Probe into the ‘consumer rights’ of renters launched
3 years ago | 4 comments
Landlords and agents targeted by the Competition and Markets Authority
9:46 AM, 25th August 2023, 3 years ago
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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.
Tags:
Competition and Markets Authority, Consumer protection rules, Enforcement action, landlords and letting agents, Private Rental Sector
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Member Since May 2014 - Comments: 145
3:50 PM, 27th August 2023, About 3 years ago
Reply to the comment left by Ian Narbeth at 25/08/2023 – 11:07
I think that the idea is to ban the use of a guarantor who is a home owner or any guarantor when the tenant is deemed to be able to pay the rent. The Government want this because then you will not be able to refuse a DSS tenant or other flaky on the edge tenant by asking for a guarantor, they want landlords to become the new social landlords and then have to fight to get rid of the doubtful/flaky tenant when they don’t pay which will be really difficult, time consuming, costly and stressful. The City councils will approve to pay the DHS tenants rent even though it is higher than their normal rates because it will get certain families off their books. Then because of the rental reform act the rent increases will be limited to 3% per year which will be lower than the inflation of say 6% a year, over the course of 5 years you will be on below market rent and not be able to get the tenant out providing that they pay their rent which the City Council will do because every year that goes by the rent will in real terms be cheaper and cheaper for them to pay. There you go, trapped with a social housing tenant who will have all the resources of the Council to bring you to account for any small repair/damp or mold issue.
Member Since October 2020 - Comments: 1137
3:28 PM, 28th August 2023, About 3 years ago
Reply to the comment left by Dylan Morris at 25/08/2023 – 10:39
It’s the Equalities Act 2010. A blanket ban on those receiving benefits is seen as indirect discrimination against women and people with disabilities.
Member Since May 2018 - Comments: 1999
12:29 PM, 29th August 2023, About 3 years ago
Reply to the comment left by Jim at 27/08/2023 – 15:50
I’m not yet very familiar with all the details of the rental reform act. Are you really limited to rent increases of 3% per year in all cases? What options do you actually have under the RRA for increasing rent?
Member Since May 2018 - Comments: 1999
4:27 PM, 29th August 2023, About 3 years ago
Reply to the comment left by Jim at 27/08/2023 – 15:50
I’m not sure this is correct. I found a bit more on the renters reform bill here:
https://blog.goodlord.co/your-guide-to-the-renters-reform-bill#:~:text=The%20Renters%27%20(Reform)%20Bill,pets%20in%20lets%20%2D%20and%20more.&text=The%20government%20introduced%20the%20Renters,parliament%20on%2017%20May%202023.
3. Notice periods for rent increases to be doubled
Rent increases will be limited to once per year and the minimum notice landlords must provide of any change in rent will be increased to two months.
WILL LANDLORDS BE ABLE TO REVIEW RENTS?
The Renters’ (Reform) Bill white paper outlines plans to end the use of rent review clauses, “preventing tenants being locked into automatic rent increases that are vague or may not reflect changes in the market price” and says that “any attempts to evict tenants through unjustifiable rent increases are unacceptable”.
However, landlords and agents will be able to raise rents once a year in line with the market rates – similar to the current section 13 rules – with two months’ notice of any increase shared with tenants.
The government will publish a new form that would need to be served to tenants to let them know that you plan to increase their rents. If the tenant agrees, they’ll simply pay the increased rent.
If the tenant feels that the increase is disproportionate, the government will “make sure that tenants have the confidence to challenge unjustified rent increases through the First-tier Tribunal.
However, it’s also expected that the courts will be able to choose to increase rents for tenants, helping to make tenants to do their own research before challenging an increase.
It will also “prevent the Tribunal increasing rent beyond the amount landlords initially asked for when they proposed a rent increase”.
So as I understand it the proposal is that landlords will be able to raise the rent once a year in line with market rates.