Regulation & Law
News articles looking at national legislation and local regulation and the application of law to the residential property industry.
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TPO reveals its work with Law Commission into retirement leasehold fees
The Property Ombudsman (TPO) has revealed how it has been working with the Law Commission to produce a report that heavily criticises retirement property landlords for charging hidden leasehold fees when properties are sold or sub-let. The fees involved as called ‘event fees’ and over costs “buried deep” in leaseholds and then charged when there is a Transfer of Title or Change of Occupancy – and even when a spouse or carer moves into a property. Agents are also highlighted in the investigation, which has been conducted over two years and shines a light on how many retirement properties are sold. It has now been presented to parliament and the Law Commission says it is now awaiting a response from the government. Landlords criticised TPO backs the Law Commission’s stance that the fees help offset the often substantial cost of the extra on-site healthcare services many retirement home developments offer, but criticises many landlords – and agents – for not highlighting the fees at the point of sale. “Owners are not always being told about the charges, which can be up to 30% of the property price,” the Law Commission says. “Others may be hit by huge bills for changes…
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Purplebricks takes down website claims after ASA probe
Purplebricks has been reported to the Advertising Standards Authority (ASA) once more for claims made on its website and, following a probe by the watchdog, subsequently taken down. The claims under scrutiny on this occasion are that it “takes us just 14 days to find a buyer” but, after the complainant clicked an icon next to the claim, it clarified that “the average time taken from a property going live to a viewing being booked for the eventual purchaser is 14 days”. A similar claim made for the Purplebricks’ lettings operation was also contested by the complainant. Using an identical device, the company said: “6 days – on average it takes us just 6 days to find a tenant”. Upon clicking an icon next to this text the following text appeared in a pop up: “The average time taken from a property going live to a viewing being booked for the eventual tenant is 6 days.” Misleading? The ASA says the complainant suggested that both claims were misleading and could be substantiated and, after the ASA contacted Purplebricks, the company agreed to remove the claims and the case was resolved informally. This is now the fourth complaint received against Purplebricks since September 2016.…
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Total tenant fees ban will cost industry 4,000 jobs, claims ARLA research
A total tenant fee ban will cost the industry £200 million a year in turnover and 4,000 jobs according to research published today by The Association of Residential Letting Agents (ARLA). The research also suggests that landlords will lose £300 million in income while tenants will pay an extra £103 a year in rent on average. ARLA commissioned Capital Economics to look at the lettings industry, which it says turns over £4 billion a year and employs 58,000 people charging on average £206 per tenant or £412 for a pair of tenants. £700 million a year The research also reveals that tenant fees generate around £700 million a year for the industry or 20% of its turnover. In what ARLA describes as the “damning, unintended consequences” of a ban, it will benefit those who move house often, but push up rents for those who must or choose to stay put for long periods. “The letting fees ban favours those tenants who move more regularly, says ARLA Managing Director David Cox. “This is because both short term tenants and long term tenants – who move less frequently – will see a rise in rent equivalent to £103 per year under our…
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Client Money Protection to be made compulsory for all letting agents, says review
Membership of a Client Money Protection scheme must be made compulsory for all letting agents in England, a government working group has concluded following more than six months of written and spoken evidence. This has included evidence from landlords, tenants and letting agents, as well as the various industry bodies including NALS, ARLA, NLA, RLA, RICS and UKALA. The working group, which has been led by Baroness Hayter and Lord Palmer (pictured, right), has revealed in its report that 85% of respondents were in favour of making Client Money Protection compulsory for letting agents, saying that it would help drive up standards across the sector. It also says that efforts to introduce transparency into the industry by making agents publish and highlight their fees and Client Money Protection (CMP) scheme membership, have not worked. Several high profile cases of agents misplacing or spending landlord and tenants funds have come to light during the group’s work, and although it agrees that most agents already have CMP is place, “some mostly small letting agents do not”, the report says. “We heard some quite heart-rending stories from bot tenants and landlords of the losses they incurred.” The introduction of a compulsory scheme is…
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TPO and CTSI launch Phase 2 of letting fees display crackdown – in Berkshire
Agents in Reading, Basingstoke and surrounding areas are warned. The Property Ombudsman (TPO) and the Chartered Trading Standards Institute (CTSI) have today launched Phase 2 of its crack down on agents not properly displaying their letting fees. The launch follows a five-month effort by the two organisations in both Swansea and Dorset, during which 266 agents were contacted and asked to provide photographic evidence to demonstrate their compliance with the law on letting fees. Agents are required to display fees clearly both in their branch and on their website. Non-compliant Any agents that TPO and CTSI found not to compliant were then given the chance to amend and re-submit. Out of the Phase 1 agents, just two have failed to comply either by not replying or addressing problems with their compliance and will now be referred to TPO’s Disciplinary and Standards Committee for investigation and review. “We are unable to name the firms concerned at this stage – a statement will be made if any agents are expelled from the scheme, as per the normal process,” a spokesperson told The Negotiator. “99% of TPO letting agents in Swansea and Dorset are now displaying their fees correctly.” Adrian Simpson (pictured, left)…
