The battle lines have been drawn in court and this time it’s the landlords that have grouped together to fight their corner against the infamous agent Foxtons on letting agents and their hidden costs.
Since the initial complaint was lodged in June by Dr Chris Townley – a law lecturer and landlord, who discovered alleged mark-ups on a contractor’s repair bill set at £616 – other landlords including TV presenters Lynn Faulds Wood and her husband John Stapleton have taken the bold step to pursue class action alleging that Foxtons:
• Has taken commission of up to 25-33% from work carried out by contractors without disclosing this to the landlord
• Used expensive contractors to increase its commission takings
• Taken tenancy fees from tenants without disclosing this to landlords
Nothing unites renters quite like a shared hatred of unexplained costs but now this has gone a step further and the landlords are on the case too. And it’s not just Foxtons charging ‘admin fees’, ‘finance fees’ and other ambiguous costs: this is an industry-wide issue.
Despite legislation coming into place in England this year, instructing agents to publish a full tariff of their fees, transparency on costs remains a fundamental problem in the market.
What seems crazy is that this is the only asset class that is still unregulated. Many people have their life savings and pensions locked up in buy-to-let properties managed by mavericks. No asset manager in the financial sector can bring the law into their own hands, yet the practices of many letting agents – even those operating under big brand names – are often dubious at best.
If you are a landlord worried about managing a property and have given the entire management to an agent you may be a sitting duck for scheming letting agents, who promise to take the burden of managing a property off your shoulders by handling all aspects such as rent collection, deposit protection, issuing required certificates and managing repairs.
The problem is, the payback for this service often takes the form of eye-watering bills when it comes to minor repairs and basic property management services. This is because so many agents abuse a position of trust: they’re not interested in getting their landlord clients the best price for the job, but rather focused on how much they can make for themselves, whether that involves adding massive mark-ups on bills from contractors or charging those contractors a fee to get the business in the first place.
The Foxtons case is making the lettings industry sit up and take note of the fact that landlords are more vigilant than ever when it comes to their money. However, 130 landlords is only a fraction of the millions in the private rental sector as a whole.
While we all hotly anticipate the outcome (and I’m sure many other agents will be sitting rather uncomfortably in their seats), here’s to the hope of a new era of transparency in the lettings market, which should mean no more nasty surprises and a smoother ride for landlords and tenants alike.
