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Foxtons Loses Court Case Over Unfair Terms

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Daily Mirror Investigates blog

Very pleased to read this!

The Office of Fair Trading has won what it's calling a landmark court battle against estate agents Foxtons.

The watchdog went to the High Court to fight what it said were unfair terms in Foxtons contracts.

In his judgment given today, Mr Justice Mann accepted that all the terms that the OFT brought before the court were unfair, including Foxtons' use of terms:

*Requiring a landlord to pay substantial sums in commission, where a tenant continues to occupy the property after the initial fixed period of the tenancy has expired - even if Foxtons plays no part in persuading the tenant to stay, and does not collect the rent or manage the property,

*Requiring a landlord to pay commission to Foxtons even after it had sold the property,

Allowing Foxtons to receive a full estate agents' commission for sale of the property to a tenant.

*Allowing Foxtons to receive a full estate agents' commission for sale of the property to a tenant.

The judge held that such important terms must be flagged prominently not just in the contract, but also in any sales literature and processes. He said a typical consumer would be unlikely to read standard terms with a great degree of attention and would not expect important obligations to be tucked away in the small print and not specifically brought to their attention. He also found that Foxtons had used language in its contracts which is not "plain and intelligible".

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Daily Mirror Investigates blog

Very pleased to read this!

Renewals are such a dodgy area. In the flat i used to rent, the EA was responsible solely for finding the tenant (as a one-off) and then drawing up the contract. No ongoing management responsibilties.

When my 1-year lease expired, I wanted to stay on and my landlord was ok with this. However, my landlord didnt want to pay the agent another huge fee just to re-issue the same contract with the same tenant, and instead went looking for another agent. The landlord was prevented from entering into a new contract directly with me (i.e. without involving the EA) even though I had never signed away my right to do so!

Hopefully today's ruling will clean up this area and put a stop to this kind of blackmail and anti-competitive behaviour. Renewal fees are such easy money for EAs, when typically, all they do is print out the same contract as the previous year and change the date, then collect £100 from tenant and probably a lot more from the landlord.

No doubt they will offset the lost revenues with higher fees on the initial lease & from those rip-off tenant credit checks...

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Some of the Press releases are not entirely accurate.

I am surprised that Foxtons have got off so lightly. It hasn't been ruled that they can't charge renewal fees but that it wasn't clear enough that they did. Again it's a London thing I think.

This is the ARLA press statement.

FRIDAY JULY 10 2009

In response to the High Court judgement on the case of the OFT vs. Foxtons, Ian Potter, Operations Manager, of the Association of Residential Letting Agents (ARLA) states as follows:

“We welcome Mr. Justice Mann’s clarification on the issue of contract transparency in relation to letting agent fees. Contrary to misleading information that has already appeared in the press, the ruling has not stated that renewal fees are unfair but that these fees must be explicitly laid out. ARLA strongly supports the need for transparency and our members adhere to this premise though a strict code of practice, which binds them to ensuring all fees and charges are made clear and are reasonable.

“The lettings market has changed irrevocably in recent times. ARLA’s members have recognised this change by launching the licensing campaign for lettings agents which is founded on the need for improved standards, best practice and redress for consumers. Today’s ruling will serve, therefore, as another building block in our aim to create strong foundations for the lettings market as we re-assess the provision of our services and how we communicate them.

“To quote the clause E.III of the Code of Practice: “ The Terms of Business used by a Member Firm must be clearly presented and written in plain and intelligible language and endeavour, where appropriate, to take account of the Unfair Terms in Consumer Contract Regulations .â€

“In effect ARLA members have always been encouraged to follow industry best practice and to provide information on fees and charges in clear and transparent manner.

“The letting of a residential property is, by its nature, a complex transaction centred on the emotive subject of people’s homes. A key element of ARLA’s licensing campaign to professionalise the sector is to increase consumer understanding of this complex process. We once again encourage landlords and tenants to only choose ARLA members. This is because they are advised to make all fees and charges clear and reasonable and are subject to a consumer complaint scheme if they are not.â€

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Some of the Press releases are not entirely accurate.

This is not helped by the OFT'(who ought to know better) releasing "the OFT will now ask the High Court to go on to grant injunctions preventing the continued use of the terms by Foxtons" which ISTM will fail.

ISTM that all Foxtons have to do to comply is make the term more prominent, not remove it.

tim

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I really struggle to understand why so many landlords use agencies.

It can't be that hard to advertise privately. My current tennancy agreement is with a private landlord and so will be my next one. It was not hard to find them and they both offered good rents (as they don't loose a tenth of the money on commission.)

It seems odd that so many "property expert" landlord rely on agencies. If they know the market so well, why can't they find a tennant?

w

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This is not helped by the OFT'(who ought to know better) releasing "the OFT will now ask the High Court to go on to grant injunctions preventing the continued use of the terms by Foxtons" which ISTM will fail.

ISTM that all Foxtons have to do to comply is make the term more prominent, not remove it.

tim

+1, sadly, outrageous fees are not going to be a thing of the past.

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I really struggle to understand why so many landlords use agencies.

It can't be that hard to advertise privately. My current tennancy agreement is with a private landlord and so will be my next one. It was not hard to find them and they both offered good rents (as they don't loose a tenth of the money on commission.)

It seems odd that so many "property expert" landlord rely on agencies. If they know the market so well, why can't they find a tennant?

w

Often it's because they don't want to do the management of the property, and "management only" deals are not offered by agencies.

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I really struggle to understand why so many landlords use agencies.

It can't be that hard to advertise privately. My current tennancy agreement is with a private landlord and so will be my next one. It was not hard to find them and they both offered good rents (as they don't loose a tenth of the money on commission.)

It seems odd that so many "property expert" landlord rely on agencies. If they know the market so well, why can't they find a tennant?

w

totally agree - since the publication of this case we have seen a huge increase in visit to our web site -with the introduction of so many online letting web sites there is no excuse for landlords to have to pay high letting agent fees if they dont want to. Paul Long www.landlordlet.com.

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totally agree - since the publication of this case we have seen a huge increase in visit to our web site -with the introduction of so many online letting web sites there is no excuse for landlords to have to pay high letting agent fees if they dont want to. Paul Long www.landlordlet.com.

Yeh your site looks cheaper than Ludlow Thompson et al but £75 to sell a contract that you adapt from a basic template? Still don't understand why landlords don't do this all themselves....

w

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Yeh your site looks cheaper than Ludlow Thompson et al but £75 to sell a contract that you adapt from a basic template? Still don't understand why landlords don't do this all themselves....

w

Agreed. I paid once for a legal contract then used that as my template (adding clauses such as cleaning of carpets on exit from property etc). Worked well for me for 10+ years. Maybe I was lucky - my home town has population of circa two hundred thousand. Don't think I'd try same in London.

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