New guidelines for landlords and tenants

Landlords and letting agents may be using tenancy agreements which contain terms that are unfair to tenants. In September 2005, the Office of Fair Trading (OFT) published an updated set of guidelines for landlords and tenants covering tenancy agreements.

The move came amid concerns that too many contracts contained clauses that took away tenants' legal rights or were not written in plain English.

The huge document covers many examples of all the terms that the OFT says are unfair. Any term, for example, which makes the tenant arrange or pay for repairs, is clearly wrong. Similarly, any term that tries to waive the landlord's duty to repair - such as making sure the property has met the gas safety and safe furnishings requirements - would be unfair too.

Another term that is clearly wrong is where it's implied a tenant should hand back a property at the end of a tenancy in a better condition than it was at the start. This is unfair because a landlord has a duty to allow for fair wear and tear (and indeed can claim the cost as a deduction from income for tax purposes).

Terms that allow the landlord freedom to stipulate the amount of the deposit they will retain at the end of the tenancy without challenge are also wrong.

The guidelines have been welcomed by Shelter and Citizens Advice and most landlords' associations.

Fred Drew of letting agent Capitaldwellings.com says he has his agreements checked by an experienced solicitor every six months to ensure they are fully up to date. He estimates that about 80 per cent of his landlord customers are happy to use the agreement his agency provides, while 10 per cent have one drawn up by a solicitor and another 10 per cent will buy a standard up-to-date contract from a legal stationer.

However, he knows of some landlords whose agreements contain terms that are clearly unfair. He says: "I see quite a lot of agreements where it says that the tenant should not do anything that compromises the landlords' insurance policy or the head lease. This term is only valid if the tenant is given a copy of the policy and head lease so he knows what he can and can't do."

Making up your own agreements is probably best avoided. Tessa Shepperson of the website Landlordlaw.co.uk says: "Landlords need to be careful about amending their own agreements because it's so easy to make a term invalid."

It's clear that the OFT is worried that some landlords are too often tempted to pass on costs to the tenant that are above the real cost to the landlord. Most landlords would accept that if their tenant had paid £5 in error under the correct rent, it would be unfair to charge them £50 for a letter telling them about it - when a phone call could easily rectify the situation.

However, the OFT guidance goes further. For example, when a tenant wants to leave half way through a six-month, fixed-term contract, the OFT suggests it would be unreasonable to make the tenant pay rent until the end of the agreement if someone else acceptable to the landlord could be found to take over the tenancy.

Whilst they sweeten this by saying that the landlord could recover from the old tenant reasonable costs associated with the re-letting, many landlords might still be surprised by this.

David Lawrenson is the author of "Successful Property Letting -How to Make Money in Buy-to-Let" price £9.99. ISBN 0-7160-3015-2.