Saturday, 19 August 2017

Costs must be transparent so tenants can budget

LETTING agents have been given new advice about how to communicate their fees when advertising residential property for rent.

LETTING agents have been given new advice about how to communicate their fees when advertising residential property for rent.

The Committee of Advertising Practice (Cap) has published new advice about how agents must market their fees on their websites and in adverts shown on property portals.

Cap says it has worked closely with other bodies, such as the Association of Residential Lettings Agents (Arla) and the Property Ombudsman, in drafting the new advice.

Private property landlords and letting agents have been informed of the new requirements in a letter sent by Cap, which has also said it will be keeping a close eye on residential property ads to ensure its guidance is complied with.

“We’ll be closely monitoring ads in all media from November 1 onwards and will consider appropriate follow-up action against non-compliant ads from this date,” Cap said in a statement.

Veronica Carnegy, head of tenancy services and property management for Strutt & Parker, explains their approach to these new transparency requirements: “In view of the ever-growing need to ensure that there can be no misrepresentation nor misunderstanding regarding the lettings process, Strutt & Parker pre-empted this ruling by drawing up ‘Tenant Terms’ which both clarifies any associated costs and also explains the process in detail for any potential tenants.

“These are now given to a tenant at the point of viewing a property to ensure that they make an informed and calculated decision before placing an offer to rent through us. As an agency, we offer a transparent business and aim to ensure that any tenancy proceeds as smoothly as possible from start to finish with all expectation being managed for every step of the way.”

Marketers are also able to check they are complying with the rules by visiting a new AdviceOnline resource published by the body that lays out how adverts must display any compulsory costs and charges relating to any residential property for rent.

The new requirements have been rolled out after a ruling published by the Advertising Standards Authority (ASA) in March this year found against a letting agent that had not provided adequate information about fees in its online adverts.

The ASA ruled that Your move.co.uk Limited must make it clear in its adverts on occasions when mandatory fees, which are not calculable in advance, are not included in a quoted price.

The number of people entering the rentals market is on the rise. For those who have never rented a property before, the task can be a daunting one.

Richard Maby from the Henley office of property investment and lettings expert Savills sets out what prospective first time tenants need to consider and any associated costs.

Under the Consumer Protection from Unfair Trading Regulations 2008 (known as CPRs), all lettings agents are required to be transparent about their fees. When budgeting, a tenant needs to take account of the actual cost of the rent but also needs to consider the cost of any bills which will have to be paid in addition to the rent, and the deposit which will need to be paid in advance of moving into a property — this is usually the equivalent of between six to eight weeks’ rent.

If renting through Savills, any further costs for which a tenant is liable, such as garden maintenance, will be explained by one of their lettings experts on an individual property basis.

Agents are required to carry out a series of referencing checks including affordability. Each person named on the tenancy agreement will require a reference check — the cost per reference will vary depending on the reference company used. Should a guarantor be required, there will also need to be a reference check for that guarantor. As proof of identity, a prospective tenant will also be asked to produce their passport and a utility bill.

In order to protect the rights of both the tenant and the landlord, a tenancy agreement is prepared which clarifies the responsibilities of both parties. Tenants contribute towards the cost of a tenancy agreement — the cost of which will vary from agent to agent. Tenants also need to take account of any inventory check they are liable for.

Savills charges the tenant for the inventory check-out which takes place at the end of the tenancy and is paid for at that time, usually by way of deduction from a tenant’s deposit. The report that is compiled during the check-out is used to determine how the deposit is to be dealt with. Costs of an inventory check-out will vary depending on the size of the property.

Tenants should also be aware that, should they wish to extend and renew their lease after the completion of their initial rental term, there may be associated administrative costs which are required to be paid upon the renewal of the property. At Savills the charge includes reprotection of the deposit upon renewal.

Once a tenant is aware of all the costs they will be liable for, they will have a clearer indication of what type of property and location they can budget for, helping them make a better informed decision about their future home.

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