Final order against UK high street property letting agent confirmed

The watchdog is also writing to a number of letting agents and key property industry bodies drawing their attention to the order and making clear that letting agents are expected to comply with the law as set out in this ruling. It says it will take necessary steps to ensure compliance across the wider lettings agent industry where appropriate.
 
The order against Foxtons follows a landmark judgment in the High Court in July 2009 in proceedings brought by the OFT under the Unfair Terms in Consumer Contracts Regulations 1999 act. By its judgment the court accepted that all the terms the OFT complained of were unfair. Foxtons had until 29 January 2010 to lodge an appeal but did not do so.
 
The High Court ruled that Foxtons’ renewal commission terms were not transparent to consumers, so that they represented a trap and were therefore unfair, and ordered that Foxtons may not rely on these terms except where they remain instructed to manage the property.
 
The order also declared that the following terms are unfair, not binding, and may not be used or relied upon in contracts with consumer landlords; terms which require landlords to pay renewal commission to Foxtons after the sale of their property to a third party because the original tenant remains in occupation, and terms which require landlords to pay a sales commission to Foxtons in the event they sell the property to their tenant.
 
Foxtons has made significant changes to its standard contract with landlords as a result of OFT intervention, including making the liability to pay renewal commission more transparent, reducing the commission payable on renewal, and limiting it to two renewals.
 
Commission is also now only payable where the original tenant remains in occupation and the landlord will get a pro rata refund where the tenant leaves the property before the date set out in his lease.
 
‘This case, and the changes Foxtons has now made, sends a wider message to letting agents and businesses in general that important terms, particularly those which may disadvantage consumers, must be clear, prominent and actively brought to people’s attention. Consumers should not be presented with a surprise bill for services they have not consciously agreed to,’ said Jason Freeman, Legal Director of the OFT's Consumer Group.
 
Unfair letting agent renewal fees should be scrapped, according to the National Landlords Association. It welcomed that order but said further protection is needed. ‘Although this is clearly good news for landlords, the NLA is still calling for these unfair renewal fees to be scrapped. Where the letting agent performs no service to the landlord throughout a tenancy, why should they still be able to charge the landlord of their tenant chooses to renew the tenancy?’ said NLA chairman David Salusbury.
 
‘The message to all letting agents is now clear, do not try and mislead your clients. Our advice to landlords remains the same. Always check the small print before signing on the dotted line,’ he added.