Court ruling: Renewal fees 'unfair'

Published 13th Jul 2009

News that estate agents Foxtons has been defeated in the High Court over renewal fee issues will be a source of celebration for many with a bone to pick with the agent and its measly little minis - but it is also something of a landmark victory in a larger sense - as it spells out new rules for how contracts are written and what is included in the small print...

The Office of Fair Trading (OFT) has welcomed the High Court ruling, which follows its claim that Foxtons fees are unfair under the Unfair Terms in Consumer Contracts Regulations 1999.

Mr Justice Mann decided that all of the terms and conditions used in Foxton's agreements with landlords were unfair.

Alongside renewal fees, these include the agency's requirement of a landlord to pay large 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.

The judge also ruled that requiring a landlord to pay commission to Foxtons even after it has sold the property and receiving a full estate agents' commission for sale of a property to tenants were also unfair terms and conditions.

Whilst the OFT will now ask the High Court to go on to grant injunctions preventing the continued use of the terms by Foxtons, contrary to industry speculation, the use of renewal fees has not been totally ruled out.

Instead, agents must now prominently disclose the fees in its contracts, sales literature and processes and not hide them away in unintelligible small print.

At present, the judge found the language used by Foxtons in its contracts to be neither ‘plain' nor ‘intelligible.'

John Fingleton, Chief Executive of the OFT, says, "This ruling sends out a clear and unambiguous message that businesses offering services need to ensure unexpected or surprising terms are not hidden away in small print.

"Contracts need to be written in clear and straightforward language with important provisions, particularly those which may disadvantage consumers as in this case, given prominence and actively brought to people's attention," he added.

Michael Brown, Foxtons CEO, said, "We are extremely pleased that this matter has finally been clarified in a way which is to the benefit of consumers and the industry."

Source: ' TMC '

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