Amendments made to the Consumer Protection from Unfair Trading Regulations 2008 mean that from 1 October 2014, consumers who are victims of misleading or aggressive practices can use these regulations for redress.
The redress rights only apply to a contract or payment for the sale or supply of a product made after 1 October 2014.
The definition includes a tenancy or service contract between a trader and a consumer, and there must have been a “prohibited practice”.
The definition of “trader” is broad and covers someone acting for the purposes of their business, trade or profession. Therefore, the definition can cover buy-to-let landlords. However, the redress rights do not apply to sales or purchases of real estate, social housing or lettings falling outside of Part 1 of the Housing Act 1988.
So what is a “prohibited practice”?
The regulations define a “prohibited practice” as an act, omission, course of conduct, or representation that is either “misleading” or “aggressive”. Misleading can include situations where the information is factually correct, but the overall presentation would mislead the average consumer.
This prohibited practice must be a significant factor in the consumer’s decision to enter into the contract. This will differ on the individual circumstances of each case.
How do the consumer protection changes affect landlords?
The rights of redress could increase void periods if tenants seek to determine tenancy agreements under these powers. They could also bring potential negligence claims against agents. Therefore, ensuring not only the tenancy agreement itself is properly explained to the tenant and information given, but that any agent acting on the landlord’s behalf to market and tenant the property are acting in the same way.
Businesses already operating in the private rented sector should know their consumer protection duties. They should
- have appropriate compliance procedures in place
- verify the accuracy of any statements made in marketing material
- keep accurate records
- train staff appropriately.
They must also ensure that all charges and fees are transparent and that they are made aware of them at the outset. For instance, you should discuss and document:
- information about deposit requirements
- guarantors
- the terms of the agreement
- what happens at the end of the tenancy, and
- how it can be brought to an end.
We recommend noting down any questions asked, the responses given and getting the tenants to sign the same confirming the accuracy of the information provided and their understanding of it.
How do the consumer protection changes affect tenants?
Amongst other provisions, assured shorthold tenants can now:
- bring civil proceedings to unwind their tenancies
- get a full refund
- get a discount on their rent, and
- claim damages for additional losses or any harm they have suffered.
The new rights also cover holiday accommodation leases and contracts for agency services. However, actions available to tenants will depend on their timing.
Timings for tenants
If a tenant acts in the first month of the assured shorthold tenancy, they can indicate to the landlord that they want to terminate the assured shorthold tenancy and recover the full rent and deposit back. They can do this either by agreement or by court proceedings, and no deduction will be made for the time they have been in occupation. Alternatively, the tenant can seek a rent discount and damages. In either case, they must demonstrate an actual loss.
If the tenant seeks to take action after the first month but before 90 days from the start of the assured shorthold tenancy, the tenant can still seek to terminate the assured shorthold tenancy, but will not get a full refund of rent or deposit.
After 90 days have expired, the tenant loses the right to unwind the assured shorthold tenancy. However, they may still claim discounted rent and/or damages.
Conclusion
These powerful new rules potentially can have quite a negative impact on landlords and give tenants an upper hand, so getting it right beforehand will become all the more important.
Speak to property litigator Laura St-Gallay today.
Note: This article is not legal advice; it provides information of general interest about current legal issues.