55 landlords ‘in group claim against Foxtons over repair bills mark-ups’

A total of 55 landlords are said to have joined a group claim against Foxtons over “hidden” repairs mark-up allegations. Foxtons has said their case is entirely without merit, and that its charges are transparent and properly communicated.

The law firm representing the landlords on a ‘no win, no fee’ basis said yesterday evening that the claim could potentially be worth £2m.

Leigh Day has reportedly served Foxtons with a letter of claim, warning it will issue High Court proceedings unless it agrees to enter settlement talks.

According to the law firm, the claim includes accusations that Foxtons has been charging landlords commissions of as much as 33% of a contractor’s fee for work done on their properties, without landlords’ fully informed consent.

It is also alleged that the London-based estate agent has engaged contractors who charge above the market rate in breach of their duty to try to get a good deal for landlords.

The individual claims on behalf of private individual landlords who have used Foxtons are said by Leigh Day to range in value from £4,000 up to tens of thousands.

Last summer when news broke of the likely group action, the TV presenters Lynn Faulds Wood and her husband John Stapleton were said to be among claimants but it is not known if they have joined the action.

The number of 55 is also much smaller than the 100 landlords originally said to be involved in the case.

One of the claimants is Dr Chris Townley, a lecturer in competition law at King’s College London, who previously worked as a principal case officer at the Office of Fair Trading.

He has said he felt ‘betrayed’ when he found out that Foxtons had taken commissions from anyone working on his property without his consent.

He alleges that he queried a £616 bill for a new security light, and was told by the contractors that they had billed Foxtons £412.50.

Chris Haan, from Leigh Day, said: “It is a landmark case.”

He added: “We were not surprised when many other landlords came forwards with similar claims to that of Dr Townley.

“This is the first group of claims to be put to Foxtons but we believe there will be many more.

“We consider Foxtons has a potential conflict of interest in that the more expensive the contractor is, the more Foxtons makes in commissions.

“We believe these charges to landlords are unlawful as they are not sufficiently disclosed, so the landlords cannot give fully informed consent to them.

“This is against industry codes of practice.

“We are taking this case on ‘no-win, no-fee’ basis, with the aim of securing a refund from Foxtons for all affected landlords.”

A spokesman for Foxtons said: “We believe our fees represent good value and are clearly communicated to landlords and detailed within the terms of each contract. This case reflects a small minority of landlords and we believe is entirely without merit.”

Other letting firms could be watching the Foxtons case with interest.

If there were to be any civil action in court challenging Foxtons – and it is by no means certain that there will be – it would be entirely separate from the recent case whereby a former Belvoir franchisee was given a jail term for fraud after he went to extraordinary lengths to disguise hidden mark-ups on repair bills. That criminal prosecution was brought by Trading Standards, initiated by a landlord’s evidence.

22 Comments

  1. Romain

    This seems to be a standard allegation of hidden profits.

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  2. Rayyan53

    Bly me… Here it’s difficult for us to get the landlords to spend a minimum amount to keep their tenants happy and Foxtons charging on top of the works. We are a small family run estate agency and we can proudly say that we haven’t charged a single penny on top of the works the contractors do…we’re negotiating with contractors bro get the minimum possible quote for a landlord .. Maybe the bigger you are the bigger crocodile people allow you to become…

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    1. observer

      Hi Rayvan, that is admirable but really it shouldn’t be admirable, it should just be standard practise.

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    2. Peter

      Landlords who see value in paying 18-20% are more likely to expect their agent to do right by the tenant. Increase your fees and you will more likely get the right landlord; just don’t abuse the trust like some I have heard about!

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    3. SarahPercy33

      We have never marked up our contractors bills, I know another agent in town that gets their contractors to increase their quotes by 10% and when they have finished the work the agent pays only 90% of the invoice and retains the other 10%!!!  I don’t think they are the only one that does this.  Unfortunately Peter I would not be in business if I tried to charge 18-20% fees but having said that I do very well on the percentage we charge without ripping off my Landlords.

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      1. Peter

        We compete with agents that buy business in up to half the amount we charge, yet we are still in business. We need half the property stock, fewer staff, smaller offices, to earn the same profit, fewer properties allows greater focus and attention to detail; and allows us to achieve the service levels that tenants and landlords become to expect from us.

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  3. smile please

    First off I do think bit naughty Foxtons doing this.

    BUT

    Surely this is more a case of consumers reading what they are asked to sign? – T&C state Foxtons will add a fee and get a commission.

