OFT ruling against FOXTONS

[Noel Adams]

I suspect this might not be a completely new thread but I'm seeking advice as to how best to deal with Foxtons on the matter of charging for renewing a rental contract. My rental flat has been let through Foxtons for the past four years. Two years ago, the tenant who had been in the flat for a year wanted to renew for two years. I was charged a hefty sum twice (once for each year) and complained at the time. The lease is up for renewal again and this time I questioned the sum in light of the recent OFT ruling. Here is their response (English uncorrected):

The ruling that came out does not prohibit the use of renewal fees and does not deem them to be unfair. What did become clear is that our terms and conditions could be set out in a way that was clearer to all our landlords of the renewal commission fee being applicable upon renewal as well.
We have been intending to change our commission structure for some time but it seemed prudent that we wait until the decision was finally made before we could bring our new structure into effect, which was in effect as of the day of the decision.
As stated, the new renewal commission fee structure which I am delighted to offer you, management service, would be reduced from the current fee of 11% commission + 6% management fees, totalling 17% plus VAT of the gross rent to a lower charge, which is only applicable to renewing tenancies, which is 7% commission + 3% management giving a total fee of 10% + VAT of the gross rent.

The question is: how best should I respond? Do I have any legal grounds to reject or negotiate this delightful offer? I'm not a person who necessarily hates Foxtons and it may be that these fees are fair.

Any advice appreciated,
N

[Amethyst]

Re: OFT ruling against FOXTONS

Judgment http://www.bailii.org/ew/cases/EWHC/Ch/2009/1681.html

Tessa Shepperson (Landlord Law Blog) is making some useful blogs on the subject...

a basic overview of the situation at the moment

Initially, the answer is "not much", as the recent decision is not necessarily the end of the story. First, the Judge states at the end of his judgement that the practical consequences of his decision are yet to be either agreed between the OFT and Foxtons, or will be the subject of a further hearing. So that needs to be sorted out.

Second, this was a High Court decision, and High Court decisions can be overturned on appeal to the Court of Appeal, (and possibly then again on an appeal to the House of Lords). At the present time, we don't know whether Foxtons will appeal or not.

Whether Foxtons appeal will probably depend on the decision in the other big (even bigger) OFT unfair contract terms litigation, which is the case against the banks on bank charges. There is a House of Lords decision due out at some stage on this (the case was heard at the end of June), so we all need to wait and see what happens.

Might be worth having a read - The Landlord Law Blog: Search results for foxtons (theres a few articles and an analysis of the judgments.

Really need to have a read through the judgment (and yes there is a thread on here disecting it a little but more concentrating on the read across to the bank charges campaign and business accounts) to see WHY the high court found the terms assessable and the OFTs info as to what they expect Foxtons outcome to be.

I would expect Landlord Law Zone would have some decent information too. One recent thread - Letting agents wants renewal fee - LandlordZONE Forums (page 2 and 3 of that threaD) where they basically say sue me and let the court decide.


The OFT press release (and they have lots more info there)

In his judgment given today, Mr Justice Mann accepted that all the terms 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.

The Office of Fair Trading: OFT welcomes high court ruling on Foxtons use of unfair terms