Landlords and agents targeted by the Competition and Markets Authority

The Competition and Markets Authority (CMA) is threatening enforcement action against landlords and letting agents who do not follow consumer protection rules.

The CMA has published an initial assessment of the private rental sector (PRS) and it says there is a ‘significant minority’ who are breaching the rules.

Sarah Cardell, the CMA’s chief executive, said her organisation cannot resolve the UK’s housing market issues alone but will work to improve the private rental sector so it will ‘work better’ for tenants.

She said: “For private renters, we’re taking action to provide updated guidance for lettings agents so that both tenants and landlords are really clear about their own rights and responsibilities.

“We’ve also identified areas of concern relating to zero deposit schemes, sham licences, onerous guarantee clauses, and possible unlawful discrimination.

“These warrant further investigation, and we stand ready to take enforcement action if needed.”

Many landlords and letting agents are providing a good service

The CMA says that while many landlords and letting agents are providing a good service, it has heard ‘many complaints’ that have been raised by stakeholders suggesting that a significant minority are not complying with consumer protection law.

To help letting agents understand their obligations, the CMA will update its guidance for lettings professionals.

However, if any landlord or letting agency is found to be in breach of the law, the CMA is not ruling out enforcement action.

The CMA has revealed that it is now investigating five areas that have been highlighted by stakeholder complaints. They are:

• Zero deposit schemes: These schemes alleviate the need for tenants to come up with a hefty deposit when they enter a tenancy, but the CMA has heard concerns that tenants may be unaware of their liabilities under such schemes, alongside reports of pressure selling and undisclosed commissions earned by letting agents.
• Sham licences: The CMA has been told that there are still landlords who claim that tenants have licences to occupy rather than assured tenancies and who fail to recognise the rights that consumers have under a tenancy.
• Guarantees: The CMA has seen examples of onerous guarantee clauses which impose wide obligations on tenants – such as requiring them to provide extensive evidence of assets.
• Activity that could constitute unlawful discrimination: This includes, for example, looking at those who advertise properties as not available to housing benefit claimants (i.e. ‘no-DSS’).
• Retirement housing fees: The CMA’s initial engagement also heard concerns around so-called ‘event fees’ charged to vulnerable tenants entering specialist retirement housing. The CMA will review practices in the sector and whether some businesses are taking advantage of elderly consumers.