A new court ruling is good news for consumers, landlords and potentially bank charges claimants too.
That's a curious headline. We don't think of consumers and landlords in one big group, so how did we get there? Well, I'll tell you.
Estate agents manage landlords' properties, and find tenants for them. In my experience, neither the landlord nor the tenant is happy with the service the agents provide.
Tenants and landlords often don't like each other much either, but tenants should spare a moment to consider why their landlords are always mistrustful and in a foul mood. Foxtons, like many other agents, charges landlords a renewal fee in every year that a tenant it placed remains in the property. What's more, the fee is still payable if the landlord terminates his/her agreement with Foxtons, i.e. the landlord stops using Foxtons to manage his/her properties.
Unsurprisingly, landlords think that's unfair, and so does the Office of Fair Trading. The OFT has been taking Foxtons to court over this. It's using them in a test case against all agents that impose the same terms.
This applies to new and existing contracts
The High Court ruled last year that, if the charges are unfair, it's just new contracts that could be affected. In other words, existing contracts could continue to use the unfair terms. This ruling was overturned last week by the Court of Appeal, which said that existing customers can't be punished with unfair terms either. Foxtons could appeal on this point to the House of Lords, but I don't consider that likely.
Notice the word 'if' at the start of my last paragraph. The courts have so far ruled on whether existing contracts can be considered. They haven't yet decided whether the charges actually are unfair. That action is to begin in the High Court in the week beginning 27 April.
Still, it's good initial news for landlords. If it becomes a complete victory, the OFT will have the confidence to put a stop to Foxtons' terms, and other agents will either follow voluntarily or be stopped by the OFT. This will save many landlords hundreds or thousands of pounds per year.
In addition, if the OFT is successful, landlords will be able to take their agents to court with confidence. The unfair term will be stripped from the contract as if it never existed, and the agents will have to pay the landlords back. If they can afford to!
And this affects the consumer...how?
The OFT is basing its arguments on the Unfair Terms in Consumer Contracts Regulations (UTCCRs). You may, like me, wonder whether landlords actually are consumers, and that'll no doubt be one of the points that'll be argued in court in a few weeks.
You'll probably recognise the name of the regulations I just mentioned, too. They're the same ones being used in the OFT's fight against unfair bank charges. That's why the Court of Appeal's ruling has much wider implications. It'll affect all consumers with unfair terms in their contracts, such as the penalties for exceeding overdrafts. It will make it harder for the banks to argue that existing contracts shouldn't be considered in the ongoing bank charges case.
Looking at this even more widely, any existing terms can be challenged under the UTCCRs by individuals or the OFT. We're not just talking about bank contracts here, but energy, pension, broadband and insurance contracts, for example.
It's also likely that other consumer laws would receive the same treatment. In particular, there was new legislation that came into effect last May, the Consumer Protection from Unfair Trading Regulations, which could receive the same treatment. I believe that thousands of businesses are using trading practices that are explicitly forbidden by these new regulations, and that they will be another major headache for businesses once they become better understood.
Times are changing. There is much more support for the consumer now, including landlords.
> Compare mortgages with lovemoney.com
> Read more about the Consumer Protection from Unfair Trading Regulations.