How the Consumer Contracts Regulations Impact Landlords

From 13 June 2014, The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 will consolidate and replace the Consumer Protection (Distance Selling) Regulations 2000 and the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008.

Consumers and traders

The regulations apply to certain contracts between consumers and traders. Consumer means

an individual acting for purposes which are wholly or mainly outside that individual’s trade, business, craft or profession.

Trader means

a person acting for purposes relating to that person’s trade, business, craft or profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf.

Exclusions

Several contracts are excluded from the regulations, including a contract for the rental of accommodation for residential purposes, so these regulations do not apply to residential landlords and tenants. However, the regulations will apply to letting and managing agents' terms of business where the landlord is a consumer.

Types of contract

There are three types of contract for the regulations:

• on-premises contract - e.g. a contract concluded in an agents office
• off-premises contract - e.g. a contract concluded at a landlord's property
• distance contract - e.g. a contract concluded entirely online

Information provisions

Depending on the type of contract, certain information must be made available in a clear and comprehendible manner to the consumer. Information is only made available -

if the consumer can reasonably be expected to know how to access it.

Where there is a dispute, it is for the trader to show compliance, and it is a criminal offence to fail to provide the necessary information, as summarised below.

On-premises contract

The information which must be provided for an on-premises contract is fairly straightforward and includes:

• the main characteristics of the goods or services
• the identity of the trader
• the total price of all services and delivery or how to calculate
• complaint handling policy
• duration of contract and conditions for terminating

This is a summary and full details are to be found in Schedule 1 to the regulations

Off-premises contract

Before a consumer is bound by an off-premises contract, the trader must give the information contained in schedule 2 of the regulations and if a right to cancel exists (see later) the prescribed form as found in schedule 3. 

The information must be given on paper or, if the consumer agrees, on another durable medium and must be legible. The information required is the same as in the on-premises contract above, plus information about the right to cancel, the procedure to cancel and various other information requirements applicable in some instances. Schedule 3 offers model instructions for cancellation, which, if followed, are treated as compliance with the information provisions about certain aspects of the consumer's cancellation rights.

Distance contract

The information provisions relating to a distance contract are similar to those shown above in the off-premises contract but with a particular focus on the timing of parts of the information being provided.

Specific contracts

There are special requirements relating to repair and maintenance contracts. There are also further specific requirements about contracts concluded by electronic means.

Cancellation provisions

The usual cancellation period of off-premises and distance contracts will increase from seven to fourteen days. Where there has been a breach of the regulations (mostly a failure to provide the necessary information), the right to cancel is increased to 12 months.

The trader must NOT begin the supply of a service before the end of the cancellation period unless the consumer has made an EXPRESS request and, in the case of an off-premises contract, has made the request on a durable medium.

Suppose a trader provides service during the cancellation period after an express request. In that case, the trader is entitled to charge a proportionate amount for the service provided to date (as long as the trader has complied with the regulations in the first instance). Much of the information provisions require an explanation that if the consumer makes an express request to take the services sooner than the cancellation period, the rights will be affected or lost.

Conclusion

Letting and managing agents will be significantly affected by these new rules and are urged to consider the regulations and update their business terms accordingly. It is unclear at what point a landlord ceases to be a consumer - e.g. if a landlord has 20 properties, are they now a business and not a consumer? As most business terms will apply equally to consumers and businesses, it’s best to play it safe and assume all customers are consumers.