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Letting agents ‘breaking the law’ by demanding deposits before renters have read contracts

LETTING agents demanding cash from renters before they’ve even seen the contract could be breaking the law, according to Which?.

The consumer group slammed the “outrageous” practice that requires tenants to commit to agreements before they even know what they’re signing up for.

Letting agents that ask for money from tenants before sharing contracts could be breaking the law

Letting agents have a legal duty to provide prospective renters with key information they need to make an informed decisions before taking on a tenancy.

But Which? argues that estate agents that demand money before sharing the terms and conditions aren’t putting the needs of the tenants’ first.

The consumer group sent mystery shoppers to 20 letting agents across England who asked to see terms and conditions before signing any paperwork – but a quarter of them failed to provide a contract.

Five letting agents, including one branch of Connells, which has 200 branches nationwide, needed a financial commitment or holding deposit before tenants could see the contract.

What you should know before renting your home

THE number of people privately renting in the UK is at record highs. Here is what you need to know:

  • What is a tenancy agreement and what should I look out for?
    The tenancy agreement is a contract between you and your landlord. Most tenancy agreements are an assured shorthold tenancy agreement for a fixed term – usually six to 12 months.
    Make sure it includes your details and those of your landlord as well as the duration of your tenancy from start to the agreed finish date.
    It should also include what payments are expected, such as council tax, utilities and service charges, as well as the services your landlord will provide, such as maintenance of common areas.
    Read of all of this carefully to avoid any unsuspected charges.
  • Beware of rogue letting agents
    You can now check for a rogue landlord or letting agent in London by using the online London Rogue Landlord and Agent Checker.
    You can use the checker to find landlords and letting agents that have been fined or convicted of a relevant housing offence.
  • How to avoid letting fees
    Many renters are still facing ridiculously high letting fees almost two years after it was announced they would be banned.
    The good news is that in recent years, a number of websites and online estate agents have sprung up that can help people connect with landlords directly. Read our guide here.
  • Ask about maintenance work and require repairs if neccessary:
    Which?’s investigation revealed letting agents brushed off questions about maintenance, with many stating that work would be carried out before the tenant moved in, or would need to be dealt with by the landlord.
    But property expert Kate Faulkner told Which? that tenants should avoid this type of verbal agreement.
    Instead, required repairs should be made conditional as a special clause in the tenancy agreement.

Connells estate agent told The Sun that tenancy agreements are freely available on request and adds that it does not insist a deposit is paid as a condition of providing the draft.

The four other firms are regional but three of them are “worryingly” approved by the Association of Residential Letting Agents (ARLA), a leading membership body for the letting agent sector.

Some agents even demanded paid-for reference checks to be carried out before showing the terms of the contract, while one requested tenants read the agreement in their office.

While the contracts are accessible, Which? warns this practice could put people under pressure to rush through the contract.

ARLA boss David Cox said that because technically there is no legal requirement in England or Wales to have tenancy agreement it “would question the suggestion that agents are breaching consumer protection law”.

He added: “We have long been advocating for a legal requirement to have a written tenancy agreement, as they have in Scotland, to avoid many of the misunderstandings cited in this research.”

But it’s not just seeing contracts in advance that’s an issue.

Out of the 13 agreements the mystery shoppers managed to get hold of, seven contracts included potentially unfair terms and clauses.

For example, one required tenants seek the landlord’s permission before switching utility supplier or allowing workmen access to the home without the tenants’ permission.

Your rights as a tenant

AS a tenant in a privately rented home, these are your rights as outlined by the Government:

  • Live in a property that’s safe and in a good state of repair
  • Have your deposit returned when the tenancy ends – and in some circumstances have it protected
  • Challenge excessively high charges
  • Know who your landlord is
  • Live in the property undisturbed
  • See an Energy Performance Certificate for the property
  • Be protected from unfair eviction and unfair rent
  • Have a written agreement if you have a fixed-term tenancy of more than three years

If you have a tenancy agreement, it should be fair and comply with the law.

If you don’t know who your landlord is, write to the person or company you pay rent to.

Your landlord can be fined if they don’t give you this information within 21 days.

Which? also found evidence of confusing language in agreements, such as vague descriptions that tenants may be required to pay a “reasonable” amount or “a fair proportion of” additional charges.

All the contracts reviewed referenced statutes and legislation that were not attached or explained further within the agreement putting tenants, most of whom may not be experts in property law, at an unfair disadvantage.

The group argues that it is “concerning” that renters may feel rushed into signing contracts they don’t agree with or else forfeit cash they were forced to pay upfront.

Now, Which? is calling on the Government to layout a mandatory code of practice for letting agents that is legally enforceable.

Natalie Hitchins, head of home products and services at Which? said: “It is outrageous that some agents are demanding cash up front before tenants are even shown a contract – committing them to agreements before they know what they’re signing up to.”

From next month, tenants will be entitled to claim their holding deposits back if they don’t agree with the terms of the contract once the tenant fee ban comes in.

Dan Wilson Craw, from Generation Rent campaign group said: “Which?’s investigation shows, unscrupulous letting agents are adept at finding ways to bamboozle tenants.

“There is a constant need to identify and expose these unfair practices.”

We previously reported how one letting agency in London has been charging tenants £300 just to VIEW a property.

The average household could save £300 each when the Government finally implements a ban on letting fees.

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