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Foxtons faces multi-million pound fine over hidden commission

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  • 08/06/2015
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Foxtons faces multi-million pound fine over hidden commission
A multi-million pound claim is being brought against Foxtons for charging landlords hidden commissions of as much as 33% of a contractor’s fee for work done on their properties.

Law firm Leigh Day, which is acting on behalf of the landlords, said the estate agent had also used contractors who charged as much as two to three times the market rate in breach of their duty to try and get a good deal for their clients.

It said potential claims could total as much as £15,000 for landlords whose properties were managed by the estate agency, but noted that the amount would vary according to individual.

The law firm added that Foxtons had a “potential conflict of interest” to use a more expensive contactor in order to make more in hidden commissions.

Private landlords who have used Foxtons either to let, or to both let and manage their property, have brought the claim against Foxtons for receiving commission on contractor work such as repairs, maintenance and inventory checks without obtaining the full consent of landlords.

Foxtons has also been accused of charging tenants various fees that it does not inform landlords about.

‘Widespread’ practice

One complainant paid out a total of £616 inc VAT for the fitting of a security light at the front of a property following a request by the tenant. However, after the complainant contacted the contractor as they were dissatisfied with the quality of work carried out, they discovered Foxtons had received fees of £203.50 alongside the contractor fees of £412.50, a just under 50% mark up.

After eventually admitting that it had taken a substantial commission on virtually every contractor’s work of the complainant’s property, totalling 38 commissions and about £1,900, Foxtons refused to repay and denied any wrongdoing. It said a clause in its contract said it may retain commissions taken from third parties.

Leigh Day also raised concerns that the practice of not obtaining landlords’ fully informed consent for such fees was not limited to Foxtons and could be widespread in the lettings industry.

Chris Haan, a solicitor at law firm Leigh Day, said: “We consider that Foxtons has a potential conflict of interest in that the more expensive the contractor is, the more Foxtons makes in hidden commissions.

“We believe these charges to landlords are unlawful as they are not sufficiently disclosed, so the landlords cannot give fully informed consent to them. This is against industry codes of practice.”

“These kinds of practices may be widespread in the lettings industry and it needs to stop. We are taking this case on no win no fee with the aim of securing a refund from Foxtons for all affected landlords.”

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