A new class action is being assembled against Foxtons over its charging of fees to tenants.
The case has major implications for all letting agents in England that levy tenancy fees.
If the action is won, it could mean letting agents having to refund fees charged in the last six years.
It is being actively promoted on social media by the law firm CaseHub, which says it “brings justice to people by building group legal battles, online. Join our class actions against Ryanair, letting agents and Parking Eye.”
In one tweet, it says: “Ever paid tenancy fees in England. Sign up for updates on upcoming case against letting agents. U could get refunded.”
Michael Green, founder of CaseHub, says that letting agent fees could be illegal under the Unfair Terms in Consumer Contracts Regulations 1999, and its successor the 2015 Consumer Rights Act.
Foxtons charges include £420 for administration, but Green says the true cost is around £55.
If the claim is successful, Green says it will not be just tenants of Foxtons who will benefit, but millions of other tenants of other agents who, he believes, could be repaid some £2bn.
He believes the lawsuit could cost Foxtons itself some £80m.
In an interview with the Guardian, Green claimed that most letting agents avoid mentioning fees until the last minute, quote prices without VAT and profit from their fees rather than simply covering their costs.
He said: “We have ended up with the ridiculous situation whereby tenants are paying hundreds of pounds for a five-minute template contract, or for a credit check which is available on the market for £20.”
He said the action is being brought against Foxtons because its practices are illustrative of the rest of the market.
He said: “If we win a case against Foxtons, it opens up liability against most other agents. They won’t like that.”
Green, 25, will pick up around one-third of the pay-outs that he might win for those who sign up.
So far, he has signed up over 5,000 people to a £400m suit against Ryanair, and says he will need to sign up 1,000 for the Foxtons case.
Yesterday, Foxtons told EYE: “Foxtons employs an open and transparent approach when it comes to fees.
“Our tenancy administration fees are fixed and charged per tenancy (not per individual tenant) and includes the cost of chauffeured viewings, negotiating the tenancy, verifying identification, obtaining references and drawing up the tenancy agreement.
“We ensure tenants have full visibility of fees upfront before making any important decisions, by displaying our fees on our website, on print and digital advertising, within branches and on all the pre-tenancy paperwork.
“Unfortunately this practice is not always replicated by other agents, and we welcome more regulations to improve transparency in the industry.”
Foxtons is already facing the possibility of another class action battle, which again could have implications for other letting agents;
This is a potential lawsuit being brought on mark-ups charged to landlords by building and maintenance, and other, contractors. The law firm in that case is Leigh Day which says that if successful, it could cost Foxtons millions. The case was announced last year.
At the end of February, Leigh Day announced that 55 landlords had joined the class action and were claiming a total of £2.14m in what they say are “overcharges”. It is threatening to take their claim to the High Court.
Foxtons has said of that case that it “reflects a small minority of landlords and we believe is entirely without merit”.
Comments (19)
You better hurry up Casehub, as the landlord suing Foxtons may get there first and from the sounds of their “profit! warning, they may have no money to pay you!!!!
Quick intro: I’m Joe and I work at CaseHub. Great to see all of your interest in this story. I thought I’d post a quick response to some of your comments.
First – on the issue of whether or not there’s an issue with letting agent fees right now:
The reaction here seems to be ‘well business is business’, ‘letting agents are not a charity’ etc. I think everyone appreciates that but there’s a big difference from a business making money out of selling its core product (ie a property) versus in the terms, fees and traps that it sets around them. That’s the problem with the letting agent industry right now. People have no objection to letting agents making money by taking a portion of rent paid. The problem are the fees levied on top of already high rent to the side of the market which is most vulnerable (ie tenants rather than landlords). It’s also often the way these fees are presented (lacking transparency), the timing (drip feeding them), double charging (same fees to landlords and tenants) and, yes, the markup on them versus the actual service provided.
As some have pointed out – obviously not all letting agents are equally guilty. Some are worse than others. But the practice is highly pervasive.
There’s a great report by shelter available on the practice: https://england.shelter.org.uk/__data/assets/pdf_file/0006/671649/Letting_agencies_-_The_price_you_pay.pdf
The UK government has made clear they have no desire to legislate on the matter and so a legal case like CaseHub’s is the only way forward for millions of renters who feel they have been taken advantage of.
As for CaseHub’s motives/profit from running this case:
CaseHub acts as a sort of private regulator. We take large scale consumer grievances and work with real legal experts (literally the top consumer barristers) to work out whether there is a case to be brought. Right now it’s near impossible for a consumer to do this alone (mainly due to huge costs). CaseHub combines the claims of many individuals and fights on their behalf with zero risk to them – the consumer pays us nothing to do this, and in the event of losing the case they are no worse off than now. All cases are funded entirely with private capital so we take a percent of the upside as a return for our litigation investors if we win.
Some upthread have made comparisons to claims management companies (CMCs)/’ambulance chasing’. What CaseHub does is very very distinct from this. Claims management companies sit and take a cut with near no work by doing minimal paperwork enforcing law which has already been made clear (think of what CMCs do as just like what letting agents do with admin fees – charge to put a name in a contract which has already been written). CaseHub has to go out and actually fight the legal battle to make the law clear in the first place which could easily cost millions of pounds and take 2 years or more.
Feel free to get in touch if you have any other questions 🙂
Dear Joe,
Great attempt at PR but shot yourself in the foot.
We charge a management fee to “Manage” a property not set it up.
Would you prefer we charged £50 per viewing instead (i would!) – how many properties do tenants look at before deciding 5/6 at least that would be £250 / £300 i could make. Then i can charge them set up costs on top.
Also do not quote shelter, they are a joke who have no idea about housing, they are an idealistic group who have ill thought out ideas.
