The OFT began High Court proceedings against Foxtons in February in an attempt to stop the letting agent using allegedly unfair terms in its landlord agreements.
An earlier ruling covering contract terms in general found that any injunction on unfair terms could only apply to future contracts and not to existing ones.
But today the Court of Appeal overturned this decision ahead of the specific case into Foxtons which will be heard by the High Court on April 27.
A statement from the OFT reads: “The Court of Appeal was of the view that traders should not have the freedom to pursue existing customers without restriction, in correspondence or by litigation, in order to enforce contractual terms that have been found to be unfair.”
The watchdog claims that Foxtons’ contract terms can require landlords to pay the agent commission if the tenant still lives in the property but Foxtons has no role in managing it.
The statement adds: “The OFT has also objected to Foxtons’ terms that require a landlord to pay these sums after they have sold the property. Foxtons contends that such terms with landlords are not unfair.”