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Property Ombudsman warns over contract terms

‘With regard to renewal commissions where the agent is conducting that renewal, the effect of the judgment is that such a term is not necessarily unfair but that it must be actively flagged to the consumer,’ says Mr Hamer.

‘As Ombudsman I have been asked to consider several cases where the renewal commission has been at issue. These pre-dated the judgment that has now been handed down by the Courts and I will now reflect that in any future cases referred to me.

‘Previously I would not have rewritten a contract but might have awarded compensation if I felt the term had been not been drawn clearly to the client’s attention. The judgment will bring no change in my approach.

‘I still feel it appropriate, however, that where a renewal of a tenancy is being discussed, best practice would dictate that the client is reminded of the liability he will face to pay such a commission fee.’

The report also shows a rise in enquiries during the first quarter of 2010 compared with the last quarter of 2009 – by 27.5 per cent in the case of sales and 14.7 per cent for lettings.

Mr. Hamer says there is no apparent reason for the rise between consecutive quarters and no identifiable trends among new complaints being brought to TPO.

‘If the current trend in workload continues throughout the year my office will end up 48 per cent ahead of forecast; and new sales cases will match those for lettings,’ he adds. ‘At this stage I can only monitor the situation and over the coming months I may be able to identify whether it is more than just a sudden peak.’

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