GUIDANCE ON UNFAIR TERMS IN RESIDENTIAL TENANCY AGREEMENTS

GENERAL

Standard Terms

The Unfair Contract Terms Regulations apply to standard terms i.e. those which are not individually negotiated.

Test for Fairness

A standard term will fail the test of fairness "if contrary to the requirement of good faith it causes a significant imbalance in the party's rights and obligations arising under the tenancy agreement to the detriment of the tenant. There is therefore a requirement of fair dealing. The starting point in assessing fairness or unfairness is to establish which legal rules would apply in the absence of the term in question and how these would apply if the term in question did not exist. A term can be unfair whether or not it is being used in a way which is detrimental to the tenant. It is the potential for unfairness which is of concern. The fact that a landlord says that he/she will not rely on it makes no difference.

Office of Fair Trading Guidance

The former Office of Fair Trading (OFT) issued guidance on the Unfair Terms in Consumer Contract Regulations 1999. The regulations apply to residential tenancy agreements. The guidance does not have the status of law. Rather it asks the views of the OFT who are the lead enforcement authority. The RLA has a number of concerns about some of this Guidance but landlords need to be aware of it. The OFT has power to consider tenancy agreements and require terms to be altered. Failure to comply with any requirements can lead to a reference to the Court to consider whether or not the term is unfair. A term can also be challenged by a tenant in court proceedings. In some cases this guidance goes beyond that given by the OFT (the relevant passages are marked in the margin) so it is the RLA's view.

Plain and intelligible language

The Agreement must be intelligible to an ordinary person. It must be clear. Ordinary words must be used in their normal sense. Technical vocabulary should be avoided. Short sentences should be used. Text should be divided into readily understood sub-headings covering similar issues. Elaborate definitions and extensive cross-referencing between clauses should be avoided. The print must be legible. However, the regulations do not mean that the tenant must understand every word of every contract. Significant matters should be highlighted and made prominent. Unavoidable technicalities must be explained.

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Guide correct as of 16th March 2015

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