Thursday, April 02, 2009

OFT preliminary success in Foxtons unfair terms case

As many of you may know, the Office of Fair Trading (OFT) is involved in litigation with Foxtons Ltd (the letting agents) regarding Foxtons’ refusal to agree that certain terms in their agency contracts with landlords are unfair under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR).

One side issue in the litigation was whether any injunction brought against Foxtons could affect current contracts as well as future ones. The Judge at first instance accepted Foxtons’ argument that any injunction in respect of unfair terms could only apply to future contracts.

However today the Court of Appeal overturned this ruling, confirming the OFT's 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 was to protect consumers, and that they 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 that have been found to be unfair.

So if you are a landlord with an agency contract with Foxtons, they should not now levy any charges under the disputed clauses on you until after the main action has been heard. This is presumably not going to do Foxtons’ cash flow a lot of good.

The main action, i.e. on whether the terms in question are actually unfair or not under the regs will be dealt with by the High Court in the week commencing 27 April.

To read more, click here.

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Anonymous said...

This is a monumental judgment against Foxtons if their terms are indeed held to be unfair.

If the Foxtons terms are held to be unfair, will all other agents have to change their own terms in so far as they are substantially similar? Are all the current contracts (as opposed to future contracts) for other agents similarly affected, or would they all need to go to court to test this?

What degree of similarity would mean other agents would need to change their terms? Does the Foxtons unfair terms case hang on the fact that they weren't rent collecting at the time of charging renewal fees, or is it likely to affect rent collected tenancies as well?

Tessa said...

This judgement is not specifically on the Foxtons terms. This will be dealt with in a separate case later this month.

However it is not a good decision for them.

If the OFT win the main case, then all other agents will need to amend their terms (or if they don't the clauses will be void). It will affect all current agreements as well as future ones. I can't comment further however until we see the case report.

Anonymous said...

I realised that the judgment is not on the Foxtons terms themselves, but on the matter of whether, if terms are held to be unfair, the ruling will affect all current as well as future Foxtons tenancies.

What I'm unclear about relates to the question of the actual unfair terms themselves, upon which judgment still has to be made. I'm not sure whether the case is about all renewal clauses or Foxtons specific renewal clauses.

For example, I could well understand landlords objecting to paying renewal fees when the agent did not negotiate the renewal. However, where the agent does negotiate the renewal and re-writes tenancy agreements, something different is happening. When the agent does not negotiate the renewal, but does rent collect, one has a different example again.

I'm just wondering how far the judgment on the upandcoming Foxton's case will affect the entire industry, or whether renewal terms can be changed very slightly.

Tessa said...

The case will be on Foxtons specific clauses, but the judgement will probably affect all similar clauses. Hopefully it will also clarify the interpretation of the regulations generally, so its effect may well be much wider than just agency agreements with landlords. There has not been a lot of case law in this area of law, so this case is very welcome.

However we will have to wait and see what the decision actually says.

Guildford landlord said...

Hi Tessa,
do we have any details on just how the OFT deem the Foxton's contracts to be unfair? I am currently being taken to court by a letting agent in Guildford for not paying him renewal commission for work he has not done. I believe the contract I signed with him (identical to the Foxtons one) is unfair but am not sure under which parts of the UTCCR law they might be deemed unfair.

Anonymous said...


What I'm surpised about, is that this is being taken under the Unfair Terms in Consumer Contracts Regulations. Surely landlords are acting as a business, and so have no protection under these regulations.

Tessa said...

Guidford landlord - we don't have the decision yet, I will do a posting on this once the decision is out.

Anonomous - not all landlords are acting in the course of a business. If they let just one or two houses with their main income from elsewhere, they will probably count as a consumer. However if they have a large portfolio and landlording is the main income, it is different.

Anonymous said...

I am about to become a first-time landlord and want to enter into an agreement with a letting agency (large national chain) whose terms for renewal of a tenancy with an existing tenant(11%) and sale to a sitting tenant (2.5%) are identical to Foxtons (although clearly expressed in the contract). Should I try to renegotiate different rates for these two aspects of the contract? If so, what would a fair percentage be considered to be?