As most landlord’s will know, it is common practice in central London for lettings agents (Foxtons et al.) to charge renewal fees on tenants that decide to stay on after their initial contract. In the majority of cases this commission is exactly the same as the original commission and can be as high as 20% of the rent for the new contract term up front. Quite often the agents play absolutely no role in the renewal, yet enforce these charges according to the small print easily missed in your original agreement with them.

Many people, myself and the Office of Fair Trading included, felt this was an unfair practice and over the last couple of years there has been a long drawn out proceeding against Foxtons from the OFT challenging their position on this. Last week the High Court finally came to a decision on the matter and have found the practice unfair. It now seems Foxtons and other agents across the capital will be forced to reign their fees in and settle for a fairer administration charge or perhaps indeed no renewal fee at all.

This is undoubtedly good news for tenants and landlords alike. Landlords will be left with more money in their pockets without the hassle of having to cover the estate agent’s up front free. For tenants it should bring greater bargaining power as the value of their rent to the landlord increases. For estate agents this is almost certainly bad news. It’s a practice that probably shouldn’t have been around in the first place, but this will be a considerable hit to their bread and butter income.

The other question that has been raised is what happens to the past renewal fees many landlords have paid, and is this judgement retrospective – and are lanrdlords entitled to claim back the thousands they have paid in the past. The answer is not so clear but hopefully will become clearer as the dust begins to settle.