88/11    1 August 2011

The Property Ombudsman (TPO) has successfully completed Stage One of the OFT's Consumer Codes Approval Scheme (CCAS) for its Lettings Code.

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.

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.'

NOTES

1. The OFT's Consumer Codes Approval Scheme (CCAS) aims to promote and safeguard consumer interests by helping consumers to identify better businesses and to encourage those businesses to raise their standards of customer service. The core criteria cover the organisation of the Code sponsor, the preparation and content of the Code, complaints handling, monitoring, compliance and publicity. The Enterprise Act 2002 (Part 1, Section 8) gives the OFT powers to approve and promote Consumer Codes of Practice that meet the OFT's core criteria.
2. The OFT's Consumer Codes Approval Scheme consists of two stages. During Stage One the Code must meet the OFT's published core criteria, which contain measures designed to remove or ease consumer concerns about undesirable trading practices. At Stage Two the Code sponsor must prove that its Code lives up to the promises made in Stage One by demonstrating that the Code is being effectively implemented by its members and that consumer disputes are properly resolved.
3. The Property Ombudsman received approval for its code of practice for Residential Estate Agents on 8 September 2005 (see press release Ombudsman for Estate Agents Company gets OFT code approval). 
4. For more information see the Consumer Codes Approval Scheme section.
5. For further details about the OFT's case against Foxtons, see press release OFT secures final high court order against Foxtons (22 February 2010).
6. Letting agents interested in the OFT event should send an e-mail to lettingagents@oft.gsi.gov.uk.