GUIDANCE ON UNFAIR TERMS IN RESIDENTIAL TENANCY AGREEMENTS

Termination (also see forfeiture clause)

A provision allowing the Landlord to terminate the contract early where the same facility is not granted to the tenant could be unfair. Likewise different lengths of notice to end the contract with a longer period for the Tenant than the Landlord would be unfair. The OFT suggests that where there is a fixed term agreement the Landlord cannot terminate the agreement early against the tenant's wishes just because he wants to recover the property. This suggests that a break clause for the Landlord alone could be unfair.

A term stating or implying that the tenant could be evicted at the landlordís discretion could be misleading and is open to challenge.

A term indicating that the tenant could be evicted without notice could be unfair or at unless there are serious grounds for doing so.

An unreasonably long notice period for a periodic tenancy could be unfair. There should be no possibility of terminating the contract and evicting the tenants for default unless it imposes a real threat to the landlordís legitimate interests. This poses a threat that the usual forfeiture clause allowing the possibility of termination for any breach (however trivial) could be void for unfairness. It is suggested that reference to breach shall be qualified as "serious breach".

Uninhabitable property

The requirement on the tenant to continue to pay the rent if the property is uninhabitable e.g. due to a fire or a flood, would be unfair. A term requiring the tenant to resume paying rent immediately after the property is reinstated is likely to be unfair if the period allowed for reinstatement is longer than the period that the tenant can reasonably be expected to remain in occupation of temporary accommodation.

Variation of terms (see also Furniture)

A term allowing the Landlord to alter the terms of the tenancy agreement without the tenant's consent would be unfair. Variation of terms may be fair if its effect is narrow so that the varied terms could be used to effect variations resulting from changes in the law or the reasons for using it are stated in the contract. They must be clear and specific enough so that the variation power cannot be used at will to the detriment of the tenant. Just using the word "reasonably" will not be enough in this context. It must be made clear how the discretion will be exercised e.g. to prevent nuisances.

In the case of periodic tenancies a variation clause which takes effect before the period of notice which the tenant can give may be unfair. In other words the tenant shall have the option to bring the tenancy to an end before the variation comes into force.

A term allowing the landlord to alter or improve the building or to remove or change the furniture during the currency of the tenancy agreement could be unfair. It is suggested that any clause allowing substitution of furniture shall be confined to broken items or to replace items by items which are at least as good/valuable.

A term allowing the landlord to move the tenant to another property could be unfair. Any variation should be restricted to minor technical adjustments which do not disadvantage the tenant or to changes required by law.

Visitors

Terms banning overnight guests could be unfair.

BACK Page 7 of 7

Guide correct as of 16th March 2015

V1-JC-16032015
Landlord & Investment Show
Martin Co
Six Hills House
Landlord Broadband

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