Prominent residential property and tenant law expert Tessa Shepperson says a class action against Foxtons alleging unfair charges to landlords will lead to the agency having its come uppance.
On her respected Landlord Law Blog, Shepperson says an action of this kind “is long overdue.”
Shepperson writes: “Because letting agents ARE in a position of trust. Landlords assume that they are acting in their best interests. The shock and distress suffered by a landlord after discovering what had been done to him, can be seen from the reaction of Dr Chris Townley, the landlord at the centre of the new Foxtons case:
‘I was incredulous when I found out that Foxtons took commissions from anyone working on my property without my consent. I felt betrayed.’ I think most landlords in his position will feel the same. I would suggest that this type of reaction is, in itself, proof that this sort of thing is unfair.”
She says that letting agents are in a position of trust so should make it crystal clear to their customers exactly what they are changing and how it is calculated. She insists that a line in the small print of their terms and conditions is not sufficient to discharge agents’ fiduciary duty.
She concludes by acknowledging that it is unfair to tar all letting agents with the same brush, however: “There are many excellent and honourable letting agents, who would scorn to take up to 33% commission from traders without specific authority from their landlords, or to charge both landlords and tenants the best part of £500 each for something which is effectively just a clerical exercise. What about THEM?
“How do they feel when they see companies who charge these extortionate fees prospering and ‘getting away with it’? Should they not be praised for standing up for what is right and just and only charging what they think is fair?”
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Well done Tessa Shepperson for articulating so well the feeling of many others of us in the industry. I have been blogging about this for some time myself and wholeheartedly support any action against the rogues and rip off merchants.
I am an agent, developer and landlord and I am weary of trying to defend my businesses against the charges that are constantly being touted by some politicians and the media. We charge less than £100 to set up a tenancy and no further fees for the duration of the tenants stay in the property - be that 6 months or 6 years. We charge landlords a small one off fee as well, and add no charges, mark ups, "administration costs" or anything else to their agreed bill for the services we provide. Our profit margins are comparable to any other service industry. And we are not alone - there are many other agents doing a good job for a fair price.
Landlords and even tenants are in the positions of power. The agents will only survive if landlords place their properties with them and tenants use their services. Placing a property with an agent should be considered as important as any other financial transaction for investors in the BTL business. You don't have to use the well known names with the shiny offices to get great service. The cost of those offices and all those branded cars is coming straight off your bottom line.
Most landlords are financially astute people. They worked hard to get the capital together to make their investment in property. Why some of them then switch off their brains before they make their final decision, where to place their property for on-going management, still surprises me.
So come on landlords - exercise your financial muscle and place your properties with management companies who will look after your best interests. Making that decision requires thought and effort. Getting it wrong, as we see from the Foxton's storey, can seriously eat into your BTL profits.
Clearly they were taking huge liberties, but will there be any significant consequences? I doubt it. The punters just keep coming back.
It's 'comeuppance' BTW.
I agree with Andrew here... Why do people with so much wealth place so much trust in these massive corporates with ludicrous charges. An element will want the highest GROSS rent but this often doesn't translate into the best NET deal for the client landlord...
@ Sceptical As Always. It's called 'premium pricing' and is a long exploited and well understood phenomena. You price something ludicrously high and certain people will buy it. Trainers are the classic example. Essentially, there is almost no difference between a pair of £70 Nikes and a pair of £200 Nikes, except the price tag. Nike know, however, that people will still buy the £200 pair (lobotomised Neanderthals, Footballers etc). They wouldn't exist if they didn't sell.
I don't understand the train of thought of the purchaser really, but it's probably a mixture of 'it MUST be better because it's more expensive' and good old fashioned Ego and one-upmanship.
Well said, Andrew. Fully agree with your thorough and articulate analysis. There are a lot of myths and misinformation about estate and letting agents that aren't challenged enough. As an industry we're not perfect - no industry is - but we're also not as bad as the portrayal painted by the media.
Of course, agencies like Foxtons who seem to thrive off bad press doesn't help our case.
I agree, us smaller agents can provide a professional service that goes above and beyond the norm. We provide a personal touch and understand the needs for all to thrive and survive in this business. I am just starting out with Penny Lane Homes in Bury but have years of experience in housing. I have dealt with some agents that just seem to want the money but there are others that go the extra mile.
Some brilliant points there Andrew. It's incredibly frustrating to see an estate agency get away with something on a regular basis & consequently creating an unfair and unrepresentative reputation of estate agents as a whole.
Tessa Shepperson speaks a lot of sense here, further backed up by Andrew's points. Most letting agents fully appreciate the responsibilities their role entails, but some don't. In this case, Foxtons erred badly, and we need to do more to ensure something like that doesn't happen again.
Foxtons in the news again! I can't work out if their PR team will be delighted about that. Their name has been in the headlines a fair few times in the last few weeks, but often for all the wrong reasons.
Hi Neil, I think the PR team are revelling! Any press is good press, stands as true today as ever.
I see you've used my proof reading services. The invoice is in the post!
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