Despite the 2010 landmark ruling, where the OFT secured a High Court order against lettings agent Foxtons, forcing them to change the terms and conditions of their contracts, the Office of Fair Trading (OFT) has warned that some letting agents are still using unfair terms and conditions for landlords.

The OFT has urged letting and managing agents to ensure their terms and conditions are fair and transparent. In some cases the office has written to a number of agents and industry associations to re-emphasise the results of the legal case.

The OFT secured a High Court order against Foxtons last year after High Court Judge, Mr Justice Mann, said “Some of its fees were like a trap for landlords, many of whom were buy-to-let investors. Such important terms should be flagged up prominently not just in the contract, but also in any sales literature, as consumers would not expect important obligations to be tucked away in the small print and not be specifically brought to their attention

Mr Justice Mann highlighted a number of terms and conditions that he considered to be unfair, including

  • Landlords to pay commission of 11% of the annual rent if a tenant remained in a property beyond the initial term (even if Foxtons played no part in persuading them to stay, or was no longer collecting rent or managing the property).
  • Commission of 2.5% of the property’s price if the landlord sold it to the tenant, even if Foxtons had not helped to broker the deal, (in some cases landlords had to continue paying commission even after the property had been sold).

Research conducted by the Office of Fair Trading showed the ruling had saved landlords at least £4.4 Million (GBP) a year.

However, many landlords and lettings agents were still unaware of the 2010 ruling and potentially unfair terms were still appearing on contracts.

OFT chief economist, Amelia Fletcher, said: “This research clearly demonstrates that there has been an immediate financial benefit for consumers from our intervention, and also evidence of knock-on benefits from making this market more competitive. However, there is evidence of continuing poor practice by some letting agents, which need to go further to make their contracts transparent and fair.”

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