Consumer Law and why you should be worried about itMake Text Bigger
This is the 7th post in my 2017 Legal Update series.
The Consumer Legislation – does it apply to YOU?
When I mention ‘Consumer law’ to most landlords they just look at me blankly. “What’s consumer law got to do with me?” one landlord asked at a training workshop earlier this year. Maybe she speaks for you too?
Landlords tend to think of themselves as investors. However, what you have to realise is that to the authorities (Government and Local Councils), and also your tenants – you are running a service business for consumers.
In fact, the service you are providing is for one of the most basic human needs – shelter. Of course, consumer protection laws are going to apply to you!
Letting agents too – most of your customers will not be ‘professional’ landlords. The consumer legislation will apply to you as well.
Consumer rights and fairness
What sort of things are we talking about?
The main act is the Consumer Rights Act 2015 along with various regulations that provide protection to consumers. Such as the Consumer Protection from Unfair Trading Regulations 2008.
Central to these is the concept of ‘fairness’. This is that businesses should be straight with consumers and not mislead them, that contracts should be even handed and not stacked in the business’s favour, and that businesses should actually do what they contracted to do.
So, if you are a landlord, this means that
- Your tenancy agreements should be clear and fair,
- Your advertising must not be misleading (e.g. if a property is described as ‘quiet’ it should not be on the school run), and
- That if you promise, before the tenancy agreement is signed, to do any repair or improvement work to the property – you should actually do it.
If you are an agent, this means that
- You must do the work you contracted to do (such as regular inspections of the property)
- You should ensure that the deposit is properly protected and the prescribed information served and also
- You are not entitled to receive commission in perpetuity without actually doing any work, simply because the tenant has stayed on in the property (sorry).
If these standards are not kept then there are consequences – which could prove expensive.
Tenants, for example, can ‘unwind’ their tenancy (i.e. end it) if they have been induced to enter into it by an unfair practice (such as misleading information about the property), provided they give notice within 90 days.
If they give notice within 30 days they can also reclaim all money paid.
Paperwork and procedures
It is important also that you follow all the proper procedures.
If you trade through a limited company – is your company name, number, place of registration and registered office address on all your stationery including your emails?
If you are an agent, in many cases you will reach agreement with your landlord outside your office, for example after visiting the property. If so, are you providing your landlords with details of their 14-day cancellation rights?
If not, your landlords may be entitled to cancel their contract with you at any time up until either you provide the cancellation information or after one year. AND if they do this, you will have to refund any fees paid.
These cancellation rights come under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.
A warning to landlords
For you to be able to take advantage of these rights vis a vis your letting agent – you must be trading in person. If you run your properties through a limited company, you will be treated as a business and not a consumer.
This is something you should take into account if you are considering setting up a company for your properties for tax purposes.
In this blog series, I can only touch on things lightly.
Therefore, as part of this Legal Update initiative I am also making available our Conference Course at a special discount for Property118 readers. The Conference Course is particularly valuable as it contains all the talks from our 2017 Landlord Law Conference (plus a few from earlier Conferences). One of the 2017 talks is on consumer law.
You will find more information about the Conference Course here.
There is also a section on consumer law on my Landlord Law membership site and members can ask me ‘quick questions’ in the members forum area.
You can find out more about Landlord Law here
Next time I will be looking at the right to rent rules.
Tessa Shepperson is a specialist landlord & tenant lawyer and runs the popular Landlord Law online information service.
To see all the articles in my series please Click Here
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