Landlords, letting agents and property management companies
There are a number of laws in place that affect landlords, letting agents and property management companies. We have set out some of them below and there are links to more detailed advice.
- Minimum energy efficiency standard
Since April 2018 a property that requires an Energy Performance Certificate (EPC) can only be let on new tenancies, which includes renewals, if it has an EPC in band E or better. The law affects domestic and non-domestic premises, but Trading Standards only enforce it for non-domestic premises such as shops and offices etc.
For existing tenancies in such premises, landlords have until 2023 to comply.
There are also many exemptions to the requirements. However, almost all require the landlord to register the exemption they are claiming with the government on the National PRS (Private Rental Service) exemptions register.
Central Government have provided Guidance on the requirements, claiming an exemption, and an email address for the register. If you believe you can claim an exemption, follow the guide on how to do so, and email the address given, even though it is described as a pilot.
Landlords of property with an EPC in bands F & G should speak to an energy efficiency adviser about their options, but should also contact the Planning Department if their property is in a conservation area, as this will affect their options.
The site mentioned above also has advice for landlords of domestic premises.
- Redress Scheme Guidance
A redress scheme will give tenants a clear route for making a complaint in the knowledge that if it cannot be resolved with the agent an independent third party will look at the facts and arbitrate.
Letting and property management agents must join a redress scheme by 1 October 2014. Failure to do so could result in a penalty of up to £5,000.
View the legislation.
The Redress Schemes for Lettings Agency Work and Property Management Work (Approval and Designation of Schemes) (England) Order 2013
The following organisations have been approved to run redress schemes:
View the legislation.
- Client Money Protection scheme
You must join a ‘client money protection scheme’ if you’re a letting or property management agent in the private rented sector in England and you hold clients’ money.
These schemes make sure landlords and tenants are compensated if you cannot repay their money, for example if you go into administration. This is different to tenancy deposit protection.
- hold your clients’ money in an account with a bank or building society authorised by the Financial Conduct Authority
- get a certificate confirming membership of the scheme you join, and provide it to anyone who asks, free of charge
You’ll need to display the certificate:
- in any office where you deal with the public
- on your website
The following organisations have been approved to run client money protection scheme
- Client Money Protect
- Money Shield
- Safeagent (previously NALS)
- UKALA Client Money Protection
Failure to join a scheme can lead to a fine of up to £30,000
- Displaying your fees
Letting agents and property management companies must display their fees and charges to clients. Failure to comply can result in a penalty of up to £5,000.
Tenants Fees Act 2019
Prohibited and permitted fees fall under the remit of the Tenants Fees Act 2019
There are some fees you can charge tenants and others which you cannot.
What fees can I ask a tenant to pay?
You cannot require a tenant to make certain payments in connection with a tenancy. You cannot require them to enter a contract with a third party or make a loan in connection with a tenancy. The only payments you can charge in connection with a tenancy are:
- the rent
- a refundable tenancy deposit capped at no more than five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or above
- a refundable holding deposit (to reserve a property) capped at no more than one week’s rent
- payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher
- payments associated with early termination of the tenancy, when requested by the tenant
- payments in respect of utilities, communication services, TV licence and council tax; and
- A default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement If the fee you are charging is not on this list, it is a prohibited payment, and you should not charge it. A prohibited payment is a payment outlawed under the ban.
For more information visit displaying your fees on the Business Companion website.
Why must fees be made known?
Potential tenants should have all the information they need in the first instance to help them make an informed choice and to avoid being drawn into contracts they haven’t budgeted for. They will be happier clients in the long run.
If you give misleading information about fees or omit to tell a client everything, you may be in breach of the Consumer Protection from Unfair Trading Regulations 2008, for which you could be prosecuted. Also, you would not be able to insist on payment under contact law.
- Holding deposits
In its Guidance for Lettings Professionals, the Competition and Markets Authority (CMA) has provided further detail on how information on these fees should be presented.
What is a holding deposit?
It is a fee paid by a potential tenant to reserve the property while negotiations are made with the landlord. The deposit is to cover potential losses by the landlord and to confirm a potential client’s interest in the property. Different terms have been used in the past and you need to be clear to tenants about what it is and its purpose.
What should my terms and conditions say?
