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Landlords, please be aware that all rent renewal clauses by letting agents such as Foxtons and Chestertons must be in plain language.

In accordance with the Unfair Terms in Consumer Contract Regulations the law used by the OFT against Foxtons was that the standard rent renwal clauses were not in plain English and difficult to understand to the typical landlord client.

The criticism is briefly put below, in relation to rent renewal fee commissions from the Judgement in the OFT v Foxtons case.  The full judgement of the OFV v Foxtons on rent renewal fee claims can be accessed by clicking here Rent Renewal Fees and Foxtons Case


Extract from OFT v Foxtons Case

"At this stage, I shall merely set out an outline of the criticisms of the terms in order to provide a context for the identification and consideration of the relevant provisions of the UTCCR and its preceding Directive. The criticisms are:

i) Various provisions, and in particular clause 2.14, contain language that is not plain and intelligible, contrary to the obligations of the UTCCR."


Landlords Make A Stand

Several years ago, landlords took action against the likes of Foxtons, Chestertons and other mainly London based letting agents for unfair rent renewal fee commissions.  These commissions were unexpected by landlords when the tenant renewed the yearly letting agreement with the landlord.

Usually the landlord's gripe was that the letting agent did not discuss the true cost of finding a tenant and moreover the letting agent had done nothing for the reward typically 9 - 12% of the rental income.

Publicity

What appeared to spark the injustice of such rent renewal fee commissions was the former Blue Peter presenter Konnie Huq signed objected to the renewal fees.  For further information on this story please visit the following rent renewal fee commission article "Buy-to Let Landlords Paying Over The Odds."  Reported online Daily Telegraph
A Truly Objectionable Clause?

When a landlord wants a letting agent to find a tenant, the landlord expects initially to pay a commission to the letting agent known as a "finder's fee".  This finder's fee initially in the mind of most landlords was to pay the letting agent a percentage of the first year's rental income for the property usually about 9 - 12 % of the rental.  When the letting agent hits the landlord for another rent renewal fee each time the tenant renews the let property the landlord is surprised but pays.  As we now know however, these renewal fees can be challenged - click here to claim back rent renewal

But what if later into the tenancy agreement the tenant wants to buy the property of the landlord?

Clause 5 is said to contain further objectionable provisions providing for commission to be paid in the event of a sale of the property to a tenant, and to provide unfairly for the continuation of the commission obligation where the landlord sells his interest in the property. It reads:

    "5.0 Sales provisions
    5.1 Sale of property to tenant
    In the event that the tenant, occupant or licensee of the property enters into an agreement with the owner/landlord to purchase the property, a commission of 2.5% of the purchase price becomes payable by the owner/landlord to  Foxtons  when contracts for the sale of the property are exchanged.  Foxtons  reserves the right to defer payment of this commission until completion.
    5.2 Sale of property by landlord
    Where a property is sold, transferred or otherwise dealt with, with the benefit of a tenancy,  Foxtons ' fees remain the responsibility of the original landlord for the duration of the tenancy and for any extensions, renewals or periods of holding-over, irrespective of whether negotiations were carried out by  Foxtons . The landlord should instruct his solicitor to assign responsibility for  Foxtons ' fees to the purchaser."

    The shorthand used in this case for those commissions are "sales commission" and "third party renewal commission" respectively.

Landlords Watch The Small Print

Many landlords have found out to their cost that when they instructed a letting agent to find a tenant, they did not appreciate that if ultimately the tenant buys the let property they will have to pay the letting agent a commission, typically 2.5% of the sale price.

A nice earner for the letting agent, a big shock for the landlord not expecting a hidden clause in the small print.
We are already acting for landlords who are defending such unfair clauses in the rent renewal letting contracts between landlord and letting agent.  Some fees are over £18,000!

Our Solicitor, Ronnie Hutcheon advises on such clauses:
"Any landlord who has or intends to sell the let property to his tenant and discovers that they will now have to pay a sale commission to the letting agent should seek legal advice immediately.  Such clauses are now difficult to enforce following the OFT v Foxtons High Court Case.  Any landlord who has already paid these type of fee, may be able to claim back what they have paid to the letting agent.  In many cases we can act for the landlord on a no win no fee basis."

