The Office of Fair Trading has secured a final High Court order against Foxtons to prevent the estate and lettings agency using certain terms inits landlord agreements.
The order against Foxtons follows a landmark judgement in the High Court in July 2009 in a case brought by the OFT under the Unfair Terms in Consumer Contracts Regulations 1999.
The High Court ruled that Foxtons’ renewal commission terms represented a trap as they were not transparent to consumers and were therefore unfair, and ordered that Foxtons may not rely on these terms except where they remain instructed to manage the property.
The court also ruled that terms requiring landlords to pay renewal commission to Foxtons after their property had been sold to a third party and when the original tenant was still living there were unfair and not binding.
It also deemed that terms requiring landlords to pay a sales commission to Foxtons in the event they sell the property to their tenant were unfair and unenforceable.
The OFT is writing to several letting agents and key industry bodies to draw their attention to the order from the High Court.
Foxtons has since changed its standard landlord contracts.
The estate agency has made the liability to pay renewal commission more transparent, reduced the commission payable on renewal, and limited the commission liability to two renewals.
Commission is also now only payable where the original tenant remains in occupation, and the landlord will get a pro rata refund where tenants leave the property before the date set out in their leases.
The OFT says it will continue to monitor whether the Foxtons’ contract operates fairly under the consumer contracts regulations.