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Initial assessment of private rental sector suggests a significant minority of landlords and letting agents may not be following consumer protection rules.
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Five areas to be probed further in next phase of housebuilding market study including estate management charges and land banks.
The Competition and Markets Authority (CMA) today issued updates on 2 pieces of work in the housing sector - a consumer protection project on issues that private rental tenants are experiencing and a market study probing competition concerns in housebuilding.
As set out in its annual plan, the CMA is prioritising outcomes which help people, businesses, and the UK economy - and a critical part of this is ensuring that competition and consumer rights are protected in relation to where people live.
Sarah Cardell, Chief Executive of the CMA, said:
"The CMA alone can't resolve the problems in the UK housing market. But we have a role to play and will do our part to help ensure the private rental and housebuilding markets work better for people and businesses.
"For private renters, we're taking action to provide updated guidance for lettings agents so that both tenants and landlords are really clear about their own rights and responsibilities. We've also identified areas of concern relating to zero deposit schemes, sham licences, onerous guarantee clauses, and possible unlawful discrimination. These warrant further investigation and we stand ready to take enforcement action if needed.
"In housebuilding, we'll press on with our investigation of the 5 areas that are the focus of our market study so that we can get to the bottom of any potential competition concerns. Once complete, we will consider what actions the CMA can take to tackle any concerns identified or whether there are more effective ways to deal with those concerns such as through recommendations to government for legislative change."
Consumer protection in rented sector
While many landlords and letting agents are providing a good service, initial engagement by the CMA heard many complaints raised by stakeholders suggesting that a significant minority are not complying with consumer protection law.
To help letting agents understand their obligations, the CMA will update its guidance for lettings professionals. If any letting agency or landlord is found to be in breach of the law, then the CMA does not rule out launching enforcement action.
Following its initial engagement, the CMA's investigation will explore the 5 areas highlighted by stakeholder complaints:
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Zero deposit schemes: These schemes alleviate the need for tenants to come up with a hefty deposit when they enter a tenancy, but the CMA has heard concerns that tenants may be unaware of their liabilities under such schemes, alongside reports of pressure selling and undisclosed commissions earned by letting agents.
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Sham licences: The CMA has been told that there are still landlords who claim that tenants have licences to occupy rather than assured tenancies and who fail to recognise the rights that consumers have under a tenancy.
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Guarantees: The CMA has seen examples of onerous guarantee clauses which impose wide obligations on tenants - such as requiring them to provide extensive evidence of assets.
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Activity that could constitute unlawful discrimination: This includes, for example, looking at those who advertise properties as not available to housing benefit claimants (i.e. 'no-DSS').
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Retirement housing fees: The CMA's initial engagement also heard concerns around so-called 'event fees' charged to vulnerable tenants entering specialist retirement housing. The CMA will review practices in the sector and whether some businesses are taking advantage of elderly consumers.
