Foxtons - renewal fees why things are far from straightforward

Landlords who have watched with interest the OFT v Foxtons case over wether it is legal for letting agents to charge renewal fees.

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The recent victory by the OFT appeared to herald a new era for landlord protected against being charged unfair renewal fees and potential able to claim thousands in over paid charges from existing and previous contracts with their letting agent.

However, things aren't that straightforward!!!!!!

Firstly, part of the judgement related to the way that the important terms were tucked away in an obscure part of the agreement in such a way that they represented a ‘trap’ or ‘timebomb’ in the way that such important obligations were bought to the landlords attention. Lord Justice Mann didn't rule that renewal fees parse were illegal, just the way that Foxtons tried to 'hide' them in the agreement. He said: “I shall not decide whether or not renewal commission is always unfair to consumer landlords.”

Secondly, The OFT case was based around a case bought under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs). These regulations are intended to protect consumers and not businesses.

Some landlords operating more than a couple of buy-to-let properties would probably be considered by the courts to be a business as a posed to a consumer and therefore may not benefit from this level of protection. The courts may instead consider that any transaction between a letting agent and a business landlord as a business transactions bound by the law of contract.

The only certainty in the Foxtons case is that it is likely to rattle on for some time.

What should a landlord do about renewal of letting fees?

If a landlord has concerns that they may have been unfairly charged renewal fees by their letting agent. The first step is probably to send a Letter of Claim to the letting agent according to Richard Jones solicitor at the Residential Letting Association. The landlord should give their letting agent 14 days to respond threatening them with a claim in the County Court.

It is possible that a landlord is able to claim back up to 6 years of fees limited by the statute of limitations. Several words of caution. Firstly, its always advisable to take your own legal advice Secondly the County Court may suspend any hearing pending any further outcome of events in the High Court such as an appeal by Foxtons over the case.

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