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We believe that most landlords who use Foxtons would have a good claim if they did not know about the hidden fees and commissions.
Although Foxtons’ standard contracts contain a provision that says they may retain any commissions paid by third parties, that clause does not appear to be drawn to the attention of landlords and it doesn’t say how often they are received or how large those commissions can be. We will argue that this is not sufficient disclosure of the commission charged on contractor’s work to enable a non-professional landlord to give fully informed consent. To comply with its duties Foxtons should have followed the guidance in industry codes of practice, such as the ‘Private Rented Sector Code’, which was drafted by the Royal Institute of Chartered Surveyors and is supported by the main industry players. That code states that an agent should disclose any commission they might receive at the time that estimates are provided to the landlord.
There is nothing wrong with taking commissions from third-party contractors so long as the agent gets the landlord’s fully informed consent.
The dispute is mainly about principles of common law and equity. Are the terms of Foxtons’ standard contracts sufficient for it to establish that landlords have given fully-informed consent to the contractor commissions and the potential conflict of interest that arises? There is limited statutory guidance. The recently enacted Consumer Rights Act 2015 contains provisions requiring letting agents to be more transparent about their fees and to publish a list of their fees on their websites and at their premises. There is a fine for failing to do so.
Interviewed by Diana Bentley.
The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
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