Nick Chamberlain joins us on the blog this week to explain the meaning of unfair contract terms and how to ensure your tenancy clauses are completely reasonable and legally compliant.
Nick has over 20 years’ experience delivering residential lettings training to property professionals across the Midlands – including members of our LettingaProperty.com team. Find out more about The Gold Standard apprenticeships and work-based training here.
What is an unfair term in a tenancy agreement?
An unfair term is a term or ‘clause’ in a tenancy agreement that disadvantages the tenant or takes way their legal rights. This could be something hidden away in the fine print, or a term that imposes unreasonable restrictions, duties or penalties on the tenant.
Unfair Terms in Consumer Contracts Regulations
All consumer contracts must abide by the Unfair Terms in Consumer Contract Regulations 1999 and the Consumer Rights Act 2015.
These regulations simply protect consumers against unfair terms in contracts. In lettings, the tenancy agreement is the contract, and the tenant is the consumer.
For tenancy agreements to be considered fair, they must:
- Be easy to understand
- Provide a balance of responsibilities between both parties (landlord and tenant)
Unfair terms: landlord and tenant responsibilities
Landlords may be tempted to include unfair terms in their tenancy agreements, but they would not be enforceable in court. Should the court agree they are unfair, it wouldn’t matter that the tenant agreed to the terms at the start of the tenancy; they would still be unenforceable.
Tenancy terms must not reduce the landlord’s legal responsibility to a tenant or deprive tenants of their legal rights. In other words, a landlord cannot “opt-out” of their legal responsibilities.
Professional digital tenancy agreements are included in all our letting plans.
Can you figure out if these terms are fair or unfair?
Here are some clauses typically found in tenancy agreements. Do you know which ones would be considered fair, and which ones would be considered unfair?
The tenant must allow the landlord access to the attic during the tenancy with no prior notice
This is an unfair term. The tenant has a legal right to quiet enjoyment of the property without being disturbed by the landlord. The landlord cannot enforce something which diminishes the tenant’s legal rights.
Landlords and letting agents must give at least 24 hours’ notice in writing before any property visits.
Any furnishings damaged during the tenancy must be replaced with new furnishings
This would be considered an unfair contract term. The tenant can be expected to replace furniture on a “like for like” basis, but is not obligated to replace old, used furnishings with new ones. This would create an imbalance between the tenant’s and the landlord’s obligations.
The landlord reserves the right to reclaim the fridge freezer at any time if it is needed elsewhere
This term is unfair. If the fridge freezer is included in the terms of the tenancy, then a fridge freezer must be provided. The fridge freezer is clearly a benefit to the tenant and they are paying for it indirectly through their rent. The threat of it being removed with no notice diminishes this benefit.
The outbuilding to the rear of the property will not be accessible to the tenant
This is a fair term, providing that it was explicitly referred to in the tenancy agreement. This term would not affect the tenant’s rights and is perfectly reasonable – as long as it was outlined and understood at the start of the tenancy.
How to avoid unfair terms
So, there you go: three would most likely be considered unfair, but one is “fair” enough. Determining what is fair and unfair isn’t always obvious. Sometimes landlords can accidentally include an unfair term without realising.
To avoid including unfair terms in tenancy agreements, landlords should:
- Make sure all clauses are in plain English & easy to understand
- Avoid ‘small print’ hidden away in the agreement
- Make sure the agreement is honourable and agreed in good faith
- Make sure agreements are “balanced” in terms of responsibilities and rights of the tenant and the landlord
- Make sure clauses are transparent so the tenant fully understands the terms
- Avoid threatening financial penalties which would be considered unreasonable
- Avoid anything which undermines a tenant’s legal right or the landlord’s legal responsibilities
Professional tenancy agreement drafting is included all our letting plans.
Of course, the best tenancy agreements are those which provide an equal and balanced benefit to the tenant and the landlord. In an ideal world, they enjoy their home, and you get your rent on time!
Nick Chamberlain and The Gold Standard train property professionals across Gloucestershire and the Midlands. Nick continues to support new and existing employees of LettingaProperty.com with industry-specific qualifications, including Level 3 Awards in Residential Letting and Property Management, Customer Service and Business Administration.