this, and agree with the landlord how the deposit will be protected to meet the statutory requirements. An agent who has agreed to be responsible for handling the deposit, should ensure the deposit is properly protected. An agent who has agreed to take the deposit from the tenant, but passes it to the landlord in order that he should arrange for it to be protected, should inform the tenant that they have done this.

This is an area where there have been legislative and case law developments in recent years and keeping up to date with this type of information is likely to help landlords and their agents comply with the law.

Further examples of potential breaches of consumer law in relation to the security deposit

• It may be a breach of professional diligence to fail to register a deposit taken from a tenant with an approved tenancy deposit scheme.
• It may be a misleading omission not to tell the tenant that their deposit is not (as it is legally required to be) protected, and that the effect of this is that the tenant can recover the deposit, with compensation, through the courts.
• It may be a misleading action to inform the tenant that their deposit is protected, when you know it is not or you have not checked.
• It may be a misleading action for an agent to tell a landlord they have protected the deposit, if in fact they have not. If you mislead landlords about whether or not you would protect deposits, you may also breach the BPRs. 

This chapter aims to help you to comply with consumer law when you are:

• an agent or a landlord dealing with the tenant during the life of the tenancy
• an agent managing a property on behalf of a landlord.

Overview

• If you are a landlord, when carrying out any services you provide under the tenancy agreement (including those relating to the property), you should carry them out using reasonable care and skill, and in a timely manner.
• If you are an agent providing such services on the landlord’s behalf, you should equally carry them out using reasonable care and skill, and in a timely way.
• You should be fair in your dealings with tenants, not enforce unfair terms and give tenants clear information concerning who is responsible for doing what during the life of the tenancy.
• If you are an agent, you should do what is expected of you under your contract with the landlord, take proper care of the landlord’s interests, and keep them informed. 

In carrying out services in order to fulfil their duties to tenants under a tenancy agreement, landlords and their agents need to have regard to the SGSA and in Scotland, to the common law. These require services to be carried out with reasonable care and skill and within a reasonable time (and where relevant, for reasonable remuneration).

In addition, landlords and their agents need to take care that they do not seek to enforce terms of the tenancy agreement that are unfair, that they do not mislead tenants about their rights or obligations and that they ensure the tenant is given all the material information they need to make informed transactional decisions.

Tenants should not be required to accept additional services from landlords or their agents, for which they must pay, unless this is provided for in the tenancy agreement and is fair. 

• The full extent of the tenant’s obligations should be set out in the tenancy agreement. 
• It could be an aggressive practice or an unfair term to require the tenant to accept services in addition to what is agreed in the tenancy agreement and to make the tenant pay for them (for example, introducing a requirement for the tenant to pay a rent collection fee after the tenancy has already commenced, or requiring a tenant to agree to pay a rent collection fee, if the tenant is willing and able to pay their rent by standing order bank transfer and the agent / landlord could receive the rent in this way). 

There will be instances when, as a landlord or their agent, you will need to be able to access a property that is being let, for example to undertake an inspection/check, carry out maintenance or repairs, or to show prospective tenants or purchasers around the property. 

• In these types of circumstances you should provide tenants with the notice specified in the agreement, which must be reasonable, unless there are exceptional circumstances which justify not giving that amount of notice. More information on this is set out in the OFT’s Guidance on unfair terms in tenancy agreements (OFT 356). 
• You should not use aggressive or deceptive means to gain access to the property, since doing so is likely to impact on the consumer’s contractual right to enjoy quiet possession of the property. 

If you are a landlord undertaking repairs on the property, these should be undertaken within a reasonable period of time and with reasonable care and skill. 

• Requests and notifications for repairs should be prioritised according to urgency, risk, seriousness, and completed to a satisfactory standard and within a reasonable time. 
• What is reasonable will depend on the circumstances including the urgency of the problem and the complexity of the work, and if in doubt you should seek legal advice. 
• We consider, however, that it will be difficult to show the timescale of repair is reasonable if there is undue delay in carrying out repairs. 
• This may mean, for example, you have to choose different (but still satisfactory) tradespeople to repair the property, if the person you would usually use is too busy or unavailable to do it within this timescale.

