In a test case of national significance, Camden Council has successfully appealed against Foxtons using the term “administration fees” in their lettings agency work, leading to a penalty charge totalling £18,000.
A partially successful appeal from Foxtons in October 2016, which followed over a year of activity by the Council’s Trading Standards and Legal teams, lead to the Council’s decision to appeal to the Upper Tier Tribunal in June 2017 as it considered that the original decision did not provide clarity to those using letting agents.
Councillor Pat Callaghan, cabinet member for housing at Camden, said: “We are delighted with this judgment as it has clarified what letting agents must do when publicising their fees. Because of our successful appeal, customers can now fully understand what they are liable for and make informed choices and proper comparisons with other letting agents about the fees charged.
“This judgment also gives clarity to Trading Standards officers nationally when enforcing fees and by assisting to ensure the market place is consistent for all letting agents and their prospective clients.
“I would personally like to thank the work undertaken by our Trading Standards and Legal Services in obtaining a successful outcome following a long, and at times complex, process.”
The Council challenged the First Tier Tribunal’s decision because Foxtons “administration fees” still did not give an adequate description for the services provided, with it considering that by stating the “administration fee can cover…” did not go far enough.
This successful appeal means that the Upper Tribunal stated that the First Tier Tribunal had failed to consider what services the administration fee might not cover and revised the penalty charge notices to £4,500 for each breach, totalling £18,000.
In 2015, the Council’s Trading Standards team undertook enforcement action after establishing that Foxtons was charging an administration fee of £420 for tenants and landlords in their lettings agency work.
The Council advised Foxtons about their new legal requirements, under the Consumer Rights Act 2015, to provide a breakdown of any fees, enabling customers to clearly see the services provided. The company however continued to use the term without undertaking this clarification.
In early 2016, the Council’s Trading Standards team issued four ‘Notices of Intent’, each for the maximum penalty of £5,000, to each branch of Foxtons located in the borough, as well as their website, for using the term without the required clarification.
The company responded that they had subsequently modified their literature to explain that it “can cover” certain services, whilst citing examples, but still failing to explicitly state the full breakdown of the fee. The Council considered that this did not provide sufficient clarity and issued four Final Penalty Charge notices in April 2016.
Foxtons appealed those notices to the First Tier Tribunal of the General Regulatory Chamber in October 2016. The judge stated that Foxtons were wrong to state, “administration fees £420” when enforcement action first began. They however decided that when the council served its final notices, Foxtons had revised their literature to explain a number of the services provided, and the fees therefore did not breach the law, consequently reducing each penalty charge notice to £3,000.
The company has the right to appeal within 28 days of the judgment. The Upper Tribunal did give Foxtons a £500 reduction on each fine in recognition of the company’s attempt to design legally compliant revised wording