Former solicitor, Tessa Shepperson has produced this article on consumer law for landlords and letting agents.
Why consumer law? You may wonder, if you are a landlord or a letting agent, what consumer law has to do with you? However you would be surprised!
Owning and renting out a buy to let property is not just an investment – it is provision of a consumer service. As the private sector now houses a considerable percentage of households (over 20% in some areas I understand) government has been ramping up the regulation for some time. To say nothing of all the new regulations coming over from the EU.
Here are six that you should watch out for:
1. Unfair terms regulations – if a landlord or agent brings proceedings based on a clause in their tenancy or (for agents) letting agreement, this can be defended on the basis that the clause is unfair under the Unfair Terms Regulations (now in the Consumer Rights Act 2015). (Remember the Foxtons case in 2010?)
So if a rent was increased under an ‘unfair’ rent review clause, the tenant could defend on the basis that (for example) he is not in arrears and so any claim for possession based on rent arrears (assuming these were due to the difference between the old rent and the new one) should fail.
2. Undisclosed fees – all fees must be fully disclosed before a tenant (or for an agency agreement) a landlord, signs the contract – or they will be unenforceable. Hidden fees lurking in the ‘small print’ are unacceptable.
3. Client Money Protection disclosure – letting agents must disclose – ie in their office and on their website – whether or not they carry client money protection insurance. If you don’t you are liable for a financial penalty of up to £5,000.
4. Letting agents reaching agreement with landlords outside their office
Here you must inform customers that they have a ‘cooling off’ 14 day cancellation period. If customers are not notified of this, they can cancel at any time up to 14 days after you finally notify them. During this time they can also refuse to pay any charges for work done unless they specifically waived their cancellation right at the time the contract was made.
This includes contracts where the parties never meet eg where agents are instructed over the internet.
So if you do work for a landlord, eg renting out property, the landlord can refuse to pay the fee if they were not told of their right to cancel. (If you are a landlord you should check your agreement now!)
Note that these ‘distance selling’ regulations do not apply to tenancies, which are specifically excluded. So tenants do not have any ‘cooling off’ period.
5. Failure to provide an EPC to a tenant before a tenancy is entered into. This is an offence which carries an unlimited fine.
6. Unwinding tenancies – if a tenant is able to show that he entered into a tenancy due (or partly due) to an ‘unfair trading practice’, he can end the tenancy agreement and get a refund of all fees paid provided he notifies the landlord within one month.
An unfair trading practice could be a misleading description (eg ‘quiet’ where the property is on the school run) or a failure to provide proper information.
Notification to the landlord after one month but before 90 days will allow him to end the tenancy but he must pay for his time in the property.
This is a rule which was introduced in 2014 but is at present little known. However the NUS is informing students about it, so watch out if you do student lets.
NB Similar rules apply to other consumer contracts.
How to find out more:
These points and many more are discussed by solicitor David Smith in the recording we are now making available, of his Consumer Law workshop last year. This now forms an online training course carrying 4 hours CPD.
I STRONGLY recommend agents to sign up to this as the information is critical for all agents. It is also very important for landlords and indeed housing advisors.
I should mention that the sound quality in the recording is not brilliant and is a bit quiet in places with some background noise. However the importance of the content makes it well worthwhile the effort of watching. David is also a very good speaker and is able to get complex issues over in a clear and entertaining way.
You can find out more (including a video clip explaining consumer cancellation rights in greater detail) here If you sign up now you can get a £12 discount using the coupon code ptcon26.