Agents’ fees squeeze

This week, ground-breaking and much-needed clarification of the law concluded that estate agents do not have the right to a commission if a buyer who first viewed a house through them later makes an accepted offer through a different agency.

The case was fought over a £20,000 commission fee on a £1.15 million Twickenham home, which was sold in 2005. The buyer, Alisdair Low, viewed the house when it was being marketed by Foxtons. He then made an offer and bought it through joint agent Hamptons.

The Court of Appeal decided that commission was payable only if the agent had actually persuaded the buyer to make the purchase. The three judges said that if the buyer went away and later made an offer through another agency, the first agent did not have the right to claim commission.

Lord Justices Waller and Rix, sitting with Lord Neuberger of Abbotsbury, decided that Foxtons needed to have “introduced the purchaser to the purchase”, not just to the property. Lord Neuberger said: “The evidence certainly does not enable Foxtons to establish that they introduced [the buyer] as the eventual purchaser.”

The judgement is especially vital now, with competition between agents at a record level as the number of sales plummets. It will, however, complicate even more arrangements in joint and multi-agent instructions.