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Unfair trading practices

This content applies to England

Consumer protection law may provide a remedy for a tenant where an unfair commercial practice has caused her/him to enter into a contract, such as a tenancy, or make decisions while in that contract that s/he would not otherwise have made.

The law is found in the Consumer Protection from Unfair Trading Regulations 2008,[1] which prohibit the use of 'unfair trading practices'. These Regulations were amended by the Consumer Protection (Amendment) Regulations 2014 to provide tenants whose tenancies began on or after 1 October 2014 with additional remedies where a landlord has used unfair trading practice. These include the right to 'unwind' a contract in certain circumstances.

Which landlords must not use 'unfair' trading practices?

The requirement not to use 'unfair' trading practices applies to all landlords (and their agents), including government departments and local authorities ('traders') acting in the course of a business with tenants ('consumers').[2]

Unfair trading practices

Trading practices that are deemed 'unfair' are prohibited under consumer protection law.[3] The prohibited practices are:

  • giving misleading information (a 'misleading action')
  • withholding necessary information (a 'misleading omission')
  • using coercion, harassment or undue influence ('aggressive practice')
  • failing to follow accepted trading practice (lack of 'professional diligence').

For a practice to be unfair it must cause the 'average consumer'[4] to take a different course of action to the one they would have taken in the absence of that practice. Where a clearly identifiable group of consumers is particularly vulnerable, for example, the elderly, then the average consumer is the average member of that group.

Misleading actions and omissions

Misleading actions and misleading omissions are both prohibited under consumer law.[5]

A commercial practice that is specifically untruthful is a misleading action. It can also be a misleading action when information is presented in such a way as to deceive, even if it is factually correct, and long as that information causes the consumer to do something s/he would not otherwise have done.

A commercial practice is a misleading omission if material information is omitted or hidden.[6] Liability for misleading someone by omission cannot be avoided by turning a blind eye to problems and claiming no knowledge - for example, where a letting agent is told by a landlord that a boiler has had a safety check, but the landlord cannot produce the certificate, it would be appropriate for the agent to insist on another check being carried out.[7]

A prospective tenant might be misled about accommodation to let, for example with regard to:

  • its nature, fitness for habitation or cost
  • how repairs will be dealt with
  • the handling of complaints.

Aggressive commercial practices

Aggressive commercial practices are prohibited under consumer law.[8] These are practices that use harassment, coercion or 'undue influence' to significantly impair a consumer's freedom of choice or conduct. Physical force does not have to be used. The exploitation of a position of power to apply pressure is sufficient to constitute an aggressive practice. Where an average consumer has done something s/he would not otherwise have done as a result of the aggressive practice, enforcement action may be taken by the Competition and Markets Authority, and in some situation s/he may be able to seek a remedy her/himself under civil law(see below).

Examples of unfair practices in letting accommodation

Government Guidance for lettings professionals on consumer protection law suggests that the following practices of a lettings professional may be unfair:

  • threatening eviction to dissuade a tenant from complaining to a local authority about the condition of the property, or asking their landlord to carry out repairs that are the landlord's statutory responsibility
  • telling a guarantor that their role is a 'mere formality', or giving the impression that it does not carry significant risks, responsibilities and obligations
  • describing a payment as a 'deposit' if it is not refundable
  • providing an incorrect inventory of the property
  • failing to provide particular items of furniture after promising to do so
  • pressurising a prospective tenant into signing up quickly by misleading them into thinking that the property is about to be rented by someone else, when this is not true
  • telling a tenant who is in arrears that they may face immediate eviction if they don't pay them off straight away
  • omitting material information from the description of a property so that a prospective tenant is more likely to sign a tenancy agreement.

Some unfair practices are prohibited outright.[9] The guidance for lettings professionals gives the scenario of where a landlord enters a tenant's property without permission to discuss late payment of rent as a potential example of a banned practice.

Enforcement

Breaches of consumer protection law by a 'trader'[10] such as a landlord or letting agent may constitute a criminal offence, or may give rise to enforcement action.

For breaches prior to 1 October 2014, the problem must be reported to the Competition and Markets Authority and/or the local authority's trading standards service, to take appropriate action.[11]

For breaches after 1 October 2014, some breaches may trigger a remedy that the consumer can apply to court for directly - see below.

Contracts starting on or after 1 October 2014 : civil remedies

For contracts entered into on or after 1 October 2014 only, a tenant has the right to a civil law remedy where a misleading action or aggressive practice is a significant part of the reason why a tenant signed up to an agreement.[12]

Where someone has entered into a contract as a result of a misleading action (but not a misleading omission) or aggressive practice, redress under civil law may be obtained through the right to:

  • unwind the contract
  • a discount
  • damages.