Why are you not providing your services for cost? Paper and ink does not mean you have to take a third of a win? oh thats right you have staff and overheads to pay … LIKE US!!!!
It seems that everyone wants to make a claim for everything. Claims should be based on individual cases. Any actions from one agent should not effect others. If a tenants or landlords wish to make a claim or complaint, then go to trading standards, PRS or start a civil case. If the fees are displayed and the fees are agreed then where is the issue, if the tenant or landlord don’t like the cost then don’t accept the service. This will then drive down costs regardless. If you offer a services to both the tenants and landlords and they pay in relation to the services offered how on earth can their be a issue. We only charge a set PCM fee to landlords and NO OTHER costs and the the admin fee for tenants, £300 and again no further costs to tenants. For the tenants we provide a service, a ongoing 24/7 service, payments systems, maintenance systems, viewings, advice. The issue with today’s society is “its all about money” . We on the other hand have a different view, its people, we at 247 believe we work for the TENANT just as much as we do for the Landlord, we ensure good communications, fair responses and standards met by both parties. By treating out tenant like a customer we gain masses of happy tenants who receive a service, by having masses of tenants 247 let homes faster and better. Its been a few time were we have even fired the landlord for not acting in a Landlord like manor. We place the middle man and smooth communications between both parties, sometimes the method of request needs tweaking to be heard in a better fashion and likewise the response from Landlords needs tweaking so the landlord is seen to be more caring than actual responded. Again as the middle mad you get to work to retain tenancies and longer term tenants. We mange hundreds and hundreds of homes in south Yorkshire and people have a choice, pay for a service that they want or walk into the next shop and pay for theirs. Its choice. Let the people decide if they like us or not. Asda or Primani I decided were I receive my service or product.
Brilliant!! So we must assume that the c.30% of winnings he’ll be taking in the event of a successful outcome are just going to cover his costs then and he’s not actually going to be making a penny from that? Really?
Lets just all shut our doors shall we!!!!!!!!!!!!!!!!!!!
I am also sure that Mr Green will also benefit from persons wishing to make a claim against Foxtons by paying an up-front fee.
Maybe Mr Green should offer his services for free or for the £20 he quoted, and if successful reimburse the applicants with all fees and not decide to keep a large percentage – after all, he must be a charitable individual as he clearly thinks all businesses out there are !
“Green, 25, will pick up around one-third of the pay-outs that he might win for those who sign up.”
That’s rich!
Excellent comments here. Im also not aware that my branch says “charity” above the door. Our fees contribute to keeping the lights on and the computers running, oh and to put food on the table for my family. Or should we stop charging fees altogether like Scotland so in turn tenants pay more in rent and we’ll all just drink out of puddles together.
At what point did letting agents become seen as charities?
They are there to make a profit. Who cares if it is 10p or £300 cost to them to reference the tenant.
What about all the free viewings agents do?
What about the stupid 20 min phone calls to answer questions potential renters have that a normal functioning member of society would not ask “What you mean i cant have 3 Alsatians in the studio, they are well behaved”
And lets not forget they can go to a private landlord ……. Oh thats right the properties are usually not fit for habitation …. see why you pay a little bit more now ……
They can also shop around letting agents, look at fees before the property. Might just help!
“[agents] profit from their fees rather than simply covering their costs”
Name me any self-respecting business that doesn’t do this. If it wasn’t so face-palm-ingly stupid, I’d laugh.
Also, so patronising and disrespectful to readers who need to understand that goods and services actually cost money, sometimes more than we want but you can’t go crying to mummy every time someone charges more than you want to pay. I’d be wearing Armani suits for a fiver if it was up to me, but it isn’t.
This reeks of Michael Green and CaseHub using the Foxtons brand to create some free PR for this new online class action tool.
I’ve never met Michael Green. But for some reason the word ‘odious’ keeps popping into my head.
Comical! I think Foxtons had it coming. A few years ago a landlord from London together with their tenants gave me invoice and contract to look at. 3 tenants on seperate contracts. Every 6 months the tenancy was renewed at a fee of half a months rent from the landlord snd £400 per tenant. Total earning for Foxtons of £1800 every 6 months for a bit of paperwork. Not even a city lawyer earned this for a hours work.
But this case should not be a reflection on the whole industry. A high street office in London cost just a bit more than a office in New Castle! Tenants have many means of applying for property. Not all landlords use agents.
Case Hub is not a law firm. More accurately it is a claims management company. The term “class action” is a term not recognised in our law but has gathered recognition and use to describe group litigation.
Whether or not the accusations are legitimate is beyond my knowledge. However just because there is a storm created by organisations such as Case Hub and even if they gather supporters for their campaigns that doesn’t mean there is any legitimate basis to the accusations.
The secret with any fees charged is to be clear from the very start what will be charged, why and when so there is no surprise and the charge is justifiable.
So are ambulance chasers, “Casehub”, going to pursue every business that turns a profit? Pretty sure Primark for example charge more for their goods than they pay for them, it’s called a profit margin, something businesses need to pay for things like staff.
Ridiculous.
I am amazed that this is such a big story. Being charged over and above the actual cost. That’s called business . My lender charges £1,999.00 just so they can lend me money at a higher rate than it costs them to borrow it in the 1st instance. Now why are they making money twice out of me? This seems to be acceptable but not when an agent charges in a similar fashion !
So why is the holier than thou Michael Green going to pick up a third of the pay-outs i.e. about £27m rather than just what it costs?
If he only received what it costs I suspect he’d lose interest pretty damn quickly.
Hypocrite!!
GREAT post!
THAT is what my mucker Chris Wood knows as ‘a head shot’.
Green couldn’t get up and walk away from that one… needs firing from the highest parapet.