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Buy-to-let Landlords Can Claim Millions

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Buy-to-let landlords can claim millions

Thousands of buy-to-let landlords could be in line to claim millions back from estate agents as a result of a landmark High Court ruling yesterday against Foxtons. Mr Justice Mann ruled that leasing agreements made by Foxtons, which operates mainly in London, unfairly overcharged commission to landlords. The Judge described Foxtons' agreements as traps and timebombs. Foxtons, which lets some of the most expensive property in Central London, charged customers 11 per cent commission when a tenant continued to occupy the property for longer than the initial term of the lease, and an additional 2.5 per cent commission payment if a tenant agreed to buy the property from the owner.

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Bound to be appealed. Generally you can put anything short of slavery in a contract and get away with it.

Secondly, Foxtons will simply go bust if this is upheld, so no one will get anything.

Much more important for BTLers is: the tax man coming to collect all that tax BTLers have been illegally evading for years...with modern technology it's childishly simple to find out who owns multiple properties. The govt is now desperate for the money...

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Buy-to-let landlords can claim millions

Thousands of buy-to-let landlords could be in line to claim millions back from estate agents as a result of a landmark High Court ruling yesterday against Foxtons. Mr Justice Mann ruled that leasing agreements made by Foxtons, which operates mainly in London, unfairly overcharged commission to landlords. The Judge described Foxtons' agreements as traps and timebombs. Foxtons, which lets some of the most expensive property in Central London, charged customers 11 per cent commission when a tenant continued to occupy the property for longer than the initial term of the lease, and an additional 2.5 per cent commission payment if a tenant agreed to buy the property from the owner.

Automatic renewal fees (where the agent doesn't actually do any work) are not charged in my area by any agent I know. Foxtons were charging a high % of the rent when they didn't even manage the properties.

Unfortunately I disagree and think that the ruling has gone against landlords. The fees were not condemned IMO thus giving carte blanche to those London agents to continue to do as they please. :(

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Automatic renewal fees (where the agent doesn't actually do any work) are not charged in my area by any agent I know. Foxtons were charging a high % of the rent when they didn't even manage the properties.

Unfortunately I disagree and think that the ruling has gone against landlords. The fees were not condemned IMO thus giving carte blanche to those London agents to continue to do as they please. :(

Agreed the rulling did not object to renewal fees, simply hiding renewal fees in the contract and not making them a core term of the contract, it also got rid of some sillys such as selling fees and renewal fees remaining with the original LL if the property is sold to a new LL.

What is does do is expose the practice that bites people (me included) the first time it happens and at least make sure you have a choice or a negociation position. It does apply to existing contracts but not old ones, i.e. it might be hard having paid the fee to reclaim (that may be the subject of an appeal) and it does clear up the distinction between consumer LL and proffesional LL.

What will happen is that those LA's who do not charge these fees will advertise like hell and take business from those that do, the fees will eventually disappear and so will the silly mini's and excessive commissions. LA's that do not charge these fees survive well enough, they just don't have silly cars.

Foxtons will not appeal, they took a grubbing in court, I read all 34 of the rulling!!!!

Edited by Matt Henson

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Agreed the rulling did not object to renewal fees, simply hiding renewal fees in the contract and not making them a core term of the contract, it also got rid of some sillys such as selling fees and renewal fees remaining with the original LL if the property is sold to a new LL.

What is does do is expose the practice that bites people (me included) the first time it happens and at least make sure you have a choice or a negociation position. It does apply to existing contracts but not old ones, i.e. it might be hard having paid the fee to reclaim (that may be the subject of an appeal) and it does clear up the distinction between consumer LL and proffesional LL.

What will happen is that those LA's who do not charge these fees will advertise like hell and take business from those that do, the fees will eventually disappear and so will the silly mini's and excessive commissions. LA's that do not charge these fees survive well enough, they just don't have silly cars.

Foxtons will not appeal, they took a grubbing in court, I read all 34 of the rulling!!!!

So does that mean you'll have a claim against them then or not?

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Automatic renewal fees (where the agent doesn't actually do any work) are not charged in my area by any agent I know. Foxtons were charging a high % of the rent when they didn't even manage the properties.

Unfortunately I disagree and think that the ruling has gone against landlords. The fees were not condemned IMO thus giving carte blanche to those London agents to continue to do as they please. :(

thats right, they condemned the palcing of the onerous terms deep in the small print.

didnt negate them though.

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So does that mean you'll have a claim against them then or not?

It means their claim against me is invalid, we very specifically asked if there were renewal fees and they stated "no" we signed the contract on that basis. In our contract the renewal fee clause is a single line right in the middle of the back page so it really would fail the UFTCC rules.

Interestingly they did two renewals where we paid the 60 quid fee but did not charge us the renewal fee, then 6 months later a bill came through the post for both renewals. We contested and on the basis of this ruling we will not have to pay.

I as LL I don't activety dispute renewal fees as is, but I do disagree with them being hidden in a contract and blatant lies, if they form part of the "core bargain" you can at least negociate them as you would the initial or management fee and chose not to accept a contract of the basis that those fees where not competitive.

I also think a renewal fee in the 3-5% of annual rent is a fair proposition for the argument that a good letting agent will avoid voids but any more is day light robbery.

What was interesting in the rulling was that Foxtons argued their business model relied on renewal fees to work and yet they could not state what contribution they made to the business results and viability. The judge did not seem overly amused by that

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thats right, they condemned the palcing of the onerous terms deep in the small print.

didnt negate them though.

True but unfortunately I see that you live in the land of broken chains and unfortunately it's much more common 'down South'.

I don't know why they have to do it. We manage to run businesses in the North without such fees and the rents are much lower here and so as a result are the management fees.

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It means their claim against me is invalid, we very specifically asked if there were renewal fees and they stated "no" we signed the contract on that basis. In our contract the renewal fee clause is a single line right in the middle of the back page so it really would fail the UFTCC rules.

Interestingly they did two renewals where we paid the 60 quid fee but did not charge us the renewal fee, then 6 months later a bill came through the post for both renewals. We contested and on the basis of this ruling we will not have to pay.

I as LL I don't activety dispute renewal fees as is, but I do disagree with them being hidden in a contract and blatant lies, if they form part of the "core bargain" you can at least negociate them as you would the initial or management fee and chose not to accept a contract of the basis that those fees where not competitive.

I also think a renewal fee in the 3-5% of annual rent is a fair proposition for the argument that a good letting agent will avoid voids but any more is day light robbery.

What was interesting in the rulling was that Foxtons argued their business model relied on renewal fees to work and yet they could not state what contribution they made to the business results and viability. The judge did not seem overly amused by that

Ah yes I remember now you were waiting for the case before paying them. Good for you.

We manage on £60 renewal fees for managed clients and don't even do renewals for 'let only' clients. They'll probably end up making some of their highly targeted 'sales' people redundant if they manage to survive the publicity.

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