OFT welcomes judgment against FoxtonsWhich? hails 'victory for common sense'

03 April 2009

A ruling allowing Foxtons estate agents to use unfair terms in agreements with existing landlords was yesterday overturned by the Court of Appeal.

The contract terms mean that Foxtons can charge landlords commission even when a tenant remains in a property after the initial tenancy agreement with Foxtons expires.

The Office of Fair Trading (OFT) appealed against the ruling after Foxtons had successfully argued that an injunction application challenging unfair terms could only apply to future contracts.

Money for nothing

The OFT considers the terms of Foxtons' lettings agreements unfair because they can require landlords to pay Foxtons substantial commission when a tenant continues to occupy the landlord's property after the initial fixed period of the tenancy has expired. This is even when Foxtons plays no part in persuading the tenant to stay and no longer collects the rent or manages the property.

The fees have been described by landlords as ‘money for nothing’.

Judgment welcomed

The OFT welcomed the judgment, which confirmed its views on the application of the Unfair Terms in Consumer Contract Regulations 1999 (UTCCRs) and that it can take enforcement action under the UTCCRs to protect consumers in relation to both existing and future contracts.

The Court of Appeal stated that the UTCCRs aim to protect consumers and that traders shouldn't be free to pursue existing customers to enforce contractual terms that have been found to be unfair.

Effective deterrent

Which? lawyer Chris Warner said: ‘This is a victory for common sense. It would be ludicrous for the OFT to be prevented from righting existing wrongs and protecting those in greatest need of help.

'There needs to be an effective deterrent against breaking the law – companies cannot be allowed to have their cake and eat it.’

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