As Foxtons drop appeal, renewal fees set to continue

The decision by Foxtons to withdraw their appeal on the charging of renewal fees is surprising, says a lawyer. 

David Smith of PainSmith, a firm specialising in landlord and tenant law, said the decision leaves unanswered the question as to whether landlords might still have legitimate claims against the firm.

EAT asked Foxtons to say whether it would be trying to reach settlement with landlords who had dealt with the firm under its old terms and conditions – described as a trap and a timebomb by the judge in last year’s case – or whether it would simply be refunding the fees.

However, Foxtons have not as yet responded to our query, which could have significant implications for other agents who might have had similar terms and conditions in the past.

Only last month, Foxtons won leave to appeal against last summer’s court ruling which centred around the small print of its conditions, which it has now changed. However, this week, it announced that it had decided not to go ahead with pressing its case against the Office of Fair Trading.

Smith said of the Foxtons’ statement, issued on Wednesday: “It tells us that new terms of business have been created and it seems that the OFT and Court have accepted these. 

“It seems that the new terms charge a renewal commission at a lower rate than the initial commission and do not seek to charge that renewal for more than two years. 

“It leaves open the position in relation to commission payments already made to Foxtons on the old terms of business. Foxtons have not said whether they will return this money and no clear view has ever emerged on whether they can be compelled to do so. 

“It has been suggested by some lawyers that they can be on the basis of unjust enrichment, but this is a misunderstanding of a complex area of law and it is unlikely that a claim on that basis would be successful.

“For other agents, the position remains relatively unchanged. No ruling has ever been made that renewal fees are unfair and the ruling against Foxtons turned largely on the way those charges were worded. As long as a renewal commission clause is clearly expressed, there is no reason why it should be found to be unfair.”