The CMA guidance states you must make clear what the deposit covers.
This is known as material information and includes at least:
- the circumstances in which a deposit or any part will be refunded
- whether or not payment of the deposit means that the property will be taken off the market
- whether the holding deposit, or any part of it, is to be used as payment towards future rental costs in the event that the tenancy agreement goes ahead
- the details and sums of any costs and disbursements to be taken out of the deposit, and the approximate dates or stages in the process when these will be incurred.
If the tenancy doesn’t go ahead can the whole deposit be retained?
The CMA guidance states that a term making a holding or pre-tenancy deposit non-refundable in all circumstances is highly likely to be found unfair. This is because there are some circumstances where they are likely to be refundable:
- the tenant pulls out before costs are incurred
- the agent continues to market the property and the landlord has not suffered loss by the property being held
- any loss the landlord suffers is smaller than the deposit
- the property is not ready on the date specified and/or is not as described
- the landlord decides not to let to the tenant even though all checks are satisfactory.
Part of the deposit may be retained if there has been a loss due to a fault on the tenant’s part. The amount retained should only cover the actual loss. If the loss has been mitigated, for instance the tenant withdrew at an early stage or a new tenant was quickly found the potential tenant must not be penalised.
Where the potential tenant was at fault, for instance by giving misleading information, the landlord may retain enough to cover loss of rent. The agent may retain an amount to cover reasonable costs such as reference checks.
If the potential tenant was not at fault he or she must receive a full refund.
Should the holding fee be placed in client account?
Yes. Industry Codes of Practice require the deposit to be protected in a clients’ account. The deposit does not belong to either the agent or the landlord. The tenant should also be provided with a written receipt.
- Tenancy deposit protection schemes
Landlords or letting agents must place a tenant’s deposit in a tenancy deposit protection scheme if the home is rented out on an assured shorthold tenancy that started after 6 April 2007. There is more information about tenancy deposit protection scheme on the GOV.UK website.
The Department for Communities and Local Government has also produced information for tenants and landlords:
Advice on consumer protection laws
There are other laws affecting traders in general, which also apply to agents. The Competition and Markets Authority published a PDF document, Key Principles for Lettings Professionals which is a quick guide to compliance with a broad range of consumer protection legislation:
The Competition and Markets Authority have also published a more detailed document in PDF, Lettings guidance CMA31 which accompanies the quick guide:
Model agreement for a shorthold assured tenancy
The Department for Communities and Local Government has produced a model agreement for a shorthold assured tenancy as a PDF for use by landlords and agents. You are not obliged to use this, but you may find it useful:
- Display of ownership details
The Section 1192 Companies Act 2006 and the Companies (Trading Disclosures) Regulations 2008 legislation requires owners of business to disclose their ownership details in a specified way.
The purpose of the Act and regulations is to ensure that customers know with whom they are dealing.
Who does this law apply to?
The law applies to all business where the trading name is not the same as that of the owner.
Leo Smith trading as Leo’s Bakery S Jones & F Bloggs trading as Globe Antiques ABC Foods Ltd trading as ABC Foods
Any person dealing with the above businesses would not know, from the trading name, who owned the business. The Act therefore requires the ownership details to be made known to the public. The Act applies equally to sole traders, partnerships and corporate bodies.
What information must be disclosed?
- The name(s) of the owner(s), whether that is:
- an individual, or ;
- the name of each partner, or ;
- the corporate name (i.e. Ltd plc)
- An address at which documents could be served, that is an address where letters will reach the owner.
How should the information be disclosed?
- On a notice placed in a prominent position on the business premises, where customers and suppliers have access.
- On business stationery, such as:
- business letters;
- written orders for the supply of goods and services;
- invoices and receipts (including till receipts).
- On your website, where the information can be easily read and found.
What happens if I fail to comply with the above requirements?
You will be committing a criminal offence and the maximum penalty on conviction in a Magistrates Court is £1,000. Also, without the required information, your business contracts may not be enforceable.
- The name(s) of the owner(s), whether that is:
How can I get further advice?
If you require further information, clarification or advice on any of the above, please do not hesitate to contact the Trading Standards Service by telephone on 020 7361 3002 or via email at email@example.com
In offering the above advice this Authority wishes to make it clear that only the Courts can interpret the Law.