Letting agents fees and transparency – a new case

Foxtons v. LB Camden, First Tier Tribunal,10 October 2016

This is an important decision where Foxtons appealed against four final penalty notices served on them by Camden LB  in respect of four offices and the Foxtons website.

The law and regulations concerned are set out in detail in the decision report (you can see a pdf of this here) but the reason Camden served the notices was the fact that Foxtons listed among their fees, an ‘Administration fee’ of £420.

The regulations state that fees must be set out in detail so that people know what they are paying for and the guidance notes say “Ill-defined terms such as administration cost must not be used.”

Foxtons pointed out that this is just guidance and said that their fee covered a variety of items which would vary from property to property so ‘Administration fee’ was an appropriate way to describe this. However, they then decided to amend the wording to include the following description:

Administration fee £420

This is a fixed cost fee that can cover a variety of works depending on the individual circumstances of each tenancy, including but not limited to conducting viewings, negotiating the tenancy, verifying references and drawing up contracts. This charge is applicable per tenancy, and not per individual tenant.

Camden were still unhappy with this though, believing that all the charges should be listed in detail.  The description provided by Foxtons is inadequate as it potentially includes items which are not specifically set out in it.

Foxtons therefore challenged the notice at the First Tier Tribunal.

The First Tier Tribunal Decision

The Judge, Peter Lane, ruled that the first description was inadequate. Fees cannot be described as just ‘administration fees’.

However, he felt that the amended wording was sufficient to comply with the rules, saying:

I agree with Foxtons that Camden incorrectly interpreted the legislation (and, for that matter, the Guidance), insofar as Camden considered that the use of the expression “Administration Charge” or “Administration Fee” was prohibited. There is nothing wrong per se with the use of such a label, provided that it is accompanied by “a description … that is sufficient to enable a person … to understand the service or cost that is covered by the fee or the purpose for which it is imposed”.

It is in this light that the Primary Authority Advice, regarding “vague expressions like ‘admin fee’”, must be understood.

The Judge, therefore, ordered that the penalty should be reduced from £5,000 per notice to £3,000 to take account of the fact that a satisfactory description of the charge was given from March 2016.

Points to note

Camden are not happy with this decision and I understand will be looking to appeal this case further.

In the meantime David Cox of ARLA is recommending that agents do not use the words ‘Administration fee’ when describing their fees at all.

“The Government guidance and our own Primary Authority Assured Advice said not to use the word, which is why when we created the ARLA Fees Template, we suggested using terms like ‘Tenancy Set-Up Fee’ together with a full and clear explanation of what services are provided for the fee.”*

*As reported here.  It will be interesting to see what happens on appeal.

NB I just visited the Foxtons site and could not find a list of landlord fees at all as their link did not work.  The pdf (when available) is also several clicks away from the home page.

Note – the picture is not intended to be an accurate representation of Judge Peter Lane deciding the case!