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  • Buy-to-Let

    Landlord loses in court over renewals fees

    The other day, I received a useful newsletter from the RLA (Residential Landlords Association) and thought the Tribe would like to read the following:
    "A lettings agent has won its case against a landlord over unpaid renewal fees.
    The case is of special interest as it was heard in May, before the High Court verdict on the test case brought by the Office of Fair Trading against Foxtons.
    The OFT has been trying to get the High Court to declare a term in Foxtons’ contract illegal on the grounds that it is unfair under consumer legislation. The term relates to Foxtons’ charging of renewal fees. The OFT argues that Foxtons should not charge landlords a renewal fee where it does no work after finding the tenant originally.
    Whilst waiting for the outcome of the case, some letting agents have been told by county courts that their own cases cannot be heard. Other agents have put on ice any proceedings to pursue landlords who have not paid renewal fees.
    But in a case heard at Gloucester County Court on May 1, agents Featherstone Leigh won judgement in their case against a landlord.
    Joanna Hamilton, director of residential lettings for the company, which has its headquarters in Richmond, Surrey, said: “The case took a year to get to court, and the client had asked for it to be heard in Gloucester. The judge made it clear that he knew about the Foxtons case, and the other side also knew about it.
    “They did not, however, argue on the grounds of unfairness, but on the basis that the landlord had never agreed to our terms and conditions. The judge did not accept this, and we won our two years’ worth of renewal fees.”
    Altogether, the landlord had to pay £10,000 plus interest for the renewal fees, and £8,500 towards Featherstone Leigh’s costs.
    This particular case began in 2006 when the landlord instructed the agents to let his large house in Chiswick, west London. It was duly valued, and the landlord was sent a letter of confirmation, including the firm’s terms and conditions.
    These appear in bold, in a double size font, said Hamilton, so could hardly be missed.
    Although the landlord signed an agreement with the agents, he did not give written instructions to go ahead. However, he verbally told the agents to proceed, and he was then sent another letter of confirmation.
    A blue-chip corporate client was then moved in as tenant. The landlord made it clear that he wanted a tenant find service only, and did not even want the rent collected. When the tenant stayed on after the first year, Featherstone Leigh sent the landlord an invoice, and received a letter back from him telling them he would not be paying.
    In court, says Hamilton, the landlord denied signing the agreement – although she says he did – and denied receiving letters from the agent.
    Her firm, like many, charges a standard letting fee of 10% for the whole of the tenancy."
    As I am currently in dispute with a London lettings agent, I have focused on the "unfairness" aspect and await the result of the Foxtons saga. I have also paid them some fees already but am holding back on the latest one for 2009. I think the landlord in question made a fundemental mistake in the way he took the case forward and it has cost him dear!
    Anyone have any comments?
    Warmest regards,
    David
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