Letting Agents - Claim for recovery of hidden fees
A residential landlord has recently challenged one of the country’s biggest letting agents, Foxtons, over the level of fees charged for repair works.
The private landlord was charged £550 (plus £66 VAT) for replacing a light fitting. The landlord alleges that the contractor who carried out the works had charged Foxtons £412.50 but that the contractor had added an additional commission onto their fee for Foxtons, as they were obliged to under their contract with the agent.
Foxtons claims that it is entitled to add a 33% commission to the invoice, as well as an extra 10 % management charge, simply because the amount was above £500.00. However, the commission was not set out in the invoice to the landlord.
It was subsequently discovered that Foxtons had taken a substantial commission on virtually every contractor’s work to the landlord’s property, totalling 38 commissions and approximately £1,900. None of these fees were identified in any of the invoices or in the accounts that Foxtons gave to the landlord.
Solicitors acting for the landlord have written to the agent demanding compensation, claiming that the hidden charges were not covered in the landlord’s contract with the agency.
If successful, experts claim that this action could ultimately cost Foxtons up to £42 million on the basis that these were “hidden” fees and other landlords could also be entitled to compensation (even if they have not had repair work done) due to Foxtons not declaring a conflict of interest through receiving commissions from both landlords and their contractors.
Foxtons insists that it is open and transparent about the fees it charges. However, the agent is also accused of charging tenants fees that the landlord has no knowledge of. For example, Foxtons currently charges both the landlord and the tenant £420 each (a total of £840) for arranging for the standard tenancy agreement to be signed every time a lease is entered into, meaning that there is a duplication in the fees charged.
These kinds of practices may be widespread in the lettings industry and other agents could also be affected by the dispute if they too are found to be charging landlords similar fees.
Posted on 07/07/2015 by Ortolan
