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.