Disputes sometimes arise about repair or replacement of furniture that has been supplied with the property.

• You should not assume that where a piece of furniture is damaged or ceases to be usable, that this is always the tenant’s fault or is due to excessive wear by the tenant. 
• You should be prepared to replace items where they have failed as a result of reasonable wear and tear. 
• Where this is the case, replacements should be of satisfactory quality. 
• We consider that in practice, this means you should expect to replace the item with something of comparable (or even better) quality.

In some situations the tenant will be responsible under the tenancy agreement to carry out repairs. You should inform them what these circumstances are as it will be material information that they need to know.

• If you become aware of damage to the property that needs to be repaired and the tenant will be liable for the work or cost, you should point this out to the tenant as soon as possible, highlighting the relevant terms of the agreement, so that they can take the necessary remedial action. 
• Failing to notify the tenant could be a misleading omission if it might leave them in a position where they do not undertake the repair, or the damage worsens because the repair is not done quickly or straight away.
• Where the landlord or his agent carries out repair work during the life of the tenancy that is the tenant’s responsibility, and for which the tenant will be asked to pay, this should be done only with the tenant’s agreement and after agreeing the price with him. 
• Terms that require a tenant to pay any price you choose to charge for a repair are liable to be considered to be unfair. 
• When assessing what it is fair to require the tenant to pay for a repair, regard should be had to appropriate guidance such as that produced by the authorised tenancy deposit schemes.
• Landlords should not charge tenants more than is reasonable in the light of such guidance.

You should deal professionally with tenants who are in arrears or otherwise in breach of the terms of their tenancy agreement, to avoid any risk of behaviour that may constitute a breach of the CPRs.

It could be a misleading action if you tell a tenant, who is in arrears (or give them the impression), they may face immediate eviction if they do not pay at once, without also making clear that a court order would be required to evict them. 

Further examples of potential breaches of consumer law when dealing with tenants

• It may be a misleading action to give a tenant inaccurate information about what work needs to be carried out in the property, for example by informing them that building work is needed to rectify damage for which they are responsible, when only minor redecoration is required. 
• It may be a misleading action and an unfair term to try to make the tenant responsible for repairs that it is the landlord’s duty to carry out. For example, informing the tenant they are responsible for keeping the exterior or certain installations in good repair or checking and testing gas and electrical appliances when it is not the tenant’s legal responsibility to do so.
• It may be an aggressive practice to let yourself into the rental property without the tenant’s permission to discuss certain matters (for example the late payment of rent), if the tenant is willing to discuss these matters with you through other methods such as in writing or by telephone.
• It may be an aggressive practice to lock a tenant out of the property until arrears are paid. An example of this might be a landlord who limits a tenant’s electronic key card access to the property, to make them pay rent arrears.
• It may be a banned practice under paragraph 25 of Schedule 1 to the CPRs to make an unreasonable number of visits to a tenant in their home or to ignore their request to leave, for example when collecting rent, inspecting the property or showing prospective tenants around.
• Terms in tenancy agreements may be unfair if they purport to permit landlords or their agent to access the property at unreasonable times, or without giving reasonable notice. It is likely to be an unfair practice to rely on a term that is unfair and unenforceable. This will apply to agents, even where they are not responsible for including the term in the tenancy agreement.
• It may demonstrate a lack of reasonable care and skill under the SGSA or common law to delay carrying out repairs, or to carry out substandard repairs to the property (including failing to take reasonable care not to damage tenants’ property). An example might be failing to undertake work to repair a faulty extractor fan which as a consequence causes a ventilation problem, resulting in the tenant’s property being damaged by mould.

In general the management contract will set out the agent’s duties to the landlord. However agents will also be well-advised to remember their duties under the law of agency, and be aware that terms may be implied into their contracts. If an agent engages in a practice of breaching the terms of his contracts with adverse consequences for the interests of consumers he may face enforcement action under Part 8 of the Enterprise Act.

If you are an agent acting for a landlord, terms are implied into your contract with the landlord by statute (except in Scotland, where common law applies) that you will carry out your services:

• with reasonable care and skill, and
• in a timely manner where no timescale is agreed.