These rights only apply where the prohibited practice caused the tenant to enter into a tenancy in the first place, and as such it is not available where the tenant is a victim of, or threatened with retaliatory eviction.[13] The legislation uses the collective term 'civil redress' for this type of remedy.

Time limits

Each remedy is subject to time limits, outside of which it may not be possible to claim the remedy. See below under each remedy for details.

Private sector assured and assured shorthold tenants only

The right to civil redress is open to assured or assured shorthold tenants in the private sector.[14] It is not available to tenants of social landlords, or to other types of tenant in the private sector.

Right to unwind

The right to 'unwind' the contract effectively means that a tenant (where the tenancy began on or after 1 October 2014) can terminate the contract and be released from any obligations under it where the tenancy was signed up to because of a misleading action or aggressive practice.[15] In order to claim this right, the tenant must inform the landlord (or landlord's agent) that s/he wants to reject the contract within 90 days of the tenancy start date. There is no obligation for this to be put in writing, but it is strongly advisable to do so. There is also no requirement for the tenant to show that s/he has suffered any loss, nor that the landlord (or agent) acted dishonestly or negligently.

If the tenant informs the landlord (or landlord's agent) that s/he wants to unwind the tenancy within one month of the tenancy starting, the tenant is entitled to a full refund of the money s/he has paid out.

If the tenant informs the landlord (or landlord's agent) in less than 90 days but more than one month after the tenancy start date, then a refund may still be given, but will be calculated by the court.

If 90-day time limit has expired, the tenant may still be able to claim a discount or damages.

Right to a discount

The right to a discount on the rent where a tenancy (which began on or after 1 October 2014) was signed up to because of a misleading action or aggressive practice can be claimed as an alternative to the right to unwind. It cannot be claimed as well as the right to unwind, but could be claimed outside the 90 day notice period that applies to unwinding a contract. The discount will be calculated by the court according to the severity of the prohibited practice used.[16]

A claim for a discount must be made within the six-year limitation period provided for actions founded on 'simple contract' under the Limitation Act 1980.[17]

Right to damages

Where a person signs up to a tenancy (on or after 1 October 2014) as a result of a misleading action or aggressive practice s/he has the right to damages if s/he has:[18]

  • incurred a financial loss
  • suffered alarm, distress, physical inconvenience or discomfort.

As with claiming the right to a discount, there is no 90 day time limit for claiming the right to damages, but the Limitation Act 1980 period of six years applies. Damages will be assessed according to the degree of loss or suffering experienced, but are limited to those losses reasonably forseeable at the start of the tenancy.

Possible defences

A landlord or her/his agent has a defence to a claim for damages if s/he took all reasonable precautions and exercised 'due diligence' to avoid the prohibited practice occurring. It is also a defence to show that the the prohibited practice was due to some kind of mistake or accident, or was because the landlord (or agent) reasonably relied on information supplied by someone else.

Claiming redress through the county court

Where a landlord or her/his agent does not agree to the redress claimed it will be necessary for the tenant to apply to the county court for a declaration that the contract is unwound, and/or for damages or a refund. The claim form N1 should be used.

See Part 7- general procedure in the section Preparing for court for detailed information on making a county court claim.

Property redress schemes

A breach of consumer protection law by a letting agent could be grounds for a complaint to that agent's Property Redress Scheme. This could be a useful option where the tenant is outside the time limit for using one of the civil remedies outlined above. See the page Complaints against agencies: Redress schemes for details.

[1] Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277.

[2] reg 2 Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277.

[3] reg 3 Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277. 

[4] reg 2(1) Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277.

[5] reg 5 Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277. 

[6] reg 6 Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277.

[7] see page 25 Competition and Markets Authority Guidance for lettings professionals on consumer protection law June 2014.

[8] reg 7 Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277.

[9] Sched.1 Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277.

[10] reg 2(1) Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277.

[11] reg 19 Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277.

[12] reg 27A(6) Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277 as inserted by the Consumer Protection (Amendment) Regulations 2014 SI 2014/870.

[13] see the definition of 'transactional decision' that applies to consumer rights to redress in reg 27B(2) Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277 as inserted by the Consumer Protection (Amendment) Regulations 2014 SI 2014/870.

[14] reg 27C Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277 as inserted by the Consumer Protection (Amendment) Regulations 2014 SI 2014/870.

[15] reg 27E-F Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277 as inserted by the Consumer Protection (Amendment) Regulations 2014 SI 2014/870.

[16] reg 27I Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277 as inserted by the Consumer Protection (Amendment) Regulations 2014 SI 2014/870.

[17] reg 27K(5) Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277 as inserted by the Consumer Protection (Amendment) Regulations 2014 SI 2014/870.

[18] reg 27J Consumer Protection from Unfair Trading Regulations 2008 SI 2008/1277 as inserted by the Consumer Protection (Amendment) Regulations 2014 SI 2014/870.

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