Landlords and their agents and advisors should already be aware of the fairness test; this is a test for assessing whether the terms of an agreement are fair or not. A term in any consumer contract will be unfair if, contrary to the requirement of good faith, it causes a “significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.” An unfair tenancy term will not be binding on a consumer tenant although the rest of the tenancy agreement will continue to be enforceable.
The consumer protection law cannot be used to assess the appropriateness of the price payable provided that the term is ‘transparent and prominent’. A term is transparent if it is written in plain and intelligible language and it is prominent if the term is brought to the consumer’s attention in such a way that the average customer who is well informed and observant would be aware of it. So for example, a tenant cannot ask the court to look at whether it is fair to be charged say £2000 per month for the rent of a one bedroomed flat provided that the term setting out the price is written in plain and intelligible language and is not hidden away in small print. The court may however be able to assess other terms in the contract for fairness.
One significant change under the new regime is that the courts are now under a duty in any proceedings relating to a term of a consumer contract to consider whether the term is fair even if none of the parties to the proceedings has raised it as an issue. This could cause difficulties for landlords and their representatives if they are bringing a claim against a tenant in relation to the breach of a tenancy term; even if the tenant has not complained about the fairness of the term the court may assess whether it is fair and enforceable.
A statutory list of contract terms that may be seen by the courts as being unfair is set out in both the new Consumer Rights Act and the previous legislation and it would be sensible to check any standard tenancy agreement against this list as this may form the starting point for a tenant challenging the enforceability of a tenancy term or a review by the court in subsequent proceedings. It is always good practice for landlords and their agents to review standard tenancy agreements regularly and the new Act is a good reason for reviewing agreements sooner rather than later and ensuring that they will bear up under scrutiny by the court.
For further information contact Director, Johanne Spittle.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.