A commitment to professionalism combined, with the obvious financial deterrent of falling foul of the authorities, means that standards in the lettings industry are arguably higher than ever.
There is, however, a small portion of firms that deliberately fail to adhere to their legal obligations. Moreover, with legislation changing constantly, there are also firms who are being inadvertently caught out.
Displaying fees prominently has become an important part of consumer communication and protection. It's now regarded by many as a minimum requirement for any letting agent.
Below we recap the rules and take a look at some of the recent instances of agents being fined for non-compliance.
Agents fined for compliance failures
The issue of letting agents being fined for not complying with consumer rights laws resurfaced in January, when it was reported that a local authority had taken a number of agents to task.
Thurrock Council issued a selection of letting agents with fines totalling up to £14,100. The action came after trading standards officers made visits to firms in 2016 to check whether they were displaying fees correctly.
Agents were reminded of their obligations in a letter, according to the council, and those who remained non-compliant after subsequent visits were fined.
The firms involved weren't named, although one appealed its fine of £3,250; stating that one of its members of staff was away when the original letter was sent out.
The appeal was dismissed by the General Regulatory Chamber, with Thurrock Council claiming that there was 'no excuse' for non-compliance as the legislation was passed in 2015.
What do you need to do?
It's been almost two years since legislation was passed as part of the Consumer Rights Act decreeing that all agents must be more transparent about the fees they charge.
Of course, since then, there have been further developments - most notably the announcement last November that the Government’s aiming to ban upfront fees charged to tenants.
The rules introduced in May 2015 remain unchanged, however, and all letting agents are required by law to comply with the following:
Agents are required to publish details of all fees, penalties or charges that may be payable by a landlord or tenant. Firms are expected to present - both in offices and on websites - a comprehensive list of all the fees landlords or tenants might be liable to pay before, during or after a tenancy.
Redress scheme membership
Since 2014 it’s been a legal requirement for all letting agents to become a member of one of three Government-approved redress schemes. As part of 2015's legislation, it became mandatory for letting agents to clearly identify, both in offices and on websites, which redress scheme they belong to.
Client Money Protection
It may not yet be obligatory for agents to offer Client Money Protection; however, all firms must display clearly whether or not they offer CMP to landlords and tenants.
Why a fine could have a long-term effect on your business
As mentioned above, the majority of agents are fully compliant when it comes to fee disclosure. That said, some firms have been caught out unwittingly.
Being fined for failing to display fees properly could have serious implications for your business. As well as the financial penalty - which could be up to £5,000 - being charged for non-compliance could damage your business' reputation.
Fines of this nature are likely to be reported on by the local and trade press. This means that when prospective clients search for an agent, they're likely to find out about any non-compliance cases they have been involved in. Online news means stories about your agency will be archived so any negative publicity could affect your agency for years to come.
In such a crowded marketplace, landlords will be looking for reasons to discount agents and reduce their shortlist of potential partners. Therefore, agents must do all they can to make sure prospective clients have no reason to discount them.
How can we view fines in a positive light?
Some letting agents may perceive fines for non-compliance as bureaucratic and a money maker for local councils. However, they can be viewed in a more positive light.
It’s quite clear that these sanctions only affect a tiny portion of the industry. The vast majority of agents display their fees and therefore don’t have to worry about being fined.
Therefore, action from local authorities can help to flush the industry of the non-professional firms that don’t abide by the law. This is of course better for consumers and helps to improve the public reputation of the typical professional letting agency.