Camden Council has successfully appealed against Foxtons Ltd using the term “administration fees” in their lettings agency work.
Initially in 2015, The Council’s Trading Standards team enforced against four branches of Foxtons within their borough who were using the term “administration fee” for a charge of £420.00. There was no breakdown as to what services the administration fee included.
Foxtons modified their literature explaining what the fees “can cover” but the council were not satisfied with the new wording and issued four penalty charge notices in 2016 for an amount of £5,000 each (£20,000 total).
Foxtons appealed those notices to the First Tier Tribunal later in 2016. The Tribunal decided that there was a breach when the enforcement began in 2015 but that Foxtons had adequately revised their literature and therefore reduced the penalty charges to £3,000 each.
The Council appealed to the Upper Tribunal in 2017 arguing the revised wording was still insufficient for the purposes of the legislation. Foxtons argued the revised wording was adequate.
The displaying of fees by agents is governed by the Consumer Rights Act 2015 whereby an agent must display a list of fees:
- at each of the agent’s premises where it is likely to be seen by persons using or proposing to use the agent’s services; and
- on their website (if they have a website)
Under section 83(4) the list of fees must include:
- a description of each fee that is sufficient to enable a person who is liable to pay it to understand the service or cost that is covered by the fee or the purpose for which it is imposed (as the case may be),
- in the case of a fee which tenants are liable to pay, an indication of whether the fee relates to each dwelling-house or each tenant under a tenancy of the dwelling house; and
- the amount of each fee inclusive of any applicable tax or, where the amount of a fee cannot reasonably be determined in advance, a description of how that fee is calculated.
The Revised Wording
The revised wording by Foxtons was:
* Administration fee: £420 per tenancy.
* This is a fixed cost fee that can cover a variety of works depending on the individual circumstances of each tenancy, including but not limited to conducting viewings, negotiating the tenancy, verifying references and drawing up contracts. This charge is applicable per tenancy, and not per individual tenant.
* Deposit for a long let tenancy: Equivalent to six weeks’ rent
* Deposit for a short let tenancy: £700 or equivalent to one weeks’ rent (whichever is greater)
* Change of occupancy within an existing tenancy:£300
* Letter sent by Foxtons regarding late or non-payment of rent: £60 for each letter sent
* Tenant reference request: £35
* Tenancy renewal: £96 per tenancy for long lets only
* End of tenancy inventory check-out organised by Foxtons: £165 (where a landlord organises this inspection independently of Foxtons, the charge may vary)
Decision of the Upper Tribunal
At the hearing before me Mr Byrne, for the company, said that the Administration fee” could and would never exceed £420. In my view, had the wording actually stated that and indicated that any further services not specified under the heading “Other fees” would never increase the administration fee, there would be no doubt but that the revised wording would have been compliant. However, the wording did not state that. The relevant part of the wording referred to a “fixed cost fee that can cover a variety of works depending on the individual circumstances of each tenancy, including but not limited to conducting viewings, negotiating the tenancy, verifying references and drawing up contracts”. It is the use of the phrase “can cover” that bothers me. It encompasses the idea of “might not cover” and therefore the wording is not clear that there will be no services (not listed under “Other fees”) which incur or might incur a further charge. The failure of the First-tier Tribunal to appreciate this implication of the wording goes beyond a finding of fact and amounts to an error of law. As I have explained it, the revised wording does not provide “a description of each fee that is sufficient to enable a person who is liable to pay it to understand the service or cost that is covered by the fee or the purpose for which it is imposed” and accordingly does not meet the requirements of section 83(4)(c) of the Consumer Rights Act 2015.
The Tribunal continued in respect of the penalty …
The First-tier Tribunal took the view that a penalty of £3000 for each breach was appropriate in respect of the wording in operation from 27th May 2015 until 28th March 2016. I accept that. However, I have decided that the revised wording also breached the statutory requirements. Nevertheless, credit should be given for the company’s attempt to design a compliant revised wording, although it was unsuccessful in this attempt. I would assess this credit as meriting a 25% discount (£500 in respect of each breach) from the maximum penalty (a further £2000 for each breach) to which the company would otherwise be liable in respect of the period after the issue of the revised wording. Accordingly I substitute a penalty of £4500 for each of the four breaches, totalling £18,000
This case goes to show the importance of displaying fees and the contents of the description.
Each fee must be displayed and there must be “a description of each fee that is sufficient to enable a person who is liable to pay it to understand the service or cost that is covered by the fee or the purpose for which it is imposed.
Councillor Pat Callaghan, Cabinet Member for Housing at Camden Council 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.