What does fairness mean in tenancy agreements?

Tips to ensure you never lose a ‘fairness’ battle in court

As a buy-to-let landlord, you’ll want to protect your property. Therefore, it is important to make sure that you present a tenancy agreement that does exactly this. However, the clauses that you can include are regulated by consumer law. This means they must be fair – if they aren’t and there is a dispute that goes to court, you will lose your case.

In this article, you’ll learn about the concept of unfair terms in tenancy agreements, with examples to help clear up any confusion.

What terms should you include in the tenancy agreement?

A tenancy agreement will include a lot of standard terms and conditions covering elements such as tenancy term, notice periods, and how you and the tenant should act. However, you might also decide to add specific terms and conditions. For example, you might want to limit your tenant’s access to a garden shed or garage. Such a term may be considered fair or unfair (yep, I know it’s confusing, but we’ll clarify meaning for you by the end of this article).

So, you should include all the standard terms and conditions that are needed while including other clauses (to protect you and your property), only provided they are fair. What is fair and not fair is determined by the Consumer Rights Act 2015.

What is fairness in a tenancy agreement?

The Consumer Act 2015 seeks to clarify what is unfair. It doesn’t apply to core terms such as rental price and property description but does apply to all other standard and non-standard terms. It says that a contract term will be unfair if:

contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.”

A court will decide a case by first considering what rules would have been applied if there had been no contract, before considering if the clause being questioned is unfair – and this includes if it has been written to confuse an ordinary person.

In other words, the tenancy agreement must be written in plain English. It’s worth noting that a lot of standard tenancy agreements – the sort you find in high street stationers – fail the fairness test.

If a term is found to be unfair, that term will be deemed to be null and void – though the remainder of the tenancy agreement will be enforceable.

Examples of unfair terms

Regarding specific terms in a tenancy agreement that would be considered unfair, here are a few examples:

Penalties

You can only levy penalties that would be deemed to be fair. For example, you can levy penalties that cover your costs should a tenant fall into arrears, but the penalties should be profitable for you.

Rent Increases

Specified rent increases should be specific – either in cash terms, or linked to inflation, or set by an independent expert. If you simply include a clause that allows you to increase rent by an arbitrary amount, it will be deemed to be unfair.

Property left behind

It can be infuriating when a tenant moves out and leaves personal property behind. There are rules governing what you must do if your tenant has abandoned your property and a landlord’s rights if a tenant leaves belongings behind. These are very strict and may seem weighted heavily in favour of the tenant. It’s tempted to add a clause that transfers ownership of belongings left behind so that you can sell them or dispose of them. This would be unfair.

One-sided break clauses

You might be tempted to write a clause that gives you the opportunity to break the tenancy after a set period. You can do this only if the tenant agrees, if it complies with other landlord laws, and, critically, if you provide a reciprocal break clause to the tenant.

It’s a little like a contract at work. If your boss expects you to give a minimum of three months’ notice to quit, then he must give you the same.

Banning pets is unfair!

Yep, banning pets is unfair. However, what you can do is include a clause that says the landlord’s permission must be given to keep a pet. If you simply banned pets, then goldfish and hamsters would be included.

Repairs

Maintaining your property is your responsibility. Any clause that shifts this responsibility onto the tenant will be invalid because it is unfair – and will, therefore, be void. This is the same if you require the tenant to report maintenance issues in too short a time.

So, what about that garden shed or garage?

Let’s get back to the garage that you don’t want your tenant to use. Providing you include a clause that specifically forbids use, and the tenancy agreement stipulates that it is not included in the rental, then it will be considered fair, UNLESS…

You haven’t included the exclusion specifically, or you haven’t given time for the tenant to read and understand the clause.

Keeping your tenancy agreement fair

In summary, to ensure you keep your tenancy agreement fair, you should ensure that:

  • Clauses do not unfairly limit or exclude a tenant’s rights from what they would have been if the if the clause had not been included
  • Penalty clauses do not seek to deliberately create a profit for you as the landlord
  • Clauses that may be difficult to understand are explained and, wherever possible, written in plain English
  • You always give the tenant time to consider the tenancy agreement before signing
  • Your tenancy agreement is written to comply with all landlord laws

Don’t let your tenancy agreements let you down. To discover how we ensure your tenancy agreements protect you and comply with the law at all times, contact Ezytrac  on +44 0 1522 503 717

Live with passion,

Brett Alegre-Wood

About the Author:

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Ezytrac. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids. Brett holds both the Level 3 Property Mark Qualifications for Property Sales and Property Lettings and Management.