Note: This advice is given by the CAP Executive about non-broadcast advertising. It does not constitute legal advice. It does not bind CAP, CAP advisory panels or the Advertising Standards Authority.
The pricing rules in Section 3 of the CAP Code apply across all sectors and marketing communications covered by the CAP Code. However there are some legal limitations on what can be charged to tenants for rental properties.
CAP is unable to give legal advice, and marketers should ensure that they check the relevant legislation and seek legal advice to ensure compliance with any legislation which applies.
- Can a landlord or their agent charge non-optional fees?
- Types of fees that can be charged
- Types of fees that are prohibited
- Property portals should provide clear access to information about agent’s fees
There is different legislation for the different countries of the United Kingdom, and CAP understands that it is unlikely that non-optional fees that used to be charged, can still be applied for any new tenancy agreement.
The Tenant Fees Act 2019 applies to any tenancy agreement signed on or after 1 June 2019 and means that most fees are banned including upfront fees to start new tenancies.
The law in Scotland ensures that agents across Scotland are not able to charge tenants.
In Wales, the Renting Homes (Fees Etc.) (Wales) Act 2019 create offences for a landlord or agent to require a person to make a payment which is prohibited.
There is currently no legislation which states whether fees can be charged to tenants or not. However, a court case in 2018 cast doubt on the ability of letting agents to charge fees. We would advise seeking legal advice in regards to any fees that may apply in Northern Ireland.
The Tenant Fees Act for England states what fees are permitted to be charged. Marketers should check the legislation and seek legal advice in relation to this, however, CAP understands that the permitted charges are -
- Rent - The rent should be paid at regular and specified intervals. The amount charged should usually be equally split across the tenancy. In the first year of the tenancy, a landlord or agent must not charge the tenant more at the start of the tenancy as opposed to a later period
- Refundable tenancy deposit – This is capped at no more than five weeks’ rent and is a refundable payment that a landlord or agent may ask a tenant to pay to be held as security for the performance of any obligations of the tenant or discharge of any liability arising under or in connection with the tenancy. A landlord or agent is not legally required to take a deposit. Any deposit that a landlord or agent requests for an assured shorthold tenancy must be protected in one of the three Government backed tenancy deposit schemes within 30 days of them taking the payment, and a landlord or agent will need to substantiate the reasons for any deductions from the deposit at the end of the tenancy.
- Default payments - A landlord or agent may only charge a default fee under a term of the tenancy agreement in respect of replacing a lost key or other security device to give access to the housing or late payment of rent. In the event of late payment of rent, a charge for payment that has been outstanding for 14 days or more and with interest at no more than an annual percentage rate of 3% above the Bank of England’s base rate for each day that the payment is outstanding.
- Payments for variation of tenancy (capped at £50) or for early termination both by the tenant - A default fee can be applied under terms of the tenancy agreement in respect of late payment of rent or replacing a lost key or other security device to give access to the housing.
- Payments in respect of council tax, utilities or communication services – If any bills are to be included, then tenants remain responsible for these as set out in the terms of the tenancy agreement.
Any fees that are not listed as a permitted fee, will be considered as prohibited. Again, marketers should check the legislation and seek legal advice in relation to this, but CAP understands that these are examples of prohibited fees –
- Viewing fees
- Tenancy set-up fees
- Inventory fees
- Referencing fees
- Guarantor/guarantee fees
- Check-out fees
- Cleaning/Gardening fees
Whilst we note that many fees are unlikely to be acceptable, if agent’s fees do apply property portals should provide clear access to information about these fees. The ASA has not yet ruled on the presentation of non-optional fees on property portals.
Property portals are used by a large number of estate agents, many of whom use different names for the type of fees they charge. CAP therefore considers that for property portals, it is not necessary to include the non-optional charges next to the monthly rent. However, that information does still need to be available to consumers and CAP considers that it is likely to be acceptable to provide it one step away from the monthly rent, such as through a pop-up box titled “fees apply” (or similar) which appears next to the monthly rent amount.
CAP understands that the Consumer Rights Act 2015 indicates that landlord fees need to be included on Estate and Lettings Agents websites. Although the ASA has not yet ruled on this issue, we would recommend that agents make sure this information is made clear. The Competition and Markets Authority has guidance on consumer protection law for lettings professionals which is available here.