Unfair Terms in Tenancy AgreementsWritten By PropertyLoop June 21, 2021
With the tenancy agreement being the cornerstone of the renting relationship between landlords and tenants, its importance is difficult to understate. This legally binding document establishes the rights and responsibilities of both parties, but what is the effect of an unfair term and how can these be avoided?
What Is a Tenancy Agreement?
A tenancy agreement is a legally binding contract signed by both parties of the rental. Whilst a tenancy agreement can be either verbally established or written, the latter is far more practical and popular. Upon the signing of the tenancy agreement both the owner of the rental property and the residents will be granted specific protectionary rights, alongside legal obligations that they must uphold.
Whilst a landlord is able to make additions to the tenancy agreement, adding bespoke terms before the document is signed by the tenants; these terms must not deduct from the statutory rights of a tenant in any way or they will not be legally enforceable, and perhaps be considered discrimination.
A tenancy agreement is comprised of two types of terms, express and implied. The express terms of a tenancy agreement consist of anything that is included within the written or verbal tenancy agreement; whereas the implied terms of the tenancy agreement are the rights granted to the tenant and landlord by the government and therefore do not need to be explicitly stated within the agreement.
With this in mind it is essential for both parties to note that irrespective of if the bespoke terms of the tenancy agreement are agreed upon by both parties, if they are found to conflict with the law then the implied terms will always supersede the custom term.
What Is an Unfair Term?
A term established in the tenancy agreement can be found to be unfair if the results of the specific clause create a significant disparity between the legal rights and responsibilities of the landlord and tenant. This means that if the landlord was to impose a bespoke term with the tenancy agreement that would place the occupants of the rental property at a substantial disadvantage, or was to impede upon their rights as a tenant, it would be considered unfair.
How to Avoid Unfair Terms
Perhaps one of the most common ways in which landlords avoiding including unfair terms within their tenancy agreement is to ensure that the individual terms that comprise the document are written in plain English. This is in an effort to ensure that the absence of legal jargon or niche, industry specific terms will not detract from the clarity of the document, or dilute the occupants understanding of the tenancy agreement. Of course, a tenancy agreement can be a complex document and in some regards the more sensitive legal terms should remain unaltered, however for the most part the terms of the agreement should not include unusual or complex wording, if it compromises its clearness. Similarly, the tenancy agreement should be easy to read, with the text being clearly printed or otherwise legible, with unusual fonts, colours and uncommonly small typefaces being generally avoided. Further to this the owner of the rental property must take care to ensure all of the terms of the tenancy agreement are housed within a single document that is provided to the tenant of the rental, allowing them to have a thorough understanding of their undertaking without having to consult a range of documents. In addition to this the landlord must also not try to employ terms of the tenancy agreement to diminish their responsibility owned to the occupants of the property, or reduce the rights they are entitled to as a renter, as these terms would not be upheld through being found unfair or discriminatory.
Common Unfair Terms
As mentioned, one of the more affluent applications of unfair terms is to absolve or adjust the landlord legal obligations towards their tenants. With this in mind a landlord cannot create a bespoke term within the tenancy agreement that allows them to enter the rental property at any time they wish. Once the agreement is signed the tenants are entitled to quiet enjoyment of the property. This empowers the tenants’ to have the authority to dictate who enters the rental property and when, with any visits that require entry into the rental property or its grounds having to be authorised by the occupants at least 24 hours before.
Further to this the owner of the rental property is not able to include an unreasonable rent increase within the tenancy agreement. Whilst landlords are able to increase the rent through a rent review clause, or by mutually agreeing a new rate with their tenant, if this is accomplished through a clause the amount must be justifiable. The amount the rent increases by must not only be in line with inflation but adhere to the agreed amount and provide the tenant with an appropriate amount of notice before the increase takes place.
What Are the Responsibilities of the Landlord?
Typically, one of the most common applications of unfair terms seen in renting is the owner of the rental property trying to reduce their legal obligations towards their tenants. To this end it is essential that landlord drafting a tenancy agreement for the first time, alongside new tenants understand the responsibilities a landlord undertakes when letting out their property.
Prior to a new tenant moving into a rental property the landlord is obligated to provide them with a range of documentation to allow them to make a more informed decision as to whether they should proceed with the rental opportunity, alongside guidance for the rest of their rental experience. With this in mind the landlord is required to provide the occupants of their rental property with the most recent energy performance certificate for the property. This document is intended to provide any prospective renters with an overview of how energy efficient the rental opportunity is and an estimate of its running costs. Any rental property being advertised to prospective tenants must meet the minimum energy efficiency standard of an E rating and are valid for 10 years after the rental property has been assessed. If a landlord is found to be letting out a rental property that fails to adhere to current energy efficiency regulations they could face significant fines for each infringement, alongside the costs of ensuring their property receives the appropriate work.
