Foxtons sued for millions over fees to landlords

Letting agent Foxtons is facing a multi-million lawsuit over claims that it's adding huge mark-ups to landlords' bills.

In one case, it added more than £200 to the £412.50 bill for replacing a security light fitting.

Dr Chris Townley, a lecturer in competition law at King's College London and a one-time principal case officer at the Office of Fair Trading let out his property in London via Foxtons in 2011.

During the course of managing the property, Foxtons arranged, with permission, for various contractors to undertake repairs, maintenance and improvements, and inventory checks.

But it was only when Dr Townley complained about the quality of the light fitting that he discovered the Foxtons markup. Foxtons eventually admitted that it had taken a substantial commission on virtually every job, totalling 38 commissions and about £1,900.

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In many cases the commission was as much as 33% of the contractor's bill. And the company even charged him an extra fee of 12% for any invoice that was over £500. It charged the additional fee on the £550 invoice for the security light - even though it was only over £500 because of Foxtons' 33% mark-up.

"I was incredulous when I found out that Foxtons took commissions from anyone working on my property without my consent," Dr Townley says. "I felt betrayed."

According to law firm Leigh Day, which is bringing the lawsuit on behalf of a number of landlords, Foxtons is also hiring contractors who charge as much as three times the market rate.

"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," says solicitor Chris Haan.

"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."

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Foxtons is also accused of charging tenants various fees that it doesn't tell landlords about.

For example, it currently takes £420 from tenants as well as landlords when it arranges for the standard form tenancy agreement to be signed.

Leigh Day says that landlords should be in line for a payout of as much as much as £15,000 if their properties were managed by the company, but that amounts would vary from individual to individual.

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