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Foxtons Loses Unfair Letting Renewal Fees Case says Letting Focus

It is a bad day for Foxtons and other letting agents who have been for years charging excessive amounts for carrying out renewals to tenancy agreements when there was often no work involved at all.
The OFT went to the High Court to fight what it said were unfair terms in Foxtons contracts.
This case has dragged on for years and in today’s ruling, the Judge accepted that all the terms that the OFT brought before the court were unfair.
These include Foxtons terms that required 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 played no part in persuading the tenant to stay, and does not collect the rent or even manage the property.
Also ruled unfair were terms requiring a landlord to pay commission to Foxtons even after it had sold the property and allowing them to receive a full estate agents’ commission for sale of the property to a tenant.
The ruling said that charging repeat renewal commission by Foxtons represented a “trap” and that such important terms must be flagged prominently not just in the contract, but also in any sales literature and processes.
I know from my own experience that many non professional landlords do not read the standard terms with any degree of attention and don’t expect important obligations to be tucked away in the small print.
But they often are and were very rarely bought to their attention.
The case makes clear that contracts should be written in clear and straightforward language with important provisions, particularly those which may disadvantage landlords, as in this case, given prominence and actively brought to people’s attention.
The OFT has said that it expects the letting industry to comply with this ruling and will take the necessary steps to ensure this where appropriate.
If you feel you have been “done” over the years by a letting agency using such tactics you should start by writing them a formal letter asking for your money back.

SOME LETTING AGENTS WILL GO OUT OF BUSINESS
I applaud the decision which must leave a lot of letting agents quaking tonight as they can surely expect the claims for repayment to roll in.
But you’ll have to make your claim first – these letting agents ain’t going to rush to send you a cheque - and I’m guessing many letting agents won’t pay up too easily either. (I’m no lawyer but I imagine it will certainly help if you have copies of the documents you had when you signed up to the contract)
Other letting agents will be pushed over the edge by this and go out of business taking some landlords deposits with them (but that's another matter dealt with in other posts on this blog) .

SNEAKY FEES
Hiding letting renewal fees in the way some letting agents did was a typically sneaky property industry thing to do that is sadly standard stuff for the whole financial services sector.
But why did letting agencies do it?
Well, they did it for so long because they could and because many novice landlords were eother too lazy or too busy to read all the small print in the contracts.
Maybe they were tempted because many landlords were too mean to pay a decent up front fee for an agent’s service.
I have some sympathy with them on this one because I have on occasion looked after properties for people overseas and I was frequently astounded by some amateur landlords’ meanness.
I frequently found meanness about getting things fixed for their tenants and about spending any money at all on their properties.
I can well imagine that these were the type of people who would argue over paying a decent rate for an agent to find them a tenant.
No wonder some letting agents went all sneaky and opted to charge these hidden repeat renewal fees that have now been outlawed.
For some it was the only way they could make a living (though in Foxtons and other big London letting agencies it was probably just down to a rapacious desire to squeeze every buck possible out of amateur landlords who were too huried to read the small print.)

EXPECT LETTING AGENCY FEES TO GO UP
How will this effect things going forward?
Well as a result of this decision, I fully expect up-front agency fees for finding tenant to go up and also for more landlords to opt let direct using the various portals.

NOT ALL LETTING AGENTS CHARGED SNEAKY RENEWAL FEES
finally it must be said that charging renewal fees and other sneaky fees was not practiced by all letting agents, of course. Outside London and the South East the practice was quite rare - with most agents only charging a flat rate one-off fee to find a tenant.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord experts. Read Property Articles.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Property Investment Book. The new edition is for accidental and experienced landlords and is fully up to date with all the recent changes to tenancy deposit schemes, landlord registration and capital gains taxes.
I’m a property expert and property speaker - and I run the well known property blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general advice on property letting to anyone looking to buy property for themselves or to let.
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Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
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  1. Anonymous Ian Browning | 9:20 AM |  

    What advice would you give regarding agents who have been charging renewal fees?

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