Foxtons forced to make its contracts clearerEstate agent's renewal terms judged unfair

22 February 2010

London and Surrey estate agent Foxtons has made its rental contracts for landlords clearer after court action by the Office of Fair Trading.

The estate agent’s letting agreements with private landlords were judged unfair and not transparent in a High Court case.

As a result of the judgment, Foxtons must change its contracts to ensure its renewal commission terms are transparent and do not represent 'traps and timebombs', as one judge called them.

Foxton's wrapped over commission

Until now, private landlords have been required to pay substantial rates of commission to Foxtons 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 letting agent must also change terms that require landlords to pay a sales commission to Foxtons if they sell their property to the tenant.

Changing all estate agents' practice

The OFT is writing to other letting agents and industry bodies to tell them they are expected to comply with the law as set out in the ruling.

OFT Consumer Group’s legal director Jason Freeman said:  'This case, and the changes Foxtons has now made, sends a wider message to letting agents and businesses in general that important terms, particularly those which may disadvantage consumers, must be clear, prominent and actively brought to people's attention.'

Buying and renting property

Which? has advice for consumers using estate agents, from to guidance on . 

We've also got guides on how to buy a house and sell a house, including a guide to . 

The estate agency market

An OFT report on the whole estate agent market concluded last week there was little competition between estate agents on price. Its market study said that innovation in selling property online could result in a dramatic fall in the cost of selling property.

Which? chief executive Peter Vicary-Smith said: ‘This report reaffirms what we have argued for years – that the housing market lacks innovation and reforms are needed to improve the house-buying process for consumers. We believe an independent review after the election would be the best way to determine what has to change and how this can be achieved.’

OFT chief executive John Fingleton said: ‘We encourage home sellers to negotiate hard on commission fees and consider using alternatives to traditional estate agents.’

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