OFT warns letting agents over renewal fees

The OFT has warned letting agents to check their terms and conditions are fair and transparent following an evaluation of its consumer enforcement case against Foxtons for breaching the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs).

 

A High Court ruling that Foxtons' renewal fees were not transparent led to the OFT securing an enforcement order in February 2010, which resulted in Foxtons changing some of their terms and conditions. The OFT estimates that consumer landlords using Foxtons have saved well over £4 million due to these changes.

 

However the OFT has discovered that many consumer landlords and letting agents remain unaware of the High Court ruling, and has sought to raise awareness of the issues by writing to letting agents and industry bodies. It is also hosting an event in the autumn focusing on the need for transparent contract terms, as well as the need to highlight terms relating to charges.

 

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. We will be engaging with business over the coming months to raise awareness and compliance with the law.

 

'This evaluation report complements some of the work already identified in the OFT's market study into consumer contracts which warned businesses that consumer contracts must be clear and contain no unwelcome surprises buried in the small print. Transparent business practices build trust in markets, allowing people to shop around to find the best deal, thereby stimulating effective competition and strengthening innovation and growth.'

 

The evaluation report was conducted by the OFT's in-house team and drew upon independent surveys of consumer landlords and letting agents. It was independently reviewed by Professor Stephen Davies of the University of East Anglia.

 

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