Currently, if a landlord in London and the South East who has been managing a property simply wants to renew the tenancy agreement for another 12 months, they can expect to pay around 11% of the annual rent as a renewal commission to the letting agent. For many rental properties in the region, this could be thousands of pounds and is totally unwarranted.
In passing judgment, Mr Justice Mann stated that he found "all the relevant provisions to be unfair for the purposes of the Regulations". He also said that "the renewal commission is severely camouflaged".
In a statement, the Office of Fair Trading (OFT) has said it "expects the letting industry to comply with this ruling, and will take the necessary steps to ensure this where appropriate". It went on to say that "the charging of repeat renewal commission represented a ‘trap' or a ‘timebomb' for consumers".
John Socha, Vice Chairman, NLA, commenting on this landmark ruling, said: "The NLA has been campaigning on these unfair fees for almost two years. This sends a direct message to letting agents that this lack of transparency must stop. Contracts must be clear with provisions which are upfront and ‘plain and intelligible'.
"Mr Justice Mann has not ruled against renewal commissions per se, but has said - in no uncertain terms - that they must not be hidden in the small print. This ruling is most definitely a victory for the NLA and for landlords throughout the country."
