GUIDANCE ON UNFAIR TERMS IN RESIDENTIAL TENANCY AGREEMENTS

INDIVIDUAL TERMS

Alterations

A blanket ban on alterations could be unfair. It is better to provide that they will not be carried out without the landlord's consent, such consent not to be unreasonably withheld.

Animals/Pets

An outright prohibition on all animals, pets, etc could well be unfair because of its blanket nature e.g. it prohibits a small goldfish in a bowl. A prohibition on dogs in an unfurnished terraced/semi-detached property or similar could be considered unfair. The position would however be different in a flat or a furnished property. Instead it is suggested that there is a requirement to obtain the landlordís consent (such consent not to be unreasonably withheld) coupled with a proviso that the landlord can reserve consent if an animal causes nuisance/annoyance.

Arbitration clauses/adjudication

Section 91 of the Arbitration Act 1996 makes a compulsory arbitration clause automatically unfair under the Regulations if it relates to a claim of £5,000.00 or less. Other arbitration clauses could be unfair if they hinder a right to take legal action. Compulsory arbitration clauses should therefore be avoided. Compulsory reference to adjudication may well be unfair.

Assignment (see also "Sub-letting")

Terms prohibiting assignment altogether may be unfair. Assignment with the Landlord's consent, such consent not to be unreasonably withheld, is likely to be a fair provision. A blanket prohibition on assignment may be unfair where it is linked with a blanket prohibition on sub-letting. Sub-letting can create practical problems because of a lack of a direct relationship. The better course of action would be to permit assignment with the consent of the Landlord, such consent not to be unreasonably withheld, but prohibit sub-letting altogether.

A requirement to give a guarantee on assignment will be acceptable so long as it is not excessive. Under the general law a requirement to give a guarantee beyond the immediate assignee will be void and therefore should not be included as it will be an unfair term.

Charges (also see separate section on penalties)

A term allowing the Landlord to impose an unexpected financial burden on the Tenant may be unfair. This is so particularly if it is vague. It is more likely to be fair if the amount of the charge is expressly limited to be reasonable compensation e.g. for failure to take care of the property. The more specific the term the better. If a precise amount cannot be stated it should be clear how it will be set. It may be sufficient to say that it will be reasonable. This is particularly so where the basis of the charge is fairly obvious i.e. it is identifiable and verifiable. There are particular problems with Landlord's own time. A modest fixed charge is normally the best answer. It needs to be realistic and not excessive. Any charges need to be linked to default on the part of the Tenant. It must not be a penalty i.e. it must not require a Tenant to pay more in compensation than a reasonable pre-estimate of the loss caused to the Landlord.

A term which requires the Tenant always to meet costs such as call out charges could be objectionable. They could arise due to the Landlord's default (e.g. in carrying out the Landlord's repairing obligations).

A Landlord is allowed to charge reasonably for dealing with problems arising from or due to the Tenant's fault (e.g. losing keys). The amount of the charges should be reasonable

An unreasonable administrative charge will be unfair e.g. because it is excessive in regard to the amount of effort involved. Qualifying it by saying that it will be reasonable may well suffice.

A charges clause providing that the Landlord can claim all his costs and expenses not just net costs will be unfair. A clause allowing recovery of both costs and loss of profit could lead to double accounting so it would be unfair.

An unbalanced term may be unfair; for instance if it is imposed only on the Tenant for a breach which could be committed by the Landlord. An example of this is a term requiring Tenants to meet the Landlordís costs if they failed to keep an appointment where no such provision applies if the Landlord does not keep the appointment.

Children

There is no reference in the OFT Guidance to this subject. However, depending on the type of the property a prohibition on children could be unfair. On the other hand it could well be fair in the case of flats or one bedroomed accommodation. This is an example of the case where you need to consider the type/location of the property.

Cleaning

A requirement to keep the property and its furnishings clean and dusted at all times could be unfair. Only terms requiring a basic minimum of standard cleanliness to prevent damage to the property are likely to be acceptable. The purely superficial internal condition of property during day to day occupation is likely to be a matter for the tenant alone.

Cleaning charges

A requirement to pay for cleaning at the end of the tenancy may be unfair if it is vague about the basis on how the money will be payable or the extent of the cleaning required. It is more likely to be fair if the amount of the charges is expressly limited to reasonable compensation for failure to take care of the property.

Consents (where landlord's consent is required)

Qualifying a prohibition (e.g. against alterations) by saying that something cannot be done without the consent of the landlord such consent not to be unreasonably withheld may mean that the requirement for fairness is met.

Data Protection

A term which permits a landlord to pass on information about the tenant freely which would not otherwise be allowed under the Data Protection Act may be unfair. Simply including a term about the use or disclosure of personal information may not be enough. If the tenant can freely choose to agree or not this can be sufficient. Blanket rules authorising disclosure of information by a housing benefits department to the landlord about the tenant could therefore be unfair.

Declarations/acknowledgments

A standard declaration (e.g. the tenant has read and understood the terms of the contract or have had the terms explained to him/her) might be unfair as not reflecting the true position. Likewise, declarations that the property is in good repair or the landlord has discharged specific responsibilities e.g. the landlord has provided a Gas Safety Certificate could be unfair. Declarations about matters wholly in the tenant's knowledge (e.g. their age, occupation or whether or not they have any criminal convictions) can be fair.

Deposits/bonds

A provision potentially allowing for the forfeiture of the whole deposit if the property is left in an untidy, unclean or damaged state at the end of the tenancy would be unfair. A term may be unfair if it allows the Landlord or his surveyor sole discretion to set the amount to be deducted from the deposit. Likewise, terms giving excessive discretion as to whether a tenant is in breach will be unfair. In effect the provisions relating to tenancy deposits will apply to protect the tenant.

Entire Agreement clauses

These include terms providing that employees or agents have no authority to make binding statements or amendments to the contract. An entire agreement clause including a provision of this nature would be unfair. However, a tenancy agreement may include a warning that it is a binding agreement and advising the tenant that he/she should read it carefully to ensure that it contains nothing that they are not prepared to agree to. This would be acceptable.

Entry/inspections

A provision giving the Landlord excessive rights to enter the property is unfair. Thus, the right to enter the property without the Tenant's consent except for good reason/or with reasonable notice could be unfair.

Excessive rights of entry with the benefit of prospective new tenants will be unfair. Reasonable access means access at reasonable times with reasonable notice (except in cases of genuine emergency).

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Guide correct as of 16th March 2015

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