|Office of Fair Trading Takes Foxtons To High Court|
After landlords complained about 'confusing and unfair' lettings contracts
Landlords letting properties through Foxtons have accused the estate agent of tying them into ‘confusing and unfair’ contracts. Officials from the Office of Fair Trading (OFT) began action against the agency following complaints from landlords about the terms of lettings agreements and the fees charged by the agent.
The case against Foxtons, whose headquarters are in Chiswick Business Park, could shake up the residential lettings industry after OFT asked the High Court to force the estate agent to alter its terms and conditions because they are ‘detrimental to clients’. Market experts believe the case also represents an opportunity to make the rental industry fairer. A particular area of concern is the commission charged by the agent for tenancy renewals in which it is not involved.
"We hope the ruling goes against Foxtons, so sets a precedent and encourages more transparency … The jargon used in contracts can camouflage how fees are allocated and mask clauses that commit landlords to future commission," said one industry insider.
The National Landlords Association has also called on agents to scrap the "totally unwarranted" renewal commission charges.
Earlier this year private equity firm BC Partners who bought Foxtons from its founder John Hunt in May 2007 admitted they were “regretting” the purchase calling it a “mistake with hindsight.”
The investment company announced that Foxtons had breached its loan covenants and they would not be putting in any more money into the property company unless the banks agreed to write off some of what’s owed.
Foxtons is still profitable as growth in its letting business has offset a slowdown in property sales, BC Partners claimed. Lettings now account for about half of Foxtons’ revenue, compared with 20% previously.