Complaints from consumers have prompted the Office of Fair Trading (OFT) to bring a court case against Foxtons that could result in changes throughout the letting industry.
The OFT has issued High Court proceedings against the letting agent seeking a declaration on the application of the Unfair Terms in Consumer Contract Regulations 1999 (UTCCRs) to certain terms in Foxtons’ lettings agreements with landlords.
The OFT is also seeking an injunction against Foxtons preventing it from using the terms.
If successful, the OFT says that it intends to enforce compliance with the law, as declared by the court, throughout the letting industry wherever similar terms are being used.
The OFT claims that the controversial terms can: (i) potentially require landlords to pay Foxtons substantial sums in commission where a tenant continues to occupy the landlord’s property after the initial fixed period of the tenancy has expired – even if Foxtons plays no part in persuading the tenant to stay, and no longer collects the rent or manages the property; (ii) require the landlord to pay these sums after the landlord has sold the property; and (iii) Foxtons can demand commission to be paid where the landlord sells the property to the tenant, even where the agency has played no part in negotiating that sale.
The OFT states that Foxtons contends that its agreements with landlords are not unfair and is continuing to use the terms. Accordingly, the OFT has issued proceedings so the courts can decide the matter.
