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A buy to let landlord with just one investment property beat a claim for failing to pay renewal commission under consumer protection law.
The judge threw out a claim from letting agents Chestertons that the landlord was a business and not a consumer.
The landlord, Nicholas Finney, let one buy to let through Chestertons. A tenant renewed the letting agreement and Chestertons requested a fee as commission.
Mr Finney refused to pay so the case went before District Judge Wakeham at Lambeth County Court.
The judge ruled in favour of Mr Finney on the grounds the renewal clause in his contract was unenforceable and unfair under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR).
Key to the decision was the judge regarding Mr Finney as a consumer because he only owned and operated a single investment property.
District Judge Wakeham ordered Chestertons to repay all renewal commissions collected under the contract.
He explained he considered the agreement between Chestertons and Mr Finney represented a ‘significant imbalance’ between the rights and obligations of the landlord when compared to those of the letting agent.
The disputed clause allowed the letting agent to renew the tenancy at their discretion and at a rent set by them and not the property owner. The judge felt this left Mr Finney exposed to pay commissions at a level decided by the letting agent.
He was also critical of the way the document was worded and pointed out that someone should have explained the terms and conditions – including their financial implications – to Mr Finney before he signed the agreement.
This is the second UTCCR case relating to letting agents – the previous case was between London letting agent Foxtons and the Office of Fair Trading regarding unfair contract terms.
Foxtons dropped their defence and rewrote their letting agreements because of this action.
The Chestertons case leaves the line between a landlord acting as a consumer and as a business blurred because at this time, it is unclear how many letting properties an investor needs to own to stop being a consumer.
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