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Tuesday, February 23, 2010

Foxtons case LATEST: OFT secures High Court Order

For many landlords the Foxtons case on tenancy renewal fees seems to be have rumbling on for ever without any real resolution. We learnt just a couple of weeks ago that Foxtons had withdrawn their High Court appeal putting paid to any hope on the clarification on the legal standing of charging tenancy renewal fees.

In the latest development the Office of Fair Trading ( OFT ) has secured a final High Court Order against Foxtons to prevent the letting agent using certain terms in it's landlord agreements.

However this Order fails to clarify the situation on tenancy renewal fees.

Where the Order is clear though is that the practice of some letting agents of putting conditions in their agency agreements with landlords relating to the subsequent sale of a landlords property are unfair and no longer binding. The specific conditions are:

• Terms which require landlords to pay renewal commission to Foxtons 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 Foxtons in the event they sell the property to their tenant.

It is understood that Foxtons have now reworded their standard contract to omit these conditions. However the OFT have indicated in their press release that they will be writing to other letting agents that still include these conditions reminding them they need to comply with the law.

So that's nice and clear isn't it?

Well no not quite. The OFT under it's remit is only able to protect consumers. This term may not necessarily apply to all landlords. Where a landlord has one or maybe two properties and therefore does not rely on letting out property as their main income the law may view them as a consumer of professional service; and therefore subject to the protection provided by the OFT under consumer law. However, large portfolio landlords who rely on their letting business for their income may be considered to be a business and therefore will not benefit from the same level of protection as is provided by the consumer protection regulations and the OFT.

Are landlords consumers or are we a letting business?

This case and the involvement of the OFT highlights a huge area of uncertainty over how landlords are considered by the law. Are we consumers that need protecting from unscrupulous business types? Or are landlords actually 'rough and tough' business men and women who are quiet capable of looking after themselves?

The government and the law can't quiet seem to decide.

What do you think?

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