You should consider carefully before seeking (via terms in your management contract) to contract out of (or qualify) these implied duties. Doing this is subject to legal constraints under UCTA and where a landlord client could be considered a consumer is liable to be unfair and unenforceable under the UTCCRs.

You should bear these implied terms in mind when considering how you provide your service to the landlord including, for example:

• carrying out repairs
• collecting rent
• registering a tenant’s deposit
• visiting the property. 

Where as an agent you have agreed to carry out repairs on the landlord’s behalf, your contractual relationship with him means that these should be done within a reasonable time. What is reasonable will depend on the circumstances including the urgency of the problem and the complexity of the work, and if in doubt you should seek legal advice.

Where the landlord has a duty to the tenant to carry out repairs, and you are contracted to carry out this duty as his agent, you should carry out the landlord’s duties with reasonable care and skill as well.

In circumstances where letting agents use third parties (such as a builder contracted to undertake repairs) to carry out duties that are the agent’s responsibility under his contract with the landlord, the agent should act in the landlord’s best interests and inform the landlord of any commissions they receive. We consider that:

• the amount of work that needs to be done
• the amount of work actually completed, and therefore subject to a charge

is likely to be material information. Any failure to share this information with the landlord may be a misleading omission.

Agents must not charge landlords for work that isn’t actually carried out, or claim that work is necessary when it is not.

• Doing so is likely to be a misleading action under the CPRs or BPRs as well as possibly constituting a criminal offence under the law generally. 
• Agents should clearly distinguish in any invoice between the amount of the actual disbursement and any additional fee or commission charged by the agent. 
• Leaving out these details is likely to be a misleading omission, and impair the landlord’s ability to assess whether the agent’s invoice is properly payable under their contract. 

This chapter aims to help you to comply with consumer law when you are:

• giving and accepting notice to end the tenancy
• charging tenants fees for renewing or exiting a tenancy agreement
• refunding the security deposit, or making deductions from it.

You should:

• Act consistently with information already given to the tenant on fees for renewing or exiting a tenancy agreement at the pre-contractual stage.   
• Ensure that the tenant has clear, accurate information about what they need to do to give notice, and alert them if they get this wrong.
• Avoid misleading the tenant about whether you propose to retain any money from the security deposit, and if so, how much. Giving and accepting notice 9.3 All information you give to tenants about notice periods and the form of the notice should be clear, accurate, and not misleading, and you must not omit material information. 

When you give notice to a tenant, you must not mislead them about their rights in law, or as provided for in the tenancy agreement. For example:

• You should not attempt to give the tenant Notice Requiring Possession if you are not lawfully allowed to (for example in circumstances where a security deposit has not been properly protected).72 72 Under Section 215 of the Housing Act 2004, you cannot give the tenant notice under Section 21 of the Housing Act 1988 that you require possession of the property, if you are not holding their deposit correctly in one of the 82
• You should not purport to give a shorter period of notice than is provided for in the tenancy agreement.
• You should take care to rely only on notice terms in the tenancy agreement that can safely be considered fair and enforceable. A term which allows the landlord to end the tenancy at shorter notice than the tenant, or requires the tenant to give more notice than is set out in law (even if only as a default in the absence of agreement) may be unfair. 

When a tenant gives notice:

• Landlords should clearly set out the form of notice they are willing to accept as this is material information the tenant needs. If, for example, you require the notice to be given in writing you should clearly explain which forms of writing you are willing to accept.
• If a tenant gives you notice in a way that you know means it is incorrect (for example, because it is not in writing, or it expires on the wrong day), and it is capable of being corrected, you may be under a duty, before attempting to rely on the error as invalidating the notice, to take steps to enable the tenant to correct it.

In our view, a court might find that the professional diligence requirements of the CPRs mean you should point out to the tenant that they have given notice incorrectly and remind them where to look (for example the tenancy agreement) to identify how to give notice correctly.

Alternatively, the court might find that where you know the tenant has given notice incorrectly, your knowledge of their error and the fact the notice they have given is ineffective, constitute material information. Failure to provide that information to the tenant at the appropriate time could therefore be a misleading omission. 

