New code OFT code gives greater protection to landlords

The recent introduction of a new consumer code relating to Lettings agents should make landlords feel more comfortable about allowing Lettings agents to deal with their properties

The code recently introduced by the OFT gives Landlords greater protection against Lettings agents losing money through small print in agents contracts especially regarding renewal fees.

The Lettings Code has been developed to give consumer landlords and their tenants greater protection when dealing with letting agents and better redress if things go wrong. 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.

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.'

Kevin Cox founder of Bristol Letting agents Igloolets.com said “As a company we have always used a separate bank account for any deposits or client monies held, we also use the DPS for all our deposits so in real terms only hold deposits for a short period of time, using the DPS gives both our tenants and landlord clients piece of mind that their deposits are secure and held independently from us as a company. We like this form of transparency. I am sure that many Estate Agents that have recently morphed into so called Letting Agents, will be unaware of this requirement, and continue to use one bank account. The amount of legislation that relates especially to Lettings is immense, and many Estate Agents are unaware of this, this is why I still recommend that a Landlord instructions a specialist letting agent.