A Compliance Consultant's view on the new guidance fo...

The letting agent sector was described as the wild west' of the property profession by RICS. Whether you agree with that or not, the Competition and Markets Authority's (CMA) recent publication of guidance on compliance has got to be a good thing, hasn't it

I am a Compliance Consultant and 97 pages is a lot to wade through for me, so I cringe to think how agents will get on with it. Even the CMA Legal Director says there is quite a lot of repetition in it - he is not wrong.

Putting that aside, I think there is a lot of useful information in the guidance that hopefully will improve the wild west' and help to encourage a more level playing field, but what things stand out

From an agent's perspective, the stand out issues are, firstly, the CMA's view that all charges quoted should include VAT and not be quoted as purely VAT exclusive. This is not a new concept when actual figures are being quoted and there are now legal obligations to quote inclusive prices (even though many agents do not do it). However, the CMA has taken this a stage further. Its guidance states that percentage fees should now include VAT. This means that you should not quote management fees as, for example, 12% + VAT - it should now be quoted as 14.4% including VAT.

This is at odds with the OFT's Sales Guidance published in 2012, which allows sales agents to advertise percentage fees as being + VAT. When questioned on this, the CMA stated that it had revised its views on percentage fees and that when the Sales Guidance is updated, it would bring it into line with the Lettings Guidance.

The CMA also states that before you take instructions from a landlord to market a property, you should have provided the landlord with full information about all the fees you will be or may be charging applicants and tenants. Again, in my experience, most agents currently do not do this.

The ASA (Advertising Standards Authority) and CAP (The Committee of Advertising Practice) guidance on advertising fees to potential tenants is reiterated throughout this guidance. It is well worth agents looking at their own advertising to ensure they meet the new requirements.

An interesting statement in the guidance is that you should not downplay main characteristics of the property that may be less attractive. Whether this means agents should be highlighting, less attractive or detrimental aspects of a property in the same way they promote a property location or number of bedrooms is unclear, but even if the CMA believe they should be highlighted, I would suggest it is not likely to happen. It will be interesting to see how many change their practices when it comes to this.

One point that did stand out and amuse me was a comment relating to gas and electrical installations. According to the guidance, agents can rent out properties with unsafe gas or electrical installations providing they clearly disclose the unsafe nature of the installation to applicants. Clearly, this is wrong and agents cannot rent out such properties.

I am sure the CMA would say that it is easy for someone like me to criticise and find fault with a document like this. Well, I would agree, but if you produce national guidance like this, you must make sure it has credibility and I think this document lacks that for a number of reasons.

To illustrate the point, I must mention the wonderful statement that the CMA have copied from the Sales Guidance: IF YOU DO NOT KNOW A PIECE OF MATERIAL INFORMATION, IT COULD STILL BE A MISLEADING OMISSION IF YOU DO NOT DISCLOSE IT

I will leave you to think about that one!

*Founder of Compliance Matters, David Beaumont is a Trading Standards compliance consultant working with estate and letting agents all over the UK