Unfair terms in tenancy agreements 01- a guide for landlords
Introduction
The ‘Unfair terms in consumer contracts regulations 1999’ states the law on what is and isn’t fair in any contract. In this article, the rights and responsibilities of the landlord shall be explained.
This information will be useful to landlords who wish to clarify their current legal position.
If you are a tenant and would like information about your rights and how to redress a situation, please read our article for tenants.
The basics
A consumer is a person not acting in the course of their business. These regulations only apply to consumers;
The consumer is not bound by the contract if it includes unfair terms;
A term is unfair if it gives excessive power to the landlord, at the expense of the tenant;
The regulations do not cover rent specifically, or the terms defining the product;
The contract should be written in plain English;
Each party has statutory rights and responsibilities. These rights cannot be removed, even if the contract says they can;
Clauses limiting liability are difficult to enforce.
Why have these regulations?
Quite simply, the changes have been made in order to protect consumers. The way that consumer contracts must be drafted today, compared with ten years ago is different. Contracts with complex small print, which carefully excludes the business's liability, are now open to enforcement action, and may prove to be unenforceable.
How will this affect me?
You must make sure that contracts you use are in plain, easy to understand English. As a landlord, you will usually decide the terms of the agreement. Net Lawman advises not to use small print at the end of an agreement in order to “add-in” a term. Additionally, the courts do not approve of exemption clauses. We advise that you omit any liability clauses in your contract. They often cause misunderstanding. It is your responsibility to make sure that the contract you both enter into includes no unfair terms.
If a tenant does not understand a term in their contract, they might approach you and ask for you to explain the term. Where necessary it might be wise to change the wording so that it can be more easily understood.
Examples of unfair terms:
Terms may be unfair if it makes the tenant;
Pay excessive interest for late payments;
Pay extra penalty charges for late payments;
Give the property back in a better state than it was given over in;
Pay for unreasonable costs that should be covered by the landlord;
Pay for landlord’s repairs.
Or if it:
Allows the landlord to decide what the tenant should pay;
Allows the landlord to visit without proper notice;
Allows the landlord to decide how much of the initial deposit he keeps;
Limits or excludes the landlord from liability.
What the regulations state:
Plain language
All the terms of the agreement must be written in clear language and should not contain:
Legal jargon;
Words which cannot be easily understand;
Complicated and / or long sentences.
‘Quiet Enjoyment’ of the property / rights to enter
The tenant has a right to have ‘exclusive possession’ and ‘quiet enjoyment’ of the premises during the tenancy. Tenants must be free from unwarranted intrusion by anyone, including the landlord. If the tenancy agreement allows the landlord to enter the property without the tenant’s consent, except for good reason (such as in an emergency or to inspect the property on reasonable notice), the term may be unfair.
Rent review clauses
A landlord is not allowed to increase the rent without prior notice or agreement from the tenant. The tenant always has the choice not to agree to the increase – this will end the contract.
Rent increases are only fair in certain circumstances.
Any rise in line with RPI is acceptable;
Any rise that has been previously agreed in the contract is acceptable;
A price variation clause, outside the landlord’s control, such as an increase in council tax, is usually fair. The landlord must be able to justify the rise.
Any rent review must be given with enough time for the tenant to provide the extra rent. This varies from property to property. One month’s notice will usually suffice.
There must be a term in the contract that states that where there is an increase in the rent; the tenant must be given enough time to leave the property before the increase takes place if the tenant chooses. However, this does not mean that the increase is fair.
The advice of an independent value is always useful in times of disagreement. They could state whether a rent increase is acceptable or not.
Landlords cannot exclude or limit liability
Exclusion clauses are not looked upon favourably with either the OFT or the courts.
Any term which seeks to reduce or exclude liability of any kind is an unfair term. Terms which exclude liability for death are unfair.
Examples:
The landlord should always maintain common areas of the property in a reasonably safe way and has a duty of care to all tenants and their visitors. The landlord’s duty of care is not to keep the building safe, although this is recommended, but to keep the tenants and visitors safe.
Excluding / limiting liability under these circumstances is unfair. The landlord cannot exclude themselves from their responsibilities. This is especially so for the responsibility of personal injury or death.
Terms that excludes or limits liability “as far as the law permits”, or “save as may be prohibited by statute” are also unfair. As well as unfair, they are not clear – the average tenant is not going to have an understanding of the statute that relates to tenancy contracts.
A landlord cannot exclude or limit liability for repairs which by law, they should carry out, nor can they charge ‘call out’ charges in order to repair something that is by law, their responsibility.
Terms excluding the right of “set-off”
“Set-off” means that a tenant is allowed by common law to make necessary repairs to the property and then “set off” the associated costs against their rent payments. Any clause which limits this is unfair.
Tenants should exercise the rights of set off carefully. Net Lawman advises you seek the advice of a lawyer.
Changing the product
The tenant has the right to enjoy what the two parties agreed to. Changing the product, i.e. the property is any way so that it is not what was agreed upon is unlawful. A term stating this might happen is unfair. Minor technical changes that do not affect the tenant’s enjoyment of the property are lawful, however, foe example, changing the furniture, is not. A term stating this is acceptable is unfair.
Financial penalties
Terms which commit the tenant to pay unnecessary and unreasonable costs are unfair. These might include cleaning charges when the property was vacated. The tenant must, by law, leave the property in the same state they found it in. It must be to the same standard of cleanliness.
Other fees and penalties such as an administration fee and excessive insurance charges are unfair.
Goods belonging to the tenant
The landlord is not allowed to enter the property and take goods belonging to the tenant in lieu of unpaid rent. A term allowing this would be unfair. Additionally, any goods left behind by the tenant, should be kept by the landlord where reasonable. The landlord should seek out the tenant and deliver the goods back to them. The landlord should not have t pay for delivery costs. The landlord may sell the goods if the tenant can not be found after a reasonable search.
Subletting the property
A term banning the subletting of a property is unfair. Tenants sometimes need to vacate a property. Where they can find an alternative tenant, who can pay the rent, they are allowed to sub-let the property, provided they take into account the terms under their contract was formed with the landlord.
If by chance you find some error of law or fact in any Net Lawman information page, do please tell us. We should also welcome your suggestions for new subjects for information pages. These notes:
Do not provide a complete or authoritative statement of the law;
Do not constitute legal advice by Net Lawman;
Do not create a contractual relationship;
Do not form part of any other advice, whether paid or free.