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29% of landlords may drop their agent after tenant fees ban, says research
The likely consequences of the tenant fees ban for agents has been highlighted by research from UKALA among landlords. Carried out in partnership with the National Landlords Association among nearly 700 landlords, the research reveals that 71% of those who use a letting agent will continue to do so even if their costs rise following a tenant fees ban, although this also suggests that nearly a third of landlords will not. Nearly 80% of landlords said they expect agent to increase their fees after a ban, while only 9% said they’d switch to self-managing their properties after it comes in. UKALA says it is critical of the ban, and argues that “affordability in the private-rented sector cannot be addressed by preventing agents from charging for legitimate business services, and that the costs will eventually be passed on to tenants in the long-term,” it says. The research also suggests that 40% of landlords are likely to increase rents to cover the additional costs, while just 9% are prepared to pay the extra costs themselves. “UKALA agents strive to provide a premium service which represents excellent value for money, but the ban on tenant fees could leave hundreds of professional businesses with…
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Martyn Gerrard laments “overreaction” to ad that ASA wants taken down
An estate agency asked to remove a poster advert from an Underground Station in north London by the Advertising Standards Authority (ASA) following a complaint from the public has hit out against the decision. David Smith (pictured, below), who is Marketing and Compliance Director at 14-branch Martyn Gerrard, says that although in the “strict interpretation of the rules” the ASA code means the complainant is technically correct, he wonders is this is “really the sort of image they had in mind when they devised their rules? I very much doubt it”. “We were quite surprised to receive the letter from the ASA,” he told The Negotiator. “This particular advert was on an underground station platform and had been up for over a year.” The ASA rules say an advert can’t condone or encourage an unsafe practice or show anything that will result in physical, mental or moral harm. The ASA wrote via email to Martyn Gerrard on 10th March and in his reply to them David agreed to take the advert down, as we reported yesterday, but highlighted his disappointment with the request. He wondered if the complaint may have come from a “vexatious competitor agent” rather than a concerned…
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Tell customers why you’ve got a pink window badge, says TPO
Estate agents have had a new sticker to display on their branch windows for a while now. But do any of their clients realise why? Probably not. Which is why The Property Ombudsman (TPO) which is backing a national campaign to persuade businesses to promote their membership of the Consumer Code Approval Schemes (CCAS). The schemes, which include 43,000 businesses across many sectors including property, cover consumer spending of some £51 billion every year. If you’re a TPO member then you’ll soon be getting the window stickers, as all members of the ombudsman are enrolled in the scheme through their membership. The initiative is part of a week-long campaign launched by Baroness Crawley on Monday to persuade consumers to chooseagents who are TPO members and who therefore adhere to its Code of Conduct, which is one of a family of codes covered by the CCAS scheme. Codes of conduct TPO is the only one of the three ombudsman schemes to have its own codes approved by CCAS, having achieved accreditation in 2005 via the Chartered Trading Standards Institute (CTSI). “TPO has been supportive of the Consumer Codes Approval Scheme since it was first launched by Office of Fair Trading many years ago,”…
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High profile agent withdraws London Underground ad after complaint
Sales and letting agent Martyn Gerrard has withdrawn a London Underground poster ad after a complaint from a member of the public. The ad, pictured below, which to some people might seem like a feel-good and innocent piece of advertising creative, featured two children – a boy at the top of a flight of stairs and a girl sliding down the stairs in a washing basket while wearing a cycling helmet and swimming goggles. The strapline for the advert was “oMG…that was a good move…Making your next big move more enjoyable”. The north London agent, which has 14 branches and was established in 1964, re-branded recently and has been advertising in the capital to support this with a series of ads featuring goggle-wearing children enjoying ‘good moves’ – including a girl clutching a toy rocket. But the latest one clearly didn’t amuse one member of the public. Complaint They complained to the Advertising Standards Authority (ASA) that the poster ad was likely to “condone or encourage children to copy an unsafe practice and whether the ad was also likely to be responsible”. “We contacted the advertiser about the concerns raised and they agreed to remove the ad from circulation,” an…
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CMA rejects industry forum’s call for letting fees ban review
The NALS-organised industry Fair Fees Forum has had its request for a letting fees ban review rejected by the Competition and Markets Authority (CMA), which says there is too little time to complete it. “Given the pivotal role played by the private rented sector, we feel this decision is a missed opportunity to review the way the sector works to deliver the best outcome for all concerned,” says Isobel Thompson (pictured, below), Chief Executive of the National Approved Letting Scheme (NALS). Irreparable damage The CMA decision not to get involved comes despite the Forum warning that great care must be taken not to cause “irreparable damage” to this part of the private rented sector by rushing through a ban without “fully considering the impact on the sector.” The news may surprise many in the industry who had been led to believe that after the soon-to-be published results of the consultation – and given both the pressures on parliamentary time and the need for primary legislations to impose a ban – it was unlikely that one would be introduced until next year. This would have given the CMA plenty of time to review the details of the ban. “This is disappointing news for the…
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