Foxtons case concluded – now is the time for agents to review their agency agreements

I have just learned that a final order has been made in the case of the Office of Fair Trading v. Foxtons, which I have written about in the past (see here).

Foxtons have now made ‘significant changes’ to its standard terms and conditions which have satisfied the OFT

‘including making the liability to pay renewal commission more transparent, reducing the commission payable on renewal, and limiting it to two renewal.

Commission is also now only payable where the original tenant remains in occupation, and the landlord will get a pro rata refund where the tenant leaves the property before the date set out in his lease.’

The court order states (according to the OFT press release, although I have not seen the actual order yet) that the following should not be used in contracts with consumer landlords

• Terms which require landlords to pay renewal commission to agents after the sale of their property to a third party because the original tenant remains in occupation.
• Terms which require landlords to pay a sales commission to agents in the event they sell the property to their tenant.

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 OFT make it clear in the press release that they will be writing to letting agents, and will ‘take necessary steps’  if agents terms and conditions do not comply with the law.

It is strongly suggested therefore that all letting agents now undertake a review of their agency agreements, and instruct their solicitors to re-draft them, if there is any doubt as to their validity.

Note that this is not work that we do, however PainSmith are a good firm for this type of thing.

As pointed out by The Times, this also means that landlords who have paid commission in the past on clauses which have now been found to be unfair, could be entitled to reclaim their  money through the courts.

Related posts:

1. OFT v. Foxtons case costs Foxtons £4.4 million?
2. Are the Law Commission just wasting their time?
3. Residential letting agents get new code of practice