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    1. SarahPercy33

      Surely it should state how much that commission is – if the article is to be believed they marked up a bill by £200 on a £400 bill – fantastic commission, but I am not sure any Landlord would agree to that percentage increase if they were aware of it!

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    2. Ding Dong

      I would class hidden commission and fees as theft!!  The landlord is ultimately paying more for service by the way of secret deals between contractor and agent….

      Loads of agents do the same, countrywide charge their contractors 15% for work referred…where do people think that money is being funded?? contractor or landlord paying the invoice?

      From my experience really common in London!!  Really hope the landlords win and the agents are sued for not only the money taken unfairly from contractors invoices BUT all fees and commissions charged to the landlord and their tenants!!

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  4. smile please

    The other point i will make is how many past and present landlords have Foxtons had? in the thousands.

    This story has been rumbling on for about a year. Only 55 have come forward.

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    1. Ding Dong

      alot of Foxtons landlords live abroad or potentially have too much money to care….

      lets see if they win ( and case law already supports the landlords position) and I think you see numerous claims against many agents not just Foxtons

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      1. smile please

        They need to win the case first.

        Although i do not agree with the high mark ups Foxtons add they do state they get a commission. I still believe it more a case that LL should read what they are signing.

        We have this every now and again with our sales side, sellers sign an exclusive period then want to switch agents, we advise them they have given us an exclusive period and they say they did not see it (its in pretty large print!) we also leave them a copy.

        If people are allowed to walk away from any contract or decided they dont like the terms what is the point of them?

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  5. Ding Dong

    Understand your sentiments, but in essence having an unfair clause in a contract is not enforceable irrespective of how many times it was seen by the client…

    Interesting that Foxton changed their terms and condition after being accused of hidden fees.  Even the current clause is unfair because it does not state the amount being charged and how often this is received.

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  6. Zeus

    How is this any different to corporate agents bumping up the price of an EPC?

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    1. smile please

      Zeus,

      Is that not just good business practice? – Most EPC’s are white label allowing you to do this. Estate Agents and Letting Agents are not charities.

      Why not give them referencing for cost and not charge them for an AST as all you do is change some wording. Infact refund all the fully managed fees to LL’s when a month goes by and the tenant does not need the letting agent.

      Agents are allowed to make a living!

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      1. Zeus

        smile please,

        I am not suggesting its wrong, my point is whats the difference.

        I am an Agent.

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        1. Ding Dong

          sadly I think it is wrong…surely if you don’t think the landlord minds you adding 20% or a ££ to his/her invoice, then be clear about the charge up front.

          please dont hide/bury the amount in small print with a generic clause saying we may receive a commission from third parties etc etc….

          also as per the foxtons case, you should also make your tenant charges clear to the landlord, as again, that is deemed as income derived from the landlord/agent relationship.

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  7. Will

    With all the allegations made against Foxtons and adverse publicity I am quite frankly surprised anyone uses them.

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  8. Property Paddy

    I doubt Foxtons have actually done anything underhand, it’s just not worth it with this size of business, the bad press alone could cost them far more in lost revenue.

    I don’t work for these guys but I have a little experience in large corporate agency the only way this could have happened would be by individuals in the group not at senior level.

    If I’m wrong this could be devastating for such a big concern.

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  9. Stevie

    If a clause was seen and the agreement signed thereafter, they have 14 days to change their mind after which they cannot then claim something unfair if it doesn’t ring well with them (usually financially and as SP says on contract tie ins) but I agree that there should be a figure stated re how much comm/fee will be charged.

    I’m certainly not condoning the size of the charges and we all set our charges for the service required but there comes a time when an additional charge is warranted ie our time or going beyond the call once too often and that is only good business sense in as much as, there comes a time when you have to charge because in my business area there are clients that will go from an inch to a mile when they realise what a nice and willing,helpful person you are.

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    1. Romain

      There is no time limit to claim that a term is unfair.

      This does not seem to be the claim here, though.

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  10. Ding Dong

    Unless, I am missing something, then I would call this theft i.e. money taken from someone without their knowledge with the intention of depriving them of such!!

    Fiduciary duty is one of the core facets of an agent and this has been severely compromised by a secret income derived by Foxtons.  I have worked for a large west London agency and this is commonplace  and could name plenty of contractors who regularly agree to such a charge being included within the invoice they agreed to send to the agent (who pay on behalf of the landlord).

    As I have previously mentioned, this type of secret/profit commission has already been ruled as unfair in previous case law, so I cannot see any other result than a win for the landlord.

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