Landlords can claim millions back as Foxtons defeated in High Court

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London-based estate agent, Foxtons, defeated under its unfair terms imposed on landlords – announced by the High Court on 10th July 2009. Landlords can now reclaim the overpaid charges for the past 14 years.

The Office of Fair Trading (OFT) had finally won over suing Foxtons’ unfair terms imposed on landlords, announced with High Court ruling on 10th July 2009. The small print on Foxtons’ agreement for rental properties was described as a “trap” and “timebombs”, which it required landlords to pay commissions even when the initial lease agreement expired. National Landlords Association (NLA) also hailed the ruling against Foxtons as it has been campaigning on this issue for months.

Landlords were required to pay 11% renewal commissions to the company when the current tenants continue to rent the property after the initial tenancy period (even though Foxtons had not involved in arranging the extended tenancy). Other than that, landlords have to pay full 2.5% commission to Foxtons for selling the property to the tenants.

The terms and conditions written by Foxtons were criticised as hidden and unclear – which Mr Justice Mann stated that consumers were unlikely pay high attention and expect important obligations like this to be written in the small print without bringing to their attention particularly. After the announcement of the defeat, Foxtons have now stopped using certain clauses.

Landlords can now reclaim the overpaid charges for the past 14 years. Reports estimated that if it costs a landlord £15,000 a year to rent out a two-bedroom property – he/she would have to pay £1,650 commissions to Foxtons, which would equal to £23,100 in 14 years.

Foxtons welcomed the High Court ruling and are pleased that “the OFT made clear its case was not that renewal commission is always unfair”.

They have removed certain clauses such as the sales and renewal commission from the terms of agreement and had now introduced a new literature to spell out its commission terms prominently. It is also reported that Foxtons have now voluntarily reduced the renewal commission charges but refused to reveal by how much.

15th July 2009