Foxtons loses case regarding landlord fees

Estate agent Foxtons has lost a case brought by the Office of Fair Trading (OFT) regarding landlord fees and the fact that the company charged landlords commission each time tenant contracts were renewed. As a consequence the company may well be forced to pay back millions of pounds in fees charged over the years although no specific estimate has been issued regarding potential compensation.

This will certainly be a wake-up call to many letting agencies with fees of around 11% commonplace within the industry in relation to contract renewal charges. With regard to the specific case against Foxtons, it was also revealed that the company expected landlords to pay the company commission if their property was eventually sold to the underlying tenant. There is no doubt that the details of this case against Foxtons will have far-reaching consequences within the industry and have shocked many who were unaware of what goes on under the surface.

It will be interesting to see whether a new code of practice is released, regarding letting agencies and landlord fees, or whether the industry itself might be left to introduce yet another form of self-regulation. Many believe that self-regulation was behind the recent collapse in the UK financial sector with financial companies given too much scope to influence market regulations.