The Advertising Standards Authority (ASA) has ruled against an estate agent for not being upfront about admin fees. The ASA want to make sure that all quoted prices are transparent to ensure that consumers get a fair deal. The advertiser (Your-move.co.uk Ltd t/a Your Move Lettings) did not make clear that administration fees were excluded from the rental price on the property, and an insufficient amount of information was provided for the consumer to establish how further charges would be calculated.

In future the ASA expect all letting agents to make clear what compulsory fees are charged when letting a property, and they should do this from the start. For example a property advertised at £1,500 per-calendar-month (pcm) which requires each tenant to pay a £150 administration fee should be advertised as £1,500 pcm + £150 admin fee per tenant.

Our ruling makes clear that advertisers must include all compulsory fees and charges upfront in the price quoted. If the fee cannot be calculated in advance because of, for example, an individual’s circumstances, then the advertisers (the agent) must make clear that compulsory fees and charges are excluded and provide adequate information for consumers to establish how additional fees are calculated. This means that potential tenants will 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.

The ASA state that their priority now is to make sure their rulings are followed by the sector as a whole. They want to ensure that all quoted prices are transparent so that consumers are not misled or treated unfairly.

An investigation carried out by Which? found that the vast majority of agents have been failing to display fees upfront, in written format, and in some cases even when the information was asked for. In order to improve standards within the sector they have written to the companies to share their findings, demand improvements, and remind them of their legal responsibilities under consumer law.

The ASA ruling, and that of Which? means that potential tenants have all the information they need to compare prices and shop around, so that they can be confident when choosing a property.

Guy Parker, Chief Executive of the Advertising Standards Authority, said:

“Hidden fees are not only unfair, they hit those who are struggling hardest. Our ruling today makes clear that Letting Agents need to get their houses in order and treat potential tenants fairly.

Renting a property is a significant commitment. And for those who are new to the rental market, like students, navigating it can be particularly difficult. That’s why the ASA is clamping down on Letting Agents who hide fees. Today’s ruling makes clear that agents must include all compulsory fees and charges in their quoted prices. If the fees cannot be calculated in advance then the agent must make clear that fees have been excluded, and provide enough information for consumers to establish how fees are calculated. It’s now our priority to make sure agents across the sector bring their advertising into line.”

ASA Adjudication on Your-move.co.uk Ltd

Your-move.co.uk Ltd t/a Your Move Lettings
Newcastle House
Albany Court
Newcastle Business Park
Newcastle upon Tyne
NE4 7YB

Date: 6 March 2013

Media:  Internet (OM 3rd party)

Sector: Property

Number of complaints: 1

Complaint Ref: A12-201575

Ad

Ads for properties for rent posted by an estate agent on rightmove.co.uk. The ads provided general information about the properties as well as the cost of rent per calendar month.

Issue

The complainant challenged whether the ads were misleading because they did not include a compulsory administration charge.

CAP Code (Edition 12)

3.1
3.19
3.3

Response
Your-move.co.uk Ltd (YML) stated that information about the administration charge referred to in the complaint was available on their website and on request from the YML branch. There was also a link to the website on the ads. They said this was in line with market practice and that no agent, listing properties on Rightmove, disclosed admin fees within the listings themselves. This practice was in line with the requirements of the Association of Residential Lettings Agents (ARLA) and The Property Ombudsman (TPO), both of whom issued codes requiring that all relevant fees and charges be detailed in the terms of business, which must be available to tenants prior to commitment.

The fees payable were not a fixed amount: they varied from region to region and also depended on the applicant’s individual circumstances, e.g. whether or not a guarantor was required. The information available to the consumer indicated that a fee would be payable and what the fee covered. It did not define exactly how much the fee would be.

YML acknowledged that fees and charges were material information that would be relevant in the consumer’s decision to rent. However, YML did not believe that consumers arranging viewings on Rightmove were at the stage of deciding whether to rent. They therefore did not believe that the administration fee was material information that needed to be made known at this point. For this reason, information on the administration fee was only made known to the consumer at a later time, but before they had decided to rent with YML.

Assessment
Upheld
The ASA noted that the exact value of the administration fee depended on the location of the property as well as the consumer’s individual circumstances. We therefore considered that it was not always calculable in advance. CAP Code rule 3.19 stated, “If a tax, duty, fee or charge cannot be calculated in advance, for example, because it depends on the consumer’s circumstances, the marketing communication must make clear that it is excluded from the advertised price and state how it is calculated”.

We noted YML’s argument that the details of the administration fee, whilst material information at the time the consumer was deciding whether to rent, was not material when searching Rightmove and arranging viewings. However, we considered that deciding whether to arrange viewings was itself a transactional decision and likely to be affected by the existence and cost of an administration fee. We therefore considered that this was material information when consumers were searching Rightmove, not just when they were deciding whether to rent. The ads should have indicated clearly that the administration fee was not included in the quoted prices and should have provided enough information to allow the consumer to establish easily how further charges would be calculated. Because the ads did not include this information, we concluded that they had breached the Code.

The ads breached CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising) and 3.19 (Prices).

Action
We told YML to ensure that their ads made clear when non-optional fees and charges, that could not be calculated in advance, were excluded from quoted prices, and to provide enough information to allow the consumer to establish easily how further charges would be calculated.