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Landlords up and down the country are celebrating this week after a landmark case against Foxtons made excessive letting agent charges illegal.

The judge overturned several clauses in Foxtons' contracts with landlords, including using terms that require a landlord to pay substantial sums in commission, where a tenant continues to occupy the property after the initial fixed period of the tenancy has expired – even if Foxtons plays no part in persuading the tenant to stay, and does not collect the rent or manage the property. Also where it requires a landlord to pay commission to Foxtons even after it had sold the property.

So from now, any letting agent must be completely fair and transparent with any fees, commissions or renewals.

The Office of Fair Trading has said it "expects the letting industry to comply with this ruling, and will take the necessary steps to ensure this where appropriate." It went on to say that "the charging of repeat renewal commission represented a ‘trap' or a ‘timebomb' for consumers."

John Socha, vice chairman of the National Landlords Association says: "This sends a direct message to letting agents that this lack of transparency must stop. Contracts must be clear with provisions which are upfront and ‘plain and intelligible'. This ruling is most definitely a victory for landlords throughout the country."

Keshav Thukaram, managing director of Smartlandlord.co.uk, says: "Charging landlords renewal fees for existing tenancy agreements where the letting agent plays no part in persuading the tenant to stay, collecting the rent or managing the property is outrageous and a legal ban was long overdue.

"We are not saying that all letting agent fees are always unfair, but they must be clearly stated and transparent and only apply for services from which a landlord clearly benefits.

"Luckily landlords are increasingly waking up to the fact that they can save thousands of pounds by taking a DIY approach to managing their portfolio."

SOURCE: Smartlandlord.co.uk, NLA, OFT, 10/07/09

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