How To Comply With The Consumer Rights Act 2015

Updated 12 March 2019 to incorporate changes made by the Tenant Fees Act 2019 (links to England).

The main parts of the Consumer Rights Act 2015, which affect landlords and letting agents, are now in force for England and Wales.

Duty of letting agents publicise fees etc

Chapter 3 of Part 3 of the Act requires letting agents display a list of fees and certain other information in their offices and websites.

Where to display

A letting agent must display a list of fees—

• at each of the agent’s premises at which the agent deals face-to-face with persons using or proposing to use services to which the fees relate, and
• at a place in each of those premises where the list is likely to be seen by such persons.

The agent must also publish a list of the fees on the agent’s website (if it has a website). Furthermore, through changes made by the Tenant Fees Act, there are additional duties when an agent advertises on a third-party website. Where a letting agent promotes a property to let on a third-party website (such as on Rightmove, On The Market etc.) or advertises letting agency work carried on by the agent (such as sponsorship), the agent must ensure that:

• a list of the agent’s relevant fees is published on the third-party website, or
• there is a link on that website to a part of the agent’s website where a list of those fees is published.

List of fees

The list of fees displayed as required above must include the following-

• a description of each fee that is sufficient to enable a person who is liable to pay it to understand the service or cost that is covered by the fee or the purpose for which it is imposed (as the case may be),
• in the case of a fee which tenants are liable to pay, an indication of whether the fee relates to each dwelling-house or each tenant under a tenancy of the dwelling-house, and
• the amount of each fee inclusive of any applicable tax or, where the amount of a fee cannot reasonably be determined in advance, a description of how that fee is calculated.

Where the agent is required to be a member of a client money protection scheme, the list of fees must also include a statement that:

• indicates that the agent is a member of a client money protection scheme, and
• gives the name of the scheme.

If the agent deals with a tenancy in England (and, as a result, is required to be a member of a redress scheme), the list of fees must also include a statement-

• that indicates that the agent is a member of a redress scheme, and
• that statement must give the name of the scheme.

What fees must be shown on the list?

The items on the list must be all the fees, charges or penalties (however expressed) payable to the agent by a landlord or tenant—

• in respect of letting agency work carried on by the agent,
• in respect of property management work carried on by the agent, or
• otherwise, in connection with—
  • an assured tenancy of a dwelling-house, or
  • a dwelling-house has been or is proposed to be let under an assured or assured shorthold tenancy.

Therefore, for example, the list of fees to be displayed must include fees payable by a tenant and all the fees payable by landlord clients, such as commission rates. It is unclear what the position will be if multiple commission rates are charged for different clients, but it’s likely that simply putting the highest commission rate will suffice. The list of fees does not need to include the following:-

• the rent payable to a landlord under a tenancy,
• any fees, charges or penalties that the letting agent receives from a landlord under a tenancy on behalf of another person,
• a tenancy deposit, or
• any fees, charges or penalties contained in regulations (of which none has been made at the time of writing).

Breach of the duty to display fees

The local weights and measures authority will enforce the legislation. 

Before a financial penalty is imposed, a notice of intent must be served within six months of the authority becoming aware of any alleged breach. The letting agent may make representations about the proposed penalty within 28 days, after which the authority must decide whether to impose a fine (this presumably allows the agent to comply within 28 days, and hopefully, for the agent, the notice will be withdrawn). If the authority imposes a penalty, a final notice must be served seeking payment within 28 days. The financial penalty can be up to £5,000. 

An appeal is available to the First-tier Tribunal in England or the residential property tribunal in Wales.

Template

We have produced a template for the benefit of members, which can be adjusted with your fee structure.

Unfair terms

The Unfair Terms in Consumer Contracts Regulations 1999 are imported into the Act, and the regulations are revoked. There are a couple of minor changes to the original rules.

Firstly-

The court must consider whether the term is fair even if none of the parties to the proceedings has raised that issue or indicated that it intends to raise it.

Although that only applies if-

the court considers that it has before it sufficient legal and factual material to enable it to consider the fairness of the term.

Secondly, the unfair terms provisions still apply to tenancy agreements as the old regulations did. However, there is now an exception, and the provisions do not apply to (highlights added)-

any contract so far as it relates to the creation or transfer of an interest in land.

This will have minimal application for general purposes. The unfair terms provision doesn’t just apply to contracts but also to notices too. They would therefore apply, for example, to a note pinned in a communal hallway requiring tenants to do something. Otherwise, the Act is the same as the previous regulations, and the guidance issued under the earlier regulations will still apply.