Any fees for renewing or exiting a tenancy agreement should have a clear contractual basis and should have been drawn to the tenant’s attention before he committed to the tenancy. For example, charges for checking the inventory or for cleaning should have been brought to the tenant’s attention at the pre-contractual stage.

Introducing a new charge at this stage may be both a misleading action and an aggressive practice under the CPRs if it gives the tenant the impression that he cannot leave the property, or receive his security deposit back, unless he contracts to pay a further sum.

Where a tenant wishes to remain in the property, he should not be charged any additional fee for holding over under a statutory periodic tenancy, or given the impression that he is obliged to agree to a new fixed term agreement.

It may be a misleading action and an unfair term to seek to charge a tenant to renew a tenancy where this fee was not set out in the original tenancy agreement and brought to potential tenants’ attention in the pre-tenancy advertising and other materials.

It may also be an aggressive practice to seek to introduce a charge to renew a tenancy agreement at this stage, as doing so may take advantage of the tenant’s limited security of tenure – they effectively have no choice about whether to pay the renewal fee if the alternative is to be given a Notice Requiring Possession. 

If the tenancy agreement is not renewed, and the tenant moves out, the ‘check out’ process, including dealing with the security deposit, should be transparent and fair. You should not attempt to rely on terms that are unfair.

Information given to tenants, and to the tenancy deposit schemes, about proposed deductions from the tenant’s deposit, should be accurate, clear and not misleading.

If you are a landlord or agent, and consider that some of the security deposit should be withheld, exaggerating the sums necessary, or the scale of work required, to deal with damage caused or cleaning required could be a misleading action. 

• The terms of tenancy agreements requiring payment for damage caused by the tenant should be fair.
• You should not try to charge for damage that is not recoverable, or which would not be allowed by the courts or tenancy deposit protection schemes. 
• You should have regard to appropriate guidance in particular the importance of accounting for fair wear and tear, avoiding betterment
• You should be sure that you are able to prove any damage you allege.

Where the security deposit has not been properly protected you should not seek to make any deductions at all, but should return it immediately to the tenant. It is likely to be a misleading action if you attempt to deduct any sums without also having informed the tenant, at the outset of the tenancy agreement, that the deposit is not protected, that he has legal rights to secure a court order to recover the deposit and also, potentially, to be awarded compensation.

Further examples of potential breaches of consumer law on renewal/termination of the tenancy

• At the end of the tenancy, the tenant cleans the property before handing it back. Even though the tenant has cleaned the property appropriately, the landlord or agent has the property cleaned professionally and deducts this from the tenant’s deposit or charges the cost to the tenant. The fact the property will be cleaned professionally is likely to be material information the tenant needs to know and it may be a misleading omission if the landlord or agent does not inform the tenant of this before the tenant takes steps to clean the property himself. Where you do not have agreed evidence about how clean the property is at the start of the letting, or the landlord needs to carry out other decorating due to fair wear and tear, which means the property would need to be cleaned afterwards in any event, it may be a misleading action to claim that the tenant has to pay the additional cost of cleaning at all.
• A landlord who seeks to retain sums from a deposit where the deposit is not protected in a Tenancy Deposit Scheme, may be committing an aggressive practice, because the landlord might exploit the position they have by possessing the tenant’s money and the tenant’s likely need to get back that deposit swiftly.
• A landlord may commit an aggressive practice if, having failed to protect the tenant’s deposit correctly, they persuade the tenant to leave by threatening to serve a Notice Requiring Possession under Section 21 of the Housing Act 198876 (a ‘no-fault eviction notice’) and make the tenant think they are legally required to leave . 
• A landlord may commit an aggressive practice if they serve a no-fault eviction notice in response to a tenant or tenants raising legitimate complaints about the state of the property, including where a tenant asks the landlord to repair it so that it complies with housing-specific law requirements. Alternatively, this may breach the requirements of professional diligence. 

Examples of terms that may be unfair, and which we consider should not be relied on at the renewal stage, include those which:

• give the landlord or his agent discretion to determine whether the tenant is in breach of contract in relation to the state of repair of the property
• require the tenant to pay fixed fees for cleaning or repairing the property, without reference to the actual work carried out.