Five consumer law mistakes that could cost you money

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When I commissioned David Smith of Anthony Gold to present a workshop on Consumer Law last year, I had a sort of idea that it was an important topic. Its for that  reason that we had it filmed. However, it was not until I actually watched the film footage that I realised how deadly these rules can be for landlords and agents who fail to take them into account.

Here are five which you may not be aware of - and their penalties:

1. Unfair terms in tenancy agreements 

This has been around for a while. Basically if a term of a tenancy agreement (or indeed in any contract - for example an agency agreement) breaches the fairness rules now set out in the Consumer Rights Act 2015, it will be unenforceable. For example this could include penalty clauses and rent review clauses.

In a recent European case (enforceable in this Country) it was also held that Judges have a duty to consider the regulations and apply them - whether or not the parties ask them to.

These rules are one (big) reason why it is inadvisable to amend tenancy agreements or agency contracts without getting proper advice first.  

For example a tenancy agreement clause will be unfair if it takes away a right that a tenant has under law - but how can you know if you are doing this unless you have a very good understanding of what those rights are in the first place?

2. Fee transparency

Under the Consumer Rights Act, agents must now disclose their fees both in their office and on their website. The fees must be specific (e.g. vague references to ‘admin charges’ are unacceptable) and inclusive of VAT.

Agents also need to state the redress scheme they belong to and whether they carry Client Money Protection Insurance.

Failure to comply can result in a penalty charge of up to £5,000.

3. Off-site sales and notices of cancellation

The old Distance Selling Regulations have now been replaced by the snappily named Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

Under these, if you conclude a contract with a customer after a meeting off your premises (e.g. at the property to be let) or without meeting in person at all (e.g. over the internet) you need to give your customer notice that they have a 14 day cancellation period.

If you don’t do this, the cancellation period will continue until 14 days after the notice is finally given. David in his workshop gave the example of a firm of Estate Agents who lost a commission fee of over £15,000 for failing to comply with this rule.

Please note that this does not apply to tenancies as they are specifically excluded in the legislation. So tenants do not get any cooling off period.

4. Civil powers of redress

The Consumer Protection Amendment regulations have brought in new powers for consumers to end contracts which they have entered into as a result of some kind of unfair practice.  

So if for example you were less than upfront about your fee structure, your customers could use this rule to cancel your agency agreement through the courts and recover any fees paid - provided they did this within 90 days.

5. Unwinding tenancies

Although the civil powers of redress rules do not apply to contracts for the sale of land or long leases, the regulations specifically state that they do apply to assured and assured shorthold tenancies and holiday lets.

So if a landlord or agent provides misleading information about a property - for example if it is described as ‘quiet’ when it is on the school run, or indeed as being near a good school when that school is low on the league tables, then tenants are entitled to cancel (through the courts if necessary) and recover all money paid if they do this during the first month.

After this they can cancel for up to 90 days but will have to pay for what they use.

Imagine how your landlord will feel if he learns that his tenant has been able to cancel his tenancy due to your misleading advertising! 

These rules now give the ‘fairness’ rules, teeth. Which can give you quite a bite.

How to find out more

If you want to find out more about this, the film footage of David's workshop has now been turned into an online training course.

It may be a wise investment ...

Tessa Shepperson is a specialist landlord and tenant lawyer and a director of Easy Law Training Ltd

 

 


Posted by Tessa Shepperson on 23 February 2016

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