Despite the ruling against letting agents the OFT warns landlords are still victims of unfair contract terms.
Despite a landmark ruling last year in favour of the Office of Fair Trading against estate agents Foxtons, which ruled that some of their fees were like a "trap" for landlords, the OFT has warned that unfair contract terms are still being used by letting agents. The OFT has written to a number of agents and industry associations to highlight the ruling but has claimed that research it has carried out since then has suggested that many landlords and letting agents are still unaware of the ramifications of the case.
Amelia Fletcher, OFT chief economist, said: "This research clearly demonstrates that there has been an immediate financial benefit for consumers from our intervention, and also evidence of knock-on benefits from making this market more competitive. However, there is evidence of continuing poor practice by some letting agents, which need to go further to make their contracts transparent and fair."
Unfair terms highlighted in the case included requiring landlords to pay commission of 11% of the annual rent if tenants stayed in the property beyond the initial term and a provision which gave the agent 2.5% commission if the property was sold to a tenant, regardless of whether they had been involved in brokering the deal. The judge confirmed that such terms should be highlighted in sales literature, as well as in the contract itself, as these can be hidden in the ‘small print’.