OFT warns letting agents about unfair contracts

12:43 PM, 19th July 2011, About 14 years ago 2

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"Unfair Letting Agent contracts may lead to action"

Letting agents have been warned that they must offer landlords clear and fair contracts or face action from government consumer champion the Office of Fair Trading.

The OFT is concerned that some letting agents are not abiding by a High Court ruling that found tenancy renewal terms in contracts between London letting agency Foxtons and landlords were unfair.

As a result of the case, the OFT obtained an enforcement order that made Foxtons amend letting agreements with clearer terms relating to renewal commissions when an existing tenancy was renewed.

The OFT reckons the court intervention against Foxtons has saved landlords around £4.4 million in unfair fees since February 2010.

Following the case, the OFT has investigated other firms and written to letting agents and industry associations pointing out that many were still issuing unfair contracts.

Many letting agents and industry figures are also invited to attend an OFT summit in the autumn to discuss the changes they need to make.

Amelia Fletcher, OFT chief economist, said: “This research clearly demonstrates that there has been an immediate financial benefit for consumers from our intervention, and also evidence of knock on benefits from making this market more competitive.

“However, there is evidence of continuing poor practice by some letting agents, which need to go further to make their contracts transparent and fair. We will be engaging with business over the coming months to raise awareness and compliance with the law.

“This evaluation report complements some of the work already identified in the OFT’s market study into consumer contracts which warned businesses that consumer contracts must be clear and contain no unwelcome surprises buried in the small print.”

The Foxtons enforcement order found two specific contract commission terms were unfair and not binding, and may not be used or relied upon in contracts with consumer landlords:

Terms which require landlords to pay renewal commission after the sale of their property to a third party if a remains in occupation.
Terms which require landlords to pay sales commission if they sell a property to their tenant.

“Transparent business practices build trust in markets, allowing people to shop around to find the best deal, thereby stimulating effective competition and strengthening innovation and growth,” said Fletcher.

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Tags: Letting Agency, Letting Agent, Letting Agents, Rogue Letting Agents

Comments

7:23 AM, 21st July 2011, About 14 years ago

This is a very good development. Recently, my friend paid £300 to a letting agent as initial deposit for the purpose of viewing a property to rent. He did not like the property viewed and there was no other suitable property for him in the letting agent book. His initial deposit became non-refundable administrative charge. Many bad letting agents are in the business deceiving lots of people.

As some letting agents deceive landlords, they also deceive tenants and potential tenants.

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16:35 PM, 23rd July 2011, About 14 years ago

Hi my name is Merban younis I am one of the owners of Global Letting Property Management LTD
I agree with the oft as it's un fair for agency's to charge for services which are part of there jobs like viewing a property taking a property on to let or for sale however if the landlord or a seller decides he or she no longer wishes to use the company for whatever reason there should be a charge only in some cases e.g. If a landlord decides he she should take the property off the Market within a certain time, I also Finde there are other agencies that charge landlords a setup fee to take there properties and put them on the Market to let I think that is radiculas as it's the landlords investment but I no of some agencies that still do this which clearly it is unfair thanx for the insight in to this

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