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

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