Commercial landlords have saved millions due to the OFT’s High Court order against Foxtons.
The OFT secured an enforcement order in February 2010 after they deemed Foxtons had breached the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs).
The High Court ordered that Foxtons' renewal commission terms were not transparent.
In an evaluation recently published by the OFT it states that Foxtons then amended some of its terms resulting in an estimated £4.4 million benefit to commercial landlords.
In the report the OFT deems its intervention a success and is now warning the lettings agent sector to check their terms and conditions are fair and transparent.
They are aiming to raise more awareness about the evaluation of the Foxtons case as they found some consumer landlords and letting agents remain unaware of the High Court ruling and its implications for the sector, with similar potentially unfair terms still appearing in some contracts.
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.”
In order to highlight this to the industry OFT has sent out letters to letting agents and their industry associations. They have also invited a number of agents to an event this autumn that will focus on the need for transparency of terms in contracts, including the need to highlight terms which relate to charges.
The High Court Order made to Foxtons declared terms which required landlords to pay commission to Foxtons after the sale of their property to a third party, because the original tenant remains in occupation, and terms which require landlords to pay a sales commission to Foxtons in the event they sell the property to their tenant, were unfair, not binding, and may not be used or relied upon in contracts with consumer landlords.
The evaluation was conducted in house by the OFT's evaluation team as part of the OFT's commitment to evaluate the impact of its work for external accountability and internal management purposes.
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