What the Foxtons ruling means for you.
OCTOBER 2009
Following this summer’s High Court ruling that leasing agreements made by Foxtons unfairly overcharged commission to landlords, landlords and their agents may be wondering how this affects them and what steps they should be taking.
Foxtons’ terms of business entitled them to charge a renewal commission if a tenant renewed or extended their tenancy, even where Foxtons had not negotiated the renewal or extension. Their terms also purported to entitle Foxtons to charge a sales commission where a landlord sold his property to the tenant, even if Foxtons had not negotiated or helped in any way with the sale, and entitled Foxtons to recover commission from a landlord who had transferred their property to another landlord and the tenancy had been renewed.
Mr Justice Mann said that these provisions were unfair under the Unfair Contract Terms in Consumer Contracts Regulations 1999 (UCTCCR).
The renewal commission terms allowed Foxtons to charge landlords 11% commission when a tenant continued to occupy the property for longer than the initial term of the lease. The provision was viewed as unfair as Foxtons did not provide commensurate services as time went on. In addition, the provision was not sufficiently obvious, although it was set out in the terms.
The ruling has left letting agents with similar terms very concerned and landlord hopeful that they may be able to reclaim commission fees previously paid; however it is important to note that renewal fees have not been ruled to be unfair in themselves.
Letting agents must review their terms and conditions and make sure that all contracts are clear with commission provisions “plain and intelligible”. Landlords must be made properly aware of how renewal commissions will work in order for them to be acceptable.
Equally Landlords must be wise to agents’ small print and seek legal advice if they believe their current agent’s terms and conditions could be considered unfair as they may be able to negotiate better terms.
If you would like any further information about the issues raised in this article please contact Rudy Capildeo or any other member of Goodman Derrick LLPs Litigation Department on 0207 404 0606.
This guide is for general use and interest only and should not be relied upon as providing specific legal advice. |
