Communities and Local Government CommitteeSupplementary written evidence submitted by Which?

1. Introduction

Which? sent evidence to the Committee in January of this year and subsequently gave oral evidence in March. Since then we have conducted another round of mystery shopping and have written to the four agents, who we believe are acting unlawfully by not disclosing fees early enough, to try and encourage them to change their practice. This submission details the main findings from this research.

2. Main Points

2.1 Which? conducted research in November last year which suggested that the two thirds of tenants who let through an agent find out about fees at or after a visit to a property. Of these 14% found out about the fees at the point of signing a contract or when the fees were payable. This makes it difficult for consumers to shop around—we estimated that this was costing consumers as much as £76 million per year.

2.2 In order to look at fee practices in more detail we carried out further mystery shopping to look at four agents in particular: Barnard Marcus, Foxtons, Martin and Co and Your Move. We looked at four branches per chain, and contacted each office by calling the agents, looking on their websites, calling to arrange a visit, emailing to register, going into the agents to register and looking on agent adverts on Rightmove. We focussed in branches in London because London has 20% of the lettings market.

2.3 In our snapshot research we found:

None of the letting agents provided information about fees in any property listings on their website, on or after tenants had registered online.

Only one tenant (at a Foxtons’ branch) was proactively given fee information when they registered in branch or called to arrange a viewing.

No tenant was provided with a written schedule of charges.

In some cases tenants were either not given fee information even when they asked, or they were not given the complete details.

2.4 In terms of the fees paid all agents require tenants to pay administration and referencing fees. The average across all agents was £310 (roughly equivalent to one week’s rent in central London)—the highest was £420. Some tenants could also face check-in and check-out fees, bringing the total closer to £600. Check and check out fees are not always compulsory but will be charged by some agents or landlords.

2.5 We wrote to the agents to say that we thought they were acting unlawfully by not being upfront about the fees that tenants can expect to pay when renting a property. This means that renters face unexpected charges, are unable to compare prices and don’t always know what they are signing up to until it is too late. By failing to disclose fees upfront or during their first contact with a customer, we believe that letting agents are breaching consumer law by not providing material information in a manner that is clear and timely.

2.6 We think that letting agents need to be much more open about expensive fees in advance. We want written information on fees to be provided up-front, in adverts, on websites or at the first point of contact with an agent.

2.7 This is a market which also has an alarming lack of consumer protection and redress. As a bare minimum we also want all agents to sign up to a redress scheme. Lettings agents should be covered by the same legislation as estate agents, which would require them to sign up to an independent ombudsman scheme. This could be achieved by amending the Enterprise Bill, which is currently before Parliament.

March 2012

Prepared 16th July 2013