Amongst other things, the Stage One completed code stipulates that:
•Any holding deposits taken from prospective tenants are kept in a separate designated clients’ account
•Letting agents cannot include sales commissions in their agreements with landlords, or charge renewal commission where the landlord instructs someone else to renew the lease.
•Where a let does not go ahead through no fault of the tenant, the prospective tenant’s holding deposit will be refunded in full and within 10 working days.
•TPO will provide a free, independent redress scheme for tenants and landlords who have a complaint against a TPO member.
TPO will now carry out comprehensive monitoring procedures – including mystery shopping exercises and customer satisfaction surveys – to ensure that the Code is working effectively. Only Codes that demonstrate this achieve Stage Two and are entitled to display the ‘OFT Approved Code’ logo.
As part of its wider work with letting agents, following a High Court ruling that found Foxtons’ renewal commission terms were not transparent, the OFT is embarking on further awareness-raising amongst letting agents as some remain unaware of the ruling and its implications for the sector. The OFT is hosting an event in the autumn for letting agents and their industry associations. It will focus on the need for transparency of terms in contracts and the proper communication of key points to landlords and tenants, including the need to highlight terms which relate to charges.
Cavendish Elithorn, Senior Director of the OFT’s Goods and Consumer Group, said:
‘This code, together with the TPO redress mechanism should establish good practice in the letting industry and hopefully prevent the sort of harm that the OFT found in the context of its investigation into Foxtons Letting Agents.
‘The code reiterates the need for letting agents’ terms to be transparent and fair. This specifically includes ensuring private landlords are not locked into long contracts under which they have to keep on paying renewal commissions when they wish to change agent, or which require them to pay sales commission unfairly.
‘The Property Ombudsman has undertaken a great deal of work to develop this code of practice and we will continue to work closely with it towards full OFT Code Approval.’
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