It can be very tempting to continue to re-use old tenancy agreements. They worked before, so why should they not work this time. Trouble is, the law moves on and those previous terms may now be deemed unfair and unenforceable.
Any contract made on or after 1 October 2015 between a landlord acting in the course of a business and a tenant, being an actual person acting outside the tenant’s business (if any), is now subject to the Consumer Rights Act 2015. The provisions made in connection with unfair contract terms by the Consumer Rights Act 2015 are similar to those made under the Unfair Terms and Consumer Contracts Regulations 1999 (which still apply to contracts made before 1 October 2015). However, the major difference is that, under the Consumer Rights Act 2015, the courts will not uphold a term that is ‘unfair’, even when that term has been individually negotiated.
The Office of Fair Trading (OFT) was abolished in 2014 and the Competition and Marketing Authority took over its power to take enforcement action in relation to unfair terms. The Competition Markets Authority also adopted the OFT’s Guidance on unfair terms in tenancy agreements.
Although the new Competition Markets Authority Guidance has not been updated to take into account the provisions of the Consumer Rights Act 2015 and the repeal of the Unfair Terms and Consumer Contract Regulations 1999 in respect of contracts entered into after 1 October 2015, it still provides useful guidance, although it does need to be read with a degree of caution, until it is updated.
The Competition Markets Authority’s Guidance identifies a number of terms as being potentially unfair, amongst which are:
- Terms excluding the tenant’s right of set off and that require rent to be paid free of deductions. The Guidance gives an example of an unfair term
“The tenant agrees to pay the rent at the time set out in the agreement, without exercising any right or claim to legal or set off. All payments to be made by the tenant under this agreement shall be made in full without any set off, abatement, restriction, or condition and without any deduction for or on account of a counter claim.”
By way of replacement, the Guidance suggests a revision of this sort of term but does not confirm that if used, that this will still be regarded as fair:
“The tenant pays the deposit a security for performance of the tenant’s obligations it may be used to pay to compensate the landlord for the reasonable costs of any breach of those obligations or against any outstanding rent, unless lawfully withheld by the tenant.”
- Terms that permit the landlord to cancel or suspend the provisions of any significant benefit under contract.
- Terms that allow the landlord excessive rights to enter the property.
- Terms that require the tenant to pay the landlord’s legal costs on an indemnity basis, not just those reasonable costs reasonably incurred.
- Any terms that give the landlord’s agent or surveyor the final decision, where repairs have been satisfactorily carried out.
- Any absolute ban on assignment and sub-letting in any fixed term tenancy.
- Any terms that prevent the tenant from keeping any pets.
- Any forfeiture clauses that do not make it clear that the landlord must obtain a court order before evicting the tenant.
If you have been using a lease precedent for a number of years, it may well be that some of the terms of such a leases would be deemed to be unfair. It would therefore be advisable to seek legal advice to update your tenancy agreement and to check that all the terms are deemed fair under the Consumer Rights Act 2015.
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At MW Solicitors, our mission is "To make quality legal services accessible to everyone" including Landlords who want to ensure that their tenancy agreements are fair and in accordance with the Consumer Rights Act and other contract legislation.
If you are a Landlord and need help with your tenancy agreements contact, don't delay, contact us today. Our experienced and specialist Property Disputes Solicitors are here to help. Call us today on 020 3551 8500 or use our Contact Us form to arrange a callback.