Foxtons vv OFT – The verdict!

The Court of Appeal has handed down judgement on the appeal made by the OFT into the case that the OFT originally lost against Foxtons over the terms of their contracts with landlords – specifically on renewal fees when a tenant stayed on. The OFT had claimed that the terms were unfair and that consumers were disadvantaged as a result. More background can be found here.

Although kicking estate agents is fast becoming a national sport and one has to admit that Foxtons are ‘on the naughty step’ as far as the judge is concerned the OFT has not won their main argument that renewal fees are wrong in principle.

Whilst there is much that can be improved, the lettings industry is more highly regulated than their colleagues in sales and although not perfect, advances in recent years have gone a long way towards bringing the service received by the vast majority of landlords up to the level they should expect. The market for lettings and sales advice is extremely competitive and consumers have a wide choice of fees, terms and expenses. There is little barrier to entry and this ensures that both the sales and lettings industries are some of the most competitive in the world.

The decision of the High Court today is something of a Curate’s egg – good in parts but overall appears to be a victory for common sense. Quite rightly it ensures that agents appreciate that their terms and conditions must be clear to all and all agents will need to go back to their own lawyers to double check that theirs are. The judgement has upheld the view that agents should not be able to charge landlords a fee if the tenant goes on to buy the property but it also recognises that consumers are grown ups, should be treated as adults and accept that they are responsible for what they sign up to. In the 34 page judgement heard before Mr Justice Mann, the judge states on several occasions that “I am not ruling against renewal commissions per se. I am not even ruling on renewal commissions at a particular level. I am ruling on the manner in which Foxtons seeks to charge them”.

Like most lettings agents in London who have carried on this practice, Foxtons have already amended their Terms of Business and will no doubt continue to do so as the implications of this judgment become clear. Unpopular though it might be, in my view it does not seem that in this case either the agents or their clients have been disadvantaged and perhaps with hindsight, the decision of the OFT to put the cost of this expensive appeal on the already stretched public purse might have been ill-conceived. Perhaps it’s time that public servants remembered that they themselves must provide a fair and realistic service and pull back from the idea that we the public are unable to think for ourselves.