Landlords must also ensure that their rental property is not in breach of any gas or electrical safety standards. The electrical appliances and outlets of a rental property must be inspected by a qualified electrician every five years, with this appropriate documentation authenticating its safety being provided to tenants within 28 days of the tenancy agreements being signed. However, if there are any electrical appliances or outlets within the rental property that are found to be unsafe, the landlord must have these issues addressed within 28 days of the findings being revealed.
Further to this the owner of the rental property must ensure that any gas appliances within the rental are assessed each year by a certified Gas Safe engineer. The annual gas safety inspections must assess each individual gas appliances and flues within the property and will issue the landlord with a gas safety certificate. Similarly to the energy performance certificate and the Electrical installation Condition Report, this documentation must be provided to the occupants of the rental within 28 days of the gas safety check taking place. If the safety inspection reveals any safety issues with the gas appliances in the property, it is the duty of the landed to ensure that the appropriate remedial work is carried out.
Alongside this Landlord must also ensure that their rental property adheres to current fire safety regulations. The landlord must have a fire alarm installed on each floor of any property that they let out, with any areas of the rental that contain fuel, or appliances that burn fuel, must also have a carbon monoxide alarm installed. If the rental property in question is a house in multiple occupation, or HMO, the owner of the property must have fire extinguishers and fire blankets available for the residents, with clear fire escape routes being available. If the landlord is intending to let out their rental property to tenants in a furnished condition, they will also need to consider if these additions to the rental are also fire safe. Any furnishings must adhere to the regulations established by the Furniture and Furnishings Fire Safety Regulations 1988, which sets out a minimum level of fire resistance that must be met. With this being said a landlord will not be held liable for any furnishings or belongings under the ownership of the tenant that fails to meet these standards. However, if the landlord is found to be in violation of these safety standards they could face a fine of up to £5,000 for each breach that is found, alongside criminal proceedings and potential compensation being paid to the occupants.
Landlord’s Duty for Repairs
Perhaps one of the largest causes for disputes between landlords and tenants is the responsibility of attending to repairs within the rental property. Whilst the occupants of a rental property are expected to conduct themselves in a “tenant like manner” for the duration of the fixed term, attending to minor repairs and maintenance, the owner of the rental property is obligated to ensure the property is safe, habitable and maintained. With this in mind, the landlord will not be held accountable for any repair work that needs to be conducted if the tenant has not brought this urgent matter to their attention; just as the landlord has an obligation to maintain the property, the tenant’s that reside in the rental must report any damages or areas that need repair to the landlord or letting agent.
Landlords Must Protect the Tenancy Deposit
When moving into a rental property the new tenants will, more commonly than not, be required to pay the landlord a “security” or “tenancy deposit”. Whilst the owner of the rental property is not legally bound to request a tenancy deposit from their residents, if they do it must be entered into a government approved tenancy deposit protection scheme with the details of this being provided to the tenants within 28 days of the deposit being paid. It is also essential for landlords to understand the limit that is placed on the amount they can request a tenant pay for the tenancy deposit. With the introduction of the tenant fees act 2019, landlords are prevented from charging their tenants excessive amounts when renting a property. To this end if the amount a landlord charges their tenants in rent each year is up to £50,000, the maximum amount the tenant can offer for the tenancy deposit id the equivalent cost of five weeks rent. However, if the annual rental charge for the property is over this amount, the landlord can request the tenant pay up to six weeks’ worth of rent.
PropertyLoop is the world’s first commission free lettings platform. Our platform allows landlords to advertise their rental, reference tenants, curate an agreement, register the deposit and collect rent completely for free! There are no hidden charges, upfront fees or any catches.
Built by experienced property investors and landlords, PropertyLoop connects renters with the owners directly. Your property is featured on all major search and comparison portals as well as advertised by PropertyLoop everywhere else on the Internet. You don’t have to worry about finding the good renters, that’s the job for the platform. Receive offers straight to your mailbox and select the renters that are right for your property. Need access to busy London property market? No problem at all! PropertyLoop is the London market specialist with years of experience and unique knowledge. Whatever your needs are, you can always speak to friendly support staff. Renting property is made as simple as one, two, three.