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Administration Fees

Foxtons has been fined a total £12,000 for breaches of Section 83 of the Consumer Rights Act 2015.

Section 83 states that a letting agent “must…publicise details of the agent’s relevant fees.” Subsection 4 requires such details to include “a description of each fee that is sufficient to enable a person who is liable to pay it to understand the service or cost that is covered or the purpose of which it is imposed.” Finally, agents must also indicate whether fees paid by tenants are due for each dwelling house or each tenant.

In June 2015, Camden Council wrote to Foxtons and advised that from 27 May 2015 all agents had to display all their fees to tenants and landlords. Within Foxtons fee structure was a one off “Administrative Charge of £420.” In September 2015, Camden again wrote to Foxtons and advised that this fee structure was in breach of Section 83 because it failed to provide a sufficient description of what services are included for the fee. Following a chain of correspondence Foxtons amended its fee structure on 28th March 2016 as follows:

Administration fee £420*
This is a fixed cost fee that can cover a variety of works depending on the individual circumstances of each tenancy, including but not limited to conducting viewings, negotiating the tenancy, verifying references and drawing up contracts. This charge is applicable per tenancy, and not per individual tenant.

Despite the above amendment, Camden Council issued Foxtons with Final Notices on 11 April 2016 for 3 offices and their website. The Notices contended that Foxtons were still in breach of Section 83 and imposed a fine of £5,000 for each office and the website.

Foxtons exercised their right to appeal the Final Notices to the First Tier Tribunal.

Tribunal’s decision
The Tribunal found that Foxtons were in breach of Section 83 for the period 27 May 2015 to 28 March 2016. That is the date that Camden first wrote to Foxtons to the date that Foxtons amended its fee structure. The Tribunal held that the ‘word “administration” is not, in the words of Section 83 (4), sufficient to enable a person who is liable to pay [the fee] to understand the service or cost that is covered by the fee or the purpose for which it is imposed. The word “administration,” used on its own, contains no sufficient indication of what service or services are covered’.

However, the Tribunal did find that Foxtons’ amended fee structure did meet the requirements of Section 83 and that Camden was incorrect to state that the mere use of the expression “Administration Charge/Fee” was prohibited under the Act. The Tribunal found that ‘there is nothing wrong with the use of such a label provided that is accompanied by a “description…that is sufficient to enable a person…to understand the service or cost that is covered by the fee or the purpose for which it is imposed”.’ The Tribunal rejected Camden’s argument that the list needed to be comprehensive and clearly defined and stated that the amendment above was sufficient for the purposes of Section 83.
Consequently, the Tribunal found that Foxtons were in breach of Section 83 but only for a period of 10 months contrary to Camden’s argument that they continued to be in breach. As such the Tribunal reduced the financial penalty imposed from £5,000 per office and website to £3,000 making it a total of £12,000.

Comment
A number of local authorities have misread some guidance from the government to suggest that the word “administration” is itself forbidden. That is not the case. What is forbidden is for fees not to be clear. Use of the phrase “administration fee” is fine provided that the fee list taken as a whole makes clear to a reasonable person what they are paying and what they can expect for their money.

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