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OFT v Foxtons- The Final Order

The final sealed order in the OFT v Foxtons case has been made available on the OFT website. A copy can be found here. This order gives effect to the judgement of the High Court and is now the final word on the matter as Foxtons have withdrawn their appeal.
There are some interesting points to note:

  1. Nothing in the order prevents Foxtons from defending claims against them based on monies already paid under clauses that have now been found to be unfair;
  2. Foxtons are entitled to keep using the original renewal commission clauses in full management agreements;
  3. The wording of the offending clauses used by Foxtons is quite extreme in terms of their ability to charge commission on a long-term basis even where the tenant has been changed. The new terms (in the last Schedule) are much less severe
  4. The approved terms are still charging a renewal commission even though Foxtons has no involvement in the negotiation of a renewal but it is limited to 2 years after the initial tenancy and is clearly stated at the start of the terms of business
  5. Fxotns have removed their ability to take a fee where the landlord has sold the property to another landlords with the tenant in place and where the landlord has sold the property to the tenant

The OFT has made clear in its press releases that it intends to use this decision to put pressure on other agents. How far this will go is unclear and whether the OFT will seek to impose a limitation on other agents as to how long they can continue to collect a renewal commission for.

Unfortunately this will probably lead to another raft of ill-informed letters from landlords stating that the renewal fees they have been charged are unfair. However, agents should consider how they wish to move forward and take advice as to their fee structures to avoid a visit from the OFT.

7 Comments

  • Gen 30th June 2010 at 6:15 pm

    Hi there,

    I’ve been looking through the Order and cannot find reference to the two year limit you quote in 4. above. Can you help?

    Many Thanks.

  • Gen 1st July 2010 at 3:05 pm

    Many Thanks!

    I’m not sure that this clause is widely known. Foxtons have told me that I am liable to pay an annual fee for as long as the same tenants are in the property.

    • PainSmith 1st July 2010 at 3:31 pm

      Have you signed the latest version of Foxtons terms of business. If it is an older version then the clause will not apply to you. They are also able to charge a fee where they are carrying out a service such a rent collection or management.

  • Gen 1st July 2010 at 4:14 pm

    Thanks again. My terms of business are older than this order and don’t have the clause. Is there any way of updating the terms given this order or am I stuck with paying them inperpetuity?

    • PainSmith 1st July 2010 at 4:19 pm

      Well, it is likely that the term they are relying on is unfair depending on the precise nature of the business relationship between you and Foxtons.

  • Gen 1st July 2010 at 4:18 pm

    P.S. I signed their terms and conditions in July 2009 (i.e. after the judgement but before the outcome of the appeal), I’m not sure if this makes any difference.

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