Foxtons ruling will not be a free-for-all for landlords, say organisations

Two landlord organisations are warning their members that it could be difficult to claim back renewal fees.

Richard Jones, solicitor to the Residential Landlords Association, said that the High Court ruling in the OFT v Foxtons case would only affect small numbers of landlords – those who qualified as consumers, rather than in being in business.

He said that the Judge had made some useful remarks about consumers. A landlord who let out their own home would be a consumer, as would individuals whose property investment represents part of their pension plan or other long-term saving. There is also reference to landlords who acquire one or two properties as a more secure way of providing pensions and savings. 

Jones said: “I think in the light of these remarks that a landlord who has one or two rented properties (in addition to their private home) may be regarded as a consumer, but if you have more than two, it is going to be unlikely that you would be a consumer.”

Jones also said that agents would have to draft their contracts very carefully, making the provisions prominent, advertising them, and drawing them to the individual’s attention in a face-to-face explanation before the landlord signs up.

He said: “If these things are done, and done properly, then the agent would be able to enforce the term against consumer landlords. The agent acting for the non-consumer landlord is not affected.”

Meanwhile, the National Landlords Association has said the exact implications of the ruling are unclear, but it agrees that ‘business landlords’ are unlikely to be considered as ‘consumers’ and, therefore, may not succeed in claiming back renewal fees.

The NLA has advised its members: “Secondly, each claim (i.e. each contract) would have to be judged in court on a case-by-case basis. It would depend on the nature of the contract and whether the landlord was aware of the full implications of signing on the dotted line. It is, therefore, important to get legal advice before starting a claim.”

It adds: “There is no guarantee at this stage that a claim for a refund of fees will succeed. The terms of relief following the judgement have not yet been resolved and it may be prudent to await this outcome.”

The NLA is also advising its members on how to launch a claim, if they feel they have a case.

First, the landlord should send the letting agent a Letter of Claim, giving the agent 14 days to return the fees. It says that such a letter must be the first step in the claims process. “If you do not write to the letting agent, a judge may be unsympathetic in court, especially when dealing with the costs of any action,” the NLA advises.

If the agent does not return the fees, then the landlord can launch proceedings in a county court, or online at www.moneyclaim.gov.uk

But the NLA cautions: “Given the complicated nature of this issue, we strongly advise any landlord who is considering making a claim to seek independent legal advice. At the very least, a landlord would need to determine the chances of success and this would greatly depend on the nature of the contract in question.”

Both the NLA and RLA say that, potentially, claims could be made going back six years.

The Editor of Estate Agent Today would be interested to hear – in confidence – from any letting agent who is dealing with claims. Please email rosalind.renshaw@estateagenttoday.co.uk