Following the decision in OFT v Foxtons on Friday there has already been a great deal of mis-reporting of the outcome.
One of the most noticeable points relates to the issue of renewal commission and the suggestion in much of the media that renewal commissions are unfair and that landlords will be able to recover commission already paid. This is simply incorrect. Unfortunately, as a result of these misunderstandings many agents have already been contacted by landlords demanding repayment of alleged unfair fees.
It is worth considering the judgement in detail at this point. In paragraph 33 of his judgement Mr Justice Mann said the following:
I should first make clear what I am not deciding, and what I am not asked to decide. I am not asked to decide, and do not decide, that renewal commissions (in the sense used in these proceedings) are always unfair. I make that clear because some of the evidence and submissions of the OFT come close to asserting a case that they are always unfair, and some of the correspondence seemed to be based on such a proposition, though Mr Nicholas Green QC, for the OFT, eventually made it clear that that was not his case. Mr Michael Kent QC, for Foxtons, opened his submissions by saying that I would eventually have to, and should, rule on renewal commission generally, but he moved away from that. I shall not decide whether or not renewal commission is always unfair to consumer landlords.
Therefore, the judgement in no way states that renewal commission is unfair. What was decided was that Foxtons renewal commission clauses were not worded in plain and intelligible language and were excessive in the level of commission charged and in their wider definition of renewals by associates of the tenant which would also attract a fee.
The other area of mis-reporting is in relation to the rights of parties to demand the return of sums already paid. Contrary to the decisions made in the various cases involving bank charges there is nothing in this judgement which allows for monies already paid to be recovered. This particular issue was one which Foxtons fought hard to avoid and at the current time the Court has not made any ruling in relation to it.
In short, no agent is in any way obliged by Friday’s decision to return monies to any party.