The charges issued to tenants and landlords by letting agents need greater levels of clarity and regulation, The Office of Fair Trading (OFT) has said.
The OFT are calling for an improvement in how letting agencies go about charging both tenants and landlords amid concerns that agencies are ‘drip feeding’ previously undisclosed charges, even after a contract has been signed.
There has been an increase in complaints issued against agencies in recent years with the UKs Property Ombudsman recording a 26% rise in enquiries between 2010 and 2011.
In a review of 4000 complaints made to Consumer Focus in 2011, the regulator found that 1,557 involved fees and charges, 1,211 were about agents providing poor service, and 1,015 were regarding deposits. The OFT also said that some of the complaints involved ‘surprise’ charges, such as administration fees, and fees for checking in and out of the property. Such charges were often ‘drip-fed’ once a contract had been signed.
The UK has seen a boom in the amount of people choosing to rent properties as an increasingly large number are priced out of purchasing.
Alongside this, mortgage lending to the buy-to-let market increased by 19% in 2012 rising to a four year high of £16.4 billion, the Council of Mortgage Lenders has revealed.
With a rise in both renting tenants and landlords, the OFT wants to see the government implement a policy in which agencies must provide a clear breakdown of charges. Amongst the recommendations are better levels of compliance with legislation and upfront information, ideally with fees set out in a clear tariff of charges at the beginning of the process. A general redress mechanism to help the complaints process, and a consistency throughout the industry such as what information is used for pre-tenancy checks.
Cavendish Elithorn, of the OFT, said:
"Our findings show that tenants and landlords are often dissatisfied with their agents, but we also know most agents want to do the right thing.
"It's important that tenants ask for key information, but we also believe that government, industry and enforcers working together can have a real impact and improve overall standards in the lettings market."