Legal action against Foxtons for allegedly including “secret” mark-ups on landlords’ bills is likely to go ahead, the legal firm handling the case has confirmed.
The test case could have major implications for other letting firms.
TV presenters Lynn Faulds Wood and her husband John Stapleton are to join what now looks to be some 130 landlords in the class action being organised by law firm Leigh Day.
Leigh Day and the landlords allege that Foxtons:
- Has taken commission of up to 25-33% from work carried out by contractors without disclosing this to the landlord
- Uses expensive contractors to increase its commission takings
- Takes tenancy fees from tenants without disclosing this to landlords
Leigh Day launched its bid for a group action – which it says could cost Foxtons up to £42m – after taking on the case of one landlord, Dr Chris Townley, a law lecturer, who discovered alleged mark-ups on a contractor’s repair bill.
The law firm claims that these were “hidden” fees and that other landlords with contracts with Foxtons could be entitled to compensation, even if they have not had repair work done.
Leigh Day said in June it had received more than 100 inquiries, through Twitter, to recruit landlords. The figure has since grown to around 130.
Speaking to EYE yesterday, Chris Haan, the solicitor working on the case, said: “The case will almost certainly be going ahead. There hasn’t been any special delay – these sorts of cases often take some time to put together. It just takes a long time to get everything ready, including assessing the individual cases, gathering documents, etc.
“I don’t want to give more specifics because we are dealing with Foxtons directly on the issues.”
In June, Faulds Wood told the Mail on Sunday she felt “cheated” after learning that Foxtons was accused of charging “secret commissions” and produced emails.
In one, sent to Stapleton on May 28, Foxtons said the cost for materials, a shower enclosure, shower door, a mould resistant silicon seal and disposal of old enclosure and door would be £958 plus VAT. Labour by two plumbers for one day would be £810 plus VAT.
Stapleton replied: “As you know our man resolved this problem for less than £400. Your recommended plumbers were proposing a charge of more than four times that and that didn’t include re-decoration.
“. . . (It) has merely confirmed my belief that there is something worrying about the relationship between Foxtons and their favoured contractors.”
When EYE contacted Foxtons it said it had nothing further to add, but insisted in June it was open and clear about its fees.
For what it has to say about earning commission from suppliers, see clause 3.3 in its terms and conditions here
Comments (12)
NEE NAR NEE NAR – Think i just saw an ambulance heading over Putney Bridge, may want to chase it down ……
Its not the fees stated which is the issue…its the “hidden” commissions which do not show on the clients account or statements. In the industry they are well known and only “secret” to the Landlord. Just look at all the major software providers many stating they are RICS & ARLA compliant and displaying their Logos. They build into their software a commission which is automatically deducted from the contractor. You can set whatever commission you like and then instruct your contractors to add this additional hidden commission onto their invoice. Agent gets additional fee to that stated in Terms & Conditions which is not shown in any client account.
But surely the landlords agree to works? and Foxtons have said in their t&c’s commission maybe paid to them.
Its all a bit “Nanny state” responsibility is also on the property owner to look at bills and question them.
The Landlord agrees to commission as per T&Cs but Agent does not advise that he is taking a further fee without their permission. If they had permission why “hide” it in their client account. The Landlord is also unaware that his contractors cost is being inflated to cover this “hidden” fee
Commissions to contractors on works orders are not hidden, they appear on reconcile balances reports, agency fees reports, audit trails and VAT reports. I am struggling to see how you think that is hidden.
I agree but they are not shown on the Landlords Account, unless you allow your Client access to your own business accounts they are hidden. If you were a Landlord would you agree to the Agent adding another fee by upping the Contractors invoice. If Agent wants a 2X10% fee then they should put it in T&Cs. Not 10% in Terms and the other hidden in a contractors invoice.
A fee to a contractor shouldn’t be shown the landlord’s statement. As long as landlords are aware of the process there isn’t a problem. Most landlords are happy to benefit from reduced management charges and allow an agent to apply an administration fee to works orders rather than having to pay retail costs on works and have to put all the work into obtaining quotes, negotiating access and supervising works. Typically there will be an arrangement between Agents and contractors but invariably it is the contractor who is bearing the work introduction fee not landlords.
So just so i am right in what you are saying.
They are not complaining about the standard of work, they are not complaining about the cost of work.
They are complaining about them getting a commission for organising and inspecting the work and confirming it has been done to a satisfactory level even though their t&c’s say they may get paid commissions.
Anyone that uses Foxtons given their press in the last decade is a fool.
I am not saying Foxtons are right or wrong but Foxtons wear their expensive fees as a badge of honor, so a little strange why their landlords would expected a “Cheap” service.
Remember the Stella ad form the 90’s “Reassuringly expensive” – Nobody seems to be complaining about the work just the cost.
I does look like a witch hunt on Foxtons many other agents do the same practice.
130 enquiries does not seem too high either, how many 1000’s of landlords have they had over the years?
There will always be people coming out of the woodwork when they smell free money.
I also fail to see what a couple of has been presenters add to the cause? Is there claim anymore important than the others just because they were once on tv?
It puzzles me why customers use estate agents … or pretty much any other supplier … unless friends recommend them. Not dubious ranking sites, but friends or relatives.
I suspect there are a lot of twitching bottoms out there awaiting the outcome of this. Thankfully not mine!