Foxtons has been fined after breaching requirements to show letting agents’ fees.
The breach lasted for ten months but was corrected, and the fines levied by the local authority reduced from £5,000 per branch and on the website to £3,000 each – costing the firm a total of £12,000.
But in a key case for all letting agents as well as the industry bodies and even the Government’s law-drafters, a far more substantive issue was won by Foxtons, and lost by the local authority concerned, Camden Council.
It is, however, understood that the case is likely to go further appeal in an attempt to force Foxtons to give consumers further information about its fees.
ARLA’s template advising agents and the ‘primary authority advice’ issued by Warwick Trading Standards, which has a partnership with NFoPP and The Property Ombudsman, formed an important part of the legal arguments.
The case was an appeal to the First Tier Tribunal by Foxtons against four final notices served on it by Camden – three for each branch in the borough, and a fourth for the Foxtons website.
The case revolved around the description by Foxtons: “Administration fee £420.” Originally, this was all that was said. Wording added later now says this can “cover a variety” of works.
The tribunal Judge has now ruled that the original “bare” description was a breach, but that the new wording is compliant.
Camden seems likely to challenge this in a further legal case.
Primary authority advice
Foxtons had originally merely published its admin fee as £420, without explanation.
The primary authority advice states: “The list of fees must include a description of each fee that enables people to understand what it relates to and how much it will be. In relation to fees payable by tenants, it should be clear whether each fee is per property or per tenant. Fees should be inclusive of VAT and any other taxes…
“The list must be clear and comprehensive. Surcharges, hidden fees or vague expressions like ‘admin fee’ are not permitted.”
Camden contended that Foxtons should have been more detailed, and in 2015 sent emails to the firm which said that by only stipulating a one-off admin fee of £420, without a sufficient description of what this included, it failed to comply with Section 83(4) of the Consumer Rights Act 2015.
In February this year, Camden issued Foxtons with final notice, saying that the firm breached the Consumer Rights Act and was acting in contravention of primary authority advice.
Camden also told Foxtons that this advice “prohibited” agents from using the term “administration charge”.
In March, Foxtons said it had been in touch with another council’s Trading Standards department, at Wandsworth, and agreed the following wording.
“Administration fee £420*
“This is a fixed cost fee that can cover a variety of works depending on the individual circumstances of each tenancy, including but not limited to conducting viewings, negotiating the tenancy, verifying references and drawing up contracts. This charge is applicable per tenancy, and not per individual tenant.”
This change was implemented on March 28. On April 11, Camden served Foxtons its final notices, penalising it £5,000 per branch and for the internet.
The appeal revolved around the original description by Foxtons, “Administration fee £420”, and whether the new wording was statutorily compliant.
Foxtons said that it was, arguing that its admin fees could vary from case to case. Camden argued that it was not because it was vague about what the fee might or might not include.
Judge Peter Lane ruled that Foxtons’ original advertising of fees was inadequate, but the new wording made it compliant.
He also said that Camden had incorrectly interpreted both the legislation and the guidance when it said that the use of expressions such as ‘administration charge’ was prohibited.
The Judge expressly said that use of such terms is not prohibited and that he agreed with Foxtons that there was nothing in law to prohibit the use of the phrases “administration charge” or “administration fee”.
Such phrases can be used, said the Judge, provided that they are accompanied by “a description . . . that is sufficient to enable a person . . . to understand the service or cost that is covered by the fee or the purpose for which it is imposed”.
The Judge went on to rule that the new wording complies with the legal requirement.
Rejecting Camden’ argument that the new wording is non-compliant, the Judge said: “I am satisfied that a person reading the rubric now set out by Foxtons under the heading ‘Administration Fee £420’ will thereby be able to understand the service or cost that is covered by the fee.”
He went on: “The specified services include negotiating the tenancy, verifying references and drawing of contracts, all of which can be the subject of a price comparison with a letting agent who chooses to use the ‘model’ form of list apparently emanating from the National Association of Letting Agents [sic], which Camden regards as an exemplar.”
The Judge did, however, find that Foxtons was in breach of the requirement between May 27, 2015, and March 28 this year.
He concluded: “A ten-month breach cannot, in my view, be ignored or downplayed. It should have been apparent to Foxtons . . . that the bare use of the term ‘Administration Fee’ was non-compliant.”
However, it is understood that Camden Council still strongly believes that the wording Foxtons added in this year is not compliant, and that it negates the intention of the Consumers Rights Act.
As EYE understands it, the authority is expected to appeal.