freelance buy to let and property investment writer

Is your Tenancy Agreement fair?

Many landlords and letting agents may be using tenancy agreements which contain terms that are unfair to tenants.

The Office of Fair Trading (OFT) has updated guidelines for landlords and tenants covering tenancy agreements following concerns that too many contracts contained clauses that took away tenants’ legal rights or were not written in plain English.

The detailed guidelines are contained in a huge and fairly complex document.

Some of these unfair terms are quite obvious. For example, any term which makes the tenant arrange or pay for repairs is clearly wrong. Similarly, any term that tries to waive the normal landlord’s duty to repair - such as making sure the property has met the gas safety and safe furnishings requirements – would be unfair too.

Another term that is clearly wrong is where it’s implied a tenant should hand back a property at the end of a tenancy in a better condition than it was at the start. This is unfair because a landlord has a duty to allow for fair wear and tear (and indeed can claim the cost as a deduction from income for tax purposes).

Terms that allow the landlord complete freedom to stipulate the amount of the deposit they will retain at the end of the tenancy without challenge are also wrong.

The new guidelines have been welcomed by Shelter and Citizens Advice and most landlords’ associations.

Fred Drew of letting agent Capitaldwellings.com says he has his agreements checked by an experienced solicitor every 6 months to ensure they are fully up to date. He estimates that about 80% of his landlord customers are happy to use the agreement his agency provides, whilst 10% have one drawn up by a solicitor and another 10% will buy a standard up-to-date contract from a legal stationer.

However, he’s aware of some landlords whose agreements contain terms that are clearly unfair.

He says, “I see quite a lot of agreements where it says that the tenant should not do anything that compromises the landlords’ insurance policy or the head lease. This term is quite common but is really only okay if the tenant is given a copy of the policy and head lease so he knows what he can and can’t do!”

Making up your own agreements is probably best avoided. Tessa Shepperson of website Landlordlaw.co.uk says, “Landlords need to be careful about amending their own agreements because it’s so easy to make a term invalid.”

It’s clear that the OFT is worried that some landlords do not try to keep costs down, but are too often tempted to pass on costs to the tenant which are well above the real cost to the landlord.

Most good landlords would accept that if their tenant had paid £5 in error under the correct rent, it would be unfair to charge them £50 for a letter telling them about it - when a phone call could easily rectify the situation.

However, there are other occasions, where the OFT guidance goes much further. For example, one of the more surprising comments are on what happens when a tenant wants to leave half way through a six month fixed term contract.

In these circumstances, the OFT suggests it would be unreasonable to make the tenant pay rent until the end of the agreement if someone else acceptable to the landlord could be found to take over the tenancy. Whilst they sweeten this by saying that the landlord could recover from the old tenant reasonable costs associated with the re-letting, many landlords would still be surprised at this.

The clear message to all landlords and tenants is to carefully check if your agreement is still up to date.

Find out more about this by joining me at one of my one to one consultancy sessions, where I can also check whether your tenancy agreement will be compliant with the new rules.