OFT issues guidance to combat unfair tenancy terms

New guidance on how the Unfair Terms in Consumer Contracts Regulations apply to tenancy contracts has been issued by the Office of Fair Trading to help landlords provide clear and fair contract terms to their tenants.

The OFT receives more than 200 complaints every year about unfair terms in standard tenancy contracts, such as financial penalties, exclusions of the landlord’s liability for repairs and unfair termination and eviction clauses.

The guidance on standard tenancy contracts is a revision of guidance published in 2001. It is updated to reflect enforcement action taken by the OFT, Court judgments and recent experience in dealing with tenancy contract complaints.

The guidance outlines why some standard contract terms used in tenancy agreements are considered to be potentially unfair and includes examples of terms considered to be unfair and possible ways of revising them.

Examples of unfair terms include those that: exclude or limit the landlord’s liability, for example by transferring the landlord’s legal obligations to the tenant; impose potentially excessive penalties on tenants for failure to meet the terms of the contract, for example, by charging excessive rates of interest on late payments of rent; enable the landlord to vary the terms of the contract, to impose new rules on the tenant or increase the rent at short notice.

The guidance also refers to tenancy agreements used by public sector and social housing providers, including local authorities, following a ruling by the High Court and Court of Appeal that the UTCCRs apply to terms in agreements used by these providers.

A consumer leaflet, ‘Unfair tenancy terms – don’t get caught out’, which gives a brief overview of the OFT’s views on unfair terms in tenancy agreements, is also available.

Sir John Vickers, OFT chairman, says: “Rented accommodation provides homes for millions of people in the UK.

“It is important that tenants have clear and fair contract terms so they know what the rights and obligations of the lease are.

“The OFT will continue to take action against landlords who remove tenants’ rights through using unfair terms.”

The OFT’s Annual Plan for 2005-06 identifies the construction and housing markets, including the markets for related services, as a priority theme for OFT action.