Legal entrepreneur, and owner of CaseHub, Michael Green is lining up an £80 million group action against Foxtons Estate Agents which could potentially force the Estate Agent to pay back hundreds of pounds worth of fees to tenants who have rented properties from them.
Foxtons are an Estate Agent based in London and Surrey and describe themselves as the 'leading London Estate Agent offering residential property sales and lettings service through its network of 62 branches.'
Mr Green and his legal team believe that some of the fees that Foxtons charge tenants could be illegal under the Unfair Terms in Consumer Contracts Regulations 1999 and its successor the Consumer Rights Act 2015.
There are reports that the Estate Agent has charged tenants £420 as an administration fee, £300 for name changes and £165 for viewing a property. These are figures that Mr Green believes are highly inflated, services of which should cost no more than £50.
Letting agency fees have been hugely controversial and since 2012 Scotland has made it illegal to charge any fees beyond rent and a refundable deposit. However, in England no such regulation exists and the average fee charged by letting agents is around £300.
However, due to the implications of the Consumer Rights Act 2015, Estate Agents are now required to prominently display a list of their fees, not only in their offices, but on their website too. The aim was to make fees clear and specific to customers without hidden costs.
Mr Green alleges that many of the letting agents are creative with the prices and often fail to quote prices with VAT to make them seem lower. This makes it difficult for tenants to accurately estimate the total costs of administration in renting a property.
However, these charges are not just limited to tenants. It is reported that landlords have also been stung with large administration fees too.
Foxtons deny these claims and say that their pricing scheme is 'open and transparent' and the tenant is aware of all the charges involved before they decide to rent a property. They also state that their tenancy administration fees are fixed and charged per tenancy rather than per individual.
It is likely that if the action goes ahead, the legal team will argue that there is a significant imbalance in bargaining power between the tenant and letting agent when they are dealing with the letting agency contract. If tenants were in a better position to negotiate they may not agree to terms on administration services that they may view as unfair.
Mr Green has launched an online campaign to raise support for the action and will need 1,000 people to sign up to make the case against Foxtons commercially viable.
It will of course be interesting to see if this legal challenge is brought, and, if successful, what the implications will be for the industry.
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