Landlords using a letting agent will be interested in the latest developments of the High Court battle between the OFT & FOXTONS, the letting agents which continued yesterday. The report in the Times sets out the case for the OFT.
In court, Nicholas Green, QC, for the OFT, said the regulator objects to Foxtons’ contracts because “they are not written in plain and legible English” and some of the conditions they impose on landlords are “plainly unfair”.
He said a typical consumer would be “profoundly confused” by Foxtons’ terms and conditions because “nothing tells you what you are letting yourself in for”.
Explaining that the contracts were also unfair, Mr Green highlighted a clause that requires landlords whose initial tenants are introduced by Foxtons to continue paying commission to the agency for as long as the tenants remain in the property.
Foxtons’ right to continued commission remained, regardless of whether the agency still managed the property on behalf of the landlord or had any role in persuading the tenants to stay beyond the initial rental period, Mr Green said.
“There is not necessarily any connection between an original introduction and a tenant’s decision to renew their lease,” Mr Green said. “Where there is a link and the agent plays a part, we say it is fair for them to earn further commission. But what we object to is an automatic right to commission for forever and a day.”
The OFT is relying on the same set of consumer protection laws that it is using to fight with the high street banks over unauthorised overdraft fees.
The Unfair Terms and Conditions Consumer Contract Regulations (1999) state that contracts must be clear and that some commercial agreements are fundamentally unfair and illegal, even if the consumer knows what they are getting in to upfront and does so willingly.
The OFT, which brought its case after receiving numerous complaints against Foxtons, believes the practices are “widespread” in the industry and plans to pursue other agents if successful.
Chris Horne Editor of the UKs largest specialist landlord website Property Hawk with over 30,000 registered users comments:
"If successful the case could fundamentally shake up the letting industry and permanently change the type of contracts landlords sign with their letting agent."
"The Foxtons case highlights the fact that landlords should always check very carefully any contract with their letting agent to make sure what is included in the fee. This is because their is no such thing as a standard contract. The service provided will vary from letting agent to letting agent."
The case continues.