The fairness of consumer rights
There are specific statutes and regulations in place that regulate the service industry, including the Consumer Rights Act 2015 and the Consumer Protection from Unfair Trading Regulations 2008. This legislation sets out how landlords and tenants should interact and helps to regulate the rental sector. It does this, for example, by ensuring that:
Tenancy agreements are fair and clear and do not contain any unfair terms (eg terms requiring a tenant to pay rent even if a property is uninhabitable or requiring a tenant to give notice if they want to move out on the last day of a fixed-term tenancy)
any advertising is not misleading (eg if an advertisement says the property is recently refurbished when this isn’t the case)
no necessary information is withheld from the tenant (eg the nature, fitness for human habitation or cost of a property)
tenants are not subject to coercion, harassment or undue influence (eg when entering into a tenancy)
any agreements to repair or improve any aspects of the property prior to a tenancy agreement are fulfilled
landlords and letting agents do not engage in unfair practices (eg describing a payment as a deposit when it isn’t refundable, providing an incorrect property Inventory or telling a tenant in arrears that they will face immediate eviction if they don't pay their rent immediately)
For more information, read the government’s guidance on unfair contract terms and consumer protection law for lettings professionals.
Consequences of non-compliance with consumer laws
There are consequences if either a landlord or a letting agent is found to have been unfair or have undertaken bad practices. These consequences include the tenant’s (ie consumers) being granted certain rights, including:
the right to unwind
the right to a discount
the right to damages
Note that special rules apply to unfair contract terms.
The right to unwind
A tenant can end their tenancy if they find out that their tenancy agreement was entered into following the landlord’s or letting agent’s misleading actions (ie providing a tenant with misleading information, like describing a property as furnished but then renting out unfurnished) or aggressive practices (eg using coercion, harassment or undue influence to contract with a tenant). This is known as the ‘right to unwind’.
The tenant has to give the landlord (or letting agent) notice that they want to end the contract (ie the tenancy agreement) within 90 days of the start of the tenancy. This should be done in writing.
If the tenant provides such notice within the first month of the tenancy, they are entitled to a full refund of all money that they have paid to date. If notice is given after the first month, a refund may still be provided. The amount, however, be calculated by the courts.
The right to a discount
A tenant has a right to a discount on their rent if their tenancy agreement was signed because of their landlord or letting agent’s misleading actions or aggressive practices. A discount can be claimed instead of the right to unwind.
A claim for a rent discount typically has to be brought within 6 years (ie within the limits set by the statute of limitations).
How much of a discount a tenant will receive is for the court to decide based on the severity of the prohibited practices that caused the tenant to enter into the tenancy.
The right to damages
A tenant may be able to claim damages if:
they entered into a tenancy because of their landlord or letting agent’s misleading actions or aggressive practices, and
they incurred financial loss or suffered alarm, distress, physical inconvenience or discomfort
A claim for damages must typically be brought within 6 years.
The amount of damages a tenant will be awarded is assessed by the courts according to the degree of loss or suffering experienced. However, damages are limited to losses that were reasonably foreseeable at the start of the tenancy.
Unfair contract terms
An unfair term in a tenancy agreement alone does not typically grant the above rights or invalidate the whole of the relevant tenancy agreement. Instead, the rest of a tenancy agreement generally continues to have effect (where possible) despite the presence of an unfair term. In other words, the contract is read as if the unfair term didn’t exist.
Following the correct procedures
Where laws and agreements are concerned, it’s essential to follow all of the correct procedures and complete all of the relevant paperwork properly.
For landlords that trade through a limited company, it is important for you to include your company name, address, number and place of registration wherever necessary, such as within emails.
If you are a letting agent, it is also important to inform landlords of their cancellation rights when forming contracts with them. This is the case if the landlord and letting agent make an agreement at a distance (eg over the phone or through emails) and not in person. If this information is not provided, the landlord can cancel their contract at any time up until you do provide them with the cancellation information. This would again lead to any fees already paid being returned to the landlord. For more information, read Online business regulations.
Landlords, take note…
As a landlord, in order to exercise your consumer rights in relation to your letting agent, you would have to be operating as an individual person. This is because any activity or transaction done through a company would be considered a business transaction (or ‘B2B’). You would not be considered a consumer, which means that consumer rights wouldn’t apply to you.