earlier this year the high court ruled that certain terms and conditions applied by a letting agent in its contracts with landlords were unfair.
the terms in question permitted the letting agent to charge repeat renewal commission when tenants stayed on in a rental property after the original limited amount of time tenancy had expired, even if the firm had played no part in persuading the tenant to remain, and didn’t collect the rent or manage the property. They similarly required landlords to recompense commission to the letting agent even after it had sold the property, and were allowed to accept a full estate agents’ commission for sale of the property to a tenant.
although the oft was on this occasion jumping to the defence of landlords, it’s evenly concerned that landlords don’t themselves impose unfair terms on tenants.
tenancy agreements are contracts between a landlord and a tenant, or tenants. They set out the terms underneath which the landlord lets and the tenant rents the property.
landlord and tenant are not wholly free to agree whatever terms they wish – or leastways the terms included will not necessarily be enforceable in each respect.
assured shorthold tenancy agreements – the default type of agreement – are subject to housing act and common law constraints. Irrespective what the tenancy agreement says, as an example, landlords can’t impose more stringent observe periods than required by legislation, or throw off their duty of care towards tenants.
neither can landlords enforce terms added into an agreement which are ‘unfair’ underneath the unfair terms in buyer contracts regulatings.
in fact the office of reasonable syndication has long ago issued guidance on the implications of these regulatings for tenancy agreements. In its guidance on unfair terms in tenancy agreements, the oft warns that the relationship between the regulatings and landlord and tenant law is complex. The direction or advice reflects its opinions and sets out the basis on which it’s likely to take enforcement activity but ‘it is for the courts to decide whether any term is unfair’.
the regulatings say that to be enforceable most terms that haven’t been on an individual basis negotiated will have to be reasonable to both parties – terms that set the rent or describe the main essence of the agreement and are central to it are not subject to the ‘fairness’ test. Nonetheless, all the terms of the tenancy agreement will have to be in ‘plain and intelligible language’.
‘if a term is unreadable or hidden away in little print as if it were insignificant, the test of fairness is still likely to apply’, says the oft.
‘in evaluating fairness, we take note of how a term could be applied. A term is open to challenge if it’s drafted so widely that it could be relied on in a way to injure consumers. It can be looked at unfair if it could have an unfair effect, even if it’s not at present being applied unfairly in exercise and there’s no purpose to utilize it unfairly. In such cases landlords could achieve fairness by redrafting the term more incisively, so that it reflects their exercise and intentions’.
the oft says it’s likely to object to disclaimers that try to exclude or limit liability for breach of ‘implied’ terms.
also, wwe object to terms permitting landlords to seek to deprive tenants of compensation in any circumstances in which they would ordinarily be eligible to it by law.
‘general disclaimers such as those stating that visitors enter premises ‘at their own risk’ could have the outcome of excluding liability for death or personal injury. Even if the landlord does not intend to use the term in this way, it can still be unfair.
such terms can be satisfactory if they’re qualified so that liability for loss or injure is accepted if the landlord is at mistake, or is disclaimed only where somebody else, or a component outside anyone’s control, is to blame’.
and the oft says it would regard any term having the outcome of transferring landlords’ statutory indebtednesses to their tenants as being unfair. So landlords can’t, as an example, make their tenants responsible for undertaking annual gas safety checks.
it similarly has ‘concerns’ over terms that have the object or effect of protecting landlords from liability to tenants for defects in the premises let to them, for which the landlord would other than as supposed or expected be liable. ‘we similarly regard terms that give not complete information in regards to the landlord’s repairing responsibilities as potentially unfair, because they can be misleading’.
and the oft ‘objects’ to terms that require the tenant to carry out repairs that are legally the responsibility of the landlord. ‘these terms are void, unenforceable and misleading’.
for a contract to be looked at balanced, each party’s rights will have to remain enforceable versus the other for as long as is fairly essential. Where the parties haven’t consorted a definitive amount of time, the law allows a reasonable time for making claims.
‘we would object to a term that imposes a shorter time than is reasonable, putting tenants at danger of losing their rights to redress before they would ordinarily lapse by law’.
the oft is similarly likely to object to terms that appear to concede landlords to refuse to carry out repairs if tenants don’t notify them of damage to the property without delay or within an unduly short amount of time of time. ‘landlords are not eligible to avoid their legal responsibilities towards tenants who are unable to notify them or their agent of a need for repairs without delay for reasons beyond their control and involving no mistake on their part’.
other terms considered unfair by the oft include an ‘excessive’ right for the landlord to enter the rented property. ‘under any kind of lease or tenancy, a landlord is required by common law to concede his tenants “exclusive possession” and “quiet enjoyment” of the premises for the duration of the tenancy.
in other words, tenants will have to be free from unwarranted intrusion by any person, including the landlord. Landlords are unfairly irrespective that original compulsion if they reserve a right to enter the property without giving reasonable observe or getting the tenant’s assent, except for good reason’.
the regulatings say that unfair terms are not binding on consumers. It’s open consumers themselves to challenge terms they look at unfair.
under the regulatings the oft has a duty to look at any complaint it receives in regards to unfair common terms. Where the oft considers a term to be unfair, it has the power to take activity on behalf of consumers in general to
any tenant who believes the terms included in a tenancy agreement are unfair can contact the oft or their local syndication standards service.
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