Court of Appeal overturns letting agent fee ban

Thursday, 2 April 2009 4:27 PM

The Court of Appeal has today overturned a ruling to prevent Foxtons estate agents charging their existing landlords commission when a tenant remains in a property after the fixed period.

The fees - described as money for nothing by landlords - have been highly controversial.

The OFT had sought an injunction against Foxtons, in terms which they say can "potentially require landlords to pay Foxtons substantial sums in commission, where a tenant continues to occupy the landlords property after the initial fixed period of the tenancy has expired".

High Court proceedings against Foxtons were started in February 2008 seeking an injunction under the Unfair Terms in Consumer Contract Regulations 1999 (UTCCR), preventing the estate agency using these terms, which the OFT considered to be unfair.

In the preliminary stages of proceedings the OFT appealed against the ruling of Mr Justice Morgan. This ruling accepted arguments from Foxtons that any injunction on unfair terms could only apply to future contracts, rather than preventing the use of enforcement of unfair terms in existing ones.

A spokesperson from Foxtons said: "The current OFT case relates to the way the UK estate agents charge for lettings services. In 2008 the OFT brought proceedings against Foxtons as a test case for the industry as a whole and this case will be heard in the High Court at the end of this month.

"Today's Appeal Court decision was only in respect of procedural matters relating to the interpretation of European law and the Court of Appeal very clearly stressed that today's findings have nothing to do with the OFT's issues relating to the fairness of lettings terms themselves."

Today, the Court of Appeal overturned the initial ruling, confirming what the OFT called its "long-held view that it can take enforcement action under the UTCCRs to protect consumers in relation to both existing and future contracts".

The Court of Appeal stated that the UTCCRs aim to protect consumers, and were 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 which have been found to be unfair.

The Foxtons spokesperson added: "We look forward to arguing the merits of the industry's position in the High Court at the substantive trial later this month."

Sarah Garrod

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