The test case between the Office of Fair Trading and Foxtons, on the legality of letting renewal fees, appears to hinge on how much work an agent does.
The suggestion was made in court this week by Nicholas Green QC, appearing for the OFT.
He said the OFT was challenging Foxtons’ right to claim continued commission, regardless of whether Foxtons managed the property and regardless of whether they played a part in persuading the tenant to stay on after the initial tenancy period.
He added: “There is not necessarily any connection between an original introduction and a tenant’s decision to renew their lease.
“Where there is a link and the agent plays a part, we say it is fair for them to earn further commission. But what we object to is an automatic right to commission for forever and a day.”
Mr Green also criticised the confusing terms and conditions in Foxtons’ contracts, saying they were not in plain English and would confuse a consumer, because “nothing tells you what you are letting yourself in for”.
In the Foxtons case, the OFT is using the same consumer protection laws that it is using to challenge the high street banks over unauthorised overdraft fees.
The Unfair Terms and Conditions Consumer Contract Regulations (1999) state that contracts must be clear and also that some agreements are unfair and illegal, even if the consumer knows what they are getting into upfront and does so willingly. However, the OFT says that only a court can decide.
That decision may take some weeks to come through, the OFT said earlier this week.
Source: Estate Agent Today