12 March 2020 12433 Views
There is no doubt that the BBC News article in early February caused something of a stir within the Deposit Free rental sector providers.
Hopefully the piece and surrounding publicity was an additional wake-up call for those Agents who are either unaware of the advice and warning issued by the likes of ARLA Propertymark, the Property Ombudsman, and even the providers themselves, or are simply choosing to ignore them.
Engagement with the Tenant at the very outset of any process within our industry is vitally important, not only in terms of Consumer Protection Regulation (CPR) but also good service and customer satisfaction.
As recent years have shown, even when only a tiny minority of practitioners in percentage terms have chosen to ignore best practice advice, the legislators will step in. Remember too, that the policing of regulation in our sector is now in the hands of a far more rigorous and motivated enforcement body, one with teeth.
You would think that this passage of time and experience would have been a salutary lesson for us all, especially following the ban on fees to tenants, further underlined by the changes to CPR, but it would seem this is not the case in some quarters.
I well remember the many discussions I had whilst ARLA President with David Cox and other members of the Board on the introduction of what the BBC describes as “Deposit Free Renting“ products. The schemes were broadly welcomed, with now well documented caveats and considerations. However, it was obvious to all where one possible risk would lay - the mis-selling of the product.
At Zero Deposit™, from the very outset we have ensured that the tenant has full transparency, with clear terms and conditions, easy to understand information, and a clear understanding that our agents must offer a choice with the option to provide a ‘cash’ security deposit as normal with no conditionality. As we are directly FCA regulated & FSCS protected there simply could be no ambiguity on any of these points.
Our recent surveys demonstrate that by doing so, 96% of the tenants who have purchased a Zero Deposit Guarantee would do so again for their next rental property, with 66% anticipating they will remain in the property longer due to the initial saving on move in costs.
Campaign group Generation Rent pointed out in the BBC article that some tenants feel under pressure to accept a deposit-free option in what is a very competitive renting market, citing the commission earned by agents from the selling of products, in the absence of Tenant fees, as a major driver.
As agents let’s be honest here. This “pressure” may in some cases be due to the company’s overall culture or often, and more likely individuals at branch level viewing “Deposit Free” as a means to improving their overall lettings figures. Whatever the reason maybe, it is neither acceptable nor legal.
Whether an Agent or Landlord we would urge you to act responsibly and choose to use only an FCA regulated product. One that also ensures proper process.
Good process and record keeping are key, and it is in this area where mistakes are made in providing the understanding and expectation that the law requires so that the Tenant is able to make their decision to buy the product on an informed basis. Here at Zero Deposit we were delighted that 95% of tenants polled said they’d select a Zero Deposit™ agent above the rest.
We, as an industry, also stand accused of mis-selling in order to earn what Generation Rent described as “lucrative” commission. Well, I don’t “buy” that, but we must not forget we are obliged to disclose such payments.
Agents have been reminded countless times on the matter of referral fees. In the last year alone Property Professional magazine has featured the topic in four editions!
With my agents hat on, I make no apologies for earning such fees, providing of course there is transparency. Though my personal opinion is that an outright ban on such fees is not on the cards presently, even following Trading Standards’ recent report to the government. It does remain clear that in the absence of fairness, transparency and restraint, though perhaps counterintuitive to those currently occupying 10 Downing Street, I would not be willing to bet that the government will turn a blind eye to such matters in the future.
Peter E. Savage Industry Spokesperson Zero Deposit