Landlord Hotline:
 
Call 0151 431 0548 / 0800 011 2757
 
(9.30 am to 6.00 pm Mon - Fri)


Contact Us
Following the OFT v Foxtons court case and our very own rent renewal court cases both in  Croydon County Court and Lambeth County court there is now no excuse for landlords to instruct R James Hutcheon Solicitors to review the letting agreement with the letting agent to see if the landlord can claim back £thousand in rent renewal commission fees.

What Our Rent Renewal Solicitor Says


"Following the three Court cases there is every chance for Landlords to claim back a lot of money in rent renewal fee commissions from letting agents.  We have already succeeded in two County Court Cases that went before a Judge who decided in our landlord clients' favour.  We have recovered over £20,000 in an out of court settlement against Foxtons and settled many more claims.  We are now getting more instructions from Landlords to help them either claim back their rent renewal commissions and or defending demands for payment of renewal fees from letting agents."

TAKE ACTION NOW - CALL OUR LANDLORD HOTLINE:
Call: 0151 431 0548 / 0800 011 2757 (9.30 am to 6.30 pm Mon - Fri)

CONTACT US BY CLICKING HERE

The OFT is drawing consumers' attention to a recent Court of Appeal ruling that affects 'sole agency' contracts with estate agents.

The recent court case ruled that estate agents cannot claim their commission under a 'sole agency' agreement unless they can show that they have introduced the buyer to the purchase, and not just to the property.

In the case of Foxtons v Bicknell in April this year, the Court of Appeal decided that Foxtons was not entitled to a £20,000 fee after a buyer it had originally introduced to a property but who decided not to purchase the property at the time, then went on to buy the property at a later date through another agent.

The court decided that 'introduced' meant introducing a buyer to the 'purchase' and not just to the 'property'. In this particular case, the buyer had made it clear to Foxtons that she was not interested at that time in buying the property and therefore Foxtons could not claim their fee.

Mike Haley, OFT Head of Consumer Protection, said:

'It remains the case that sellers who sign a 'sole agency' agreement with an estate agent could be liable to pay the agent their fee even if another estate agent ends up selling the property. This Court of Appeal decision helps house sellers and estate agents understand more about the circumstances where this might or might not be the case.'

Related News:

Foxtons To Be Sued By Hutcheon Solicitors


With the OFT currently taking Foxtons to the High Court over unfair contract terms and fees Hutcheon Solicitors are providing a free legal assessment for landlords wishing to claim back the any renewal fees paid to letting agents over the last 6 years.

Landlords should contact us on 0800 083 0626 to discuss your renewal fees issues or chat online with an advisor by clicking the 'Live Help' button on the top right corner of this page. Alternatively, please complete a contact request form by clicking here.
R. James Hutcheon Solicitors plan to challenge the legality of excessive tenancy renewal fees charged by letting agents in court. A full article about this development can be read here.
The issue of unfair tenancy renewal contracts that many private landlords complain about has been investigated by the BBC Watchdog TV programme. Watchdog contacted 50 letting agents in the UK to compare what each agency charged landlords for tenancy renewals. Of the 50 letting agents only 15 charged a flat renewal fee of between £25 and £150 pounds per tenant. The majority of letting agents charged a renewal fee as percentage of total revenue under the tenancy agreement.

Click Here For Renewal Fees Legal Challenge Article

One example of over charging was London based letting agency Foxtons. Foxtons charged one particular private landlord 11% upfront. Other letting agencies charge up to 12.5% commission for tenancy renewals and many landlords are unhappy about tenancy renewal fees as they do not represent any reflection of work done by letting agents after a tenant has been found to occupy a property in the first year.

Linked Articles:

OFT Vs Foxtons - Case Update
Letting Agents Face Legal Challenge Over Fees
OFT To Sue Foxtons Over Unfair Tenancy Charges and Contracts
Letting Agency Fees Reduce Landlords Profits
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