Camden appeal decision clarifies rules on letting agency fees
In a test case of national significance, Camden Council has successfully appealed against Foxtons Ltd for using the term ‘administration fees’ in their lettings agency fee structure.
Since May 2015, it has been a legal requirement for letting agents to display all relevant landlord and tenant fees both instore and on their website. In May 2016, the National Approved Letting Scheme published guidance to help explain the rules (read here).
This case related to whether it was reasonable for a letting agent to use the term ‘administration fees’ or whether agents were required to provide a more detailed breakdown of charges under the Consumer Rights Act 2015.
In early 2016, Camden Council’s Trading Standards team issued all four Foxton’s branches in the borough with a ‘Notice of Intent’ with a maximum penalty of £5,000 for failing to clarify what ‘administration fees’ included.
Whilst Foxtons did modify their literature, the council felt this did not provide sufficient clarity and so they issued four Final Penalty Charge notices in April 2016.
Foxtons appealed the notices to the First Tier Tribunal of the General Regulatory Chamber in October 2016. Whilst ruling the term ‘administration fees £420’ was wrong, it was decided Foxton’s modified literature was acceptable and so each penalty charge notice was reduced to £3,000.
Camden Council were unhappy with the decision on the basis the wording still lacked sufficient clarify to explain to letting agency clients what was included. The council therefore appealed the decision to the Upper Tier Tribunal in June 2017.
This further appeal was decided in the council’s favour. It was held that the First Tier Tribunal had failed to consider what services the administration fee might not cover and so Foxton’s modified ‘administration fees’ description remained non-compliant. As such the Judge increased each penalty charge notice to £4,500, totalling £18,000.
Councillor Pat Callaghan, Camden’s Cabinet Member for Housing, said:
“We are delighted with this judgment as it has clarified what letting agents must do when publicising their fees. Because of our successful appeal, customers can now fully understand what they are liable for and make informed choices and proper comparisons with other letting agents about the fees charged.
“This judgment also gives clarity to Trading Standards officers nationally when enforcing fees and by assisting to ensure the market place is consistent for all letting agents and their prospective clients.
“I would personally like to thank the work undertaken by our Trading Standards and Legal Services in obtaining a successful outcome following a long, and at times complex, process.“
Foxtons have the right to appeal against the judgement within 28 days. It was noted the Upper Tribunal gave Foxtons a £500 reduction on each fine in recognition of the company’s attempt to design legally compliant revised wording.
The full judgement handed down by Judge H Levenson on 25 August 2017 can be read here.
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