OFT warns letting agents to amend unfair terms

Published 24th Feb 2010

Tens of thousands of landlords could be in line for refunds after the Office of Fair Trading (OFT) confirmed that it was writing to a number of letting agents warning of unfair contract terms.

The move follows a final ruling in the High Court yesterday regarding a case brought against Foxtons by the OFT.

Last July Foxtons was found to be breaching unfair terms and conditions regulations by charging landlords an 11 per cent "renewal" commission when a tenant opted to remain at a property for longer than the initial term of the lease.

It also imposed an additional 2.5 per cent commission payment if a tenant agreed to buy the property from the owner.

Judges ruled that the charges were not transparent and represented a "trap".

Foxtons had until January 29 to appeal against the verdict.

Experts warn that renewal commission charges are widespread, particularly in London, where agents have been known to charge up to 16 per cent of rental payments when a tenant stays on at a property.

Britain has 1.15 million buy-to-let landlords and, given that many of the UK’s 15,000 letting agents impose similar charges to Foxtons, the ruling could give rise to total claims across the industry of £26 million.

The OFT said that it was writing to letting agents that it suspected of having unfair terms in the small print of contracts, warning that it expects all agents to comply with the ruling. It refused to reveal which companies is contacting.

Jason Freeman, legal director of the OFT's consumer group, said: "This case, and the changes Foxtons has now made, sends a wider message to letting agents and businesses in general that important terms, particularly those which may disadvantage consumers, must be clear, prominent and actively brought to people's attention.

"Consumers should not be presented with a surprise bill for services they have not consciously agreed to."

The ruling also made clear that terms which required landlords to pay a fee to Foxtons when they sold a property to a tenant were also unfair.

Last November Foxtons made changes to its contracts, including making the liability to pay renewal commission more transparent, reducing the commission payable on renewal, and limiting it to two renewals.

Source: ' Times '

View All Latest Articles