Unfair Terms & Fees

At the SRC Advice Centre we see many different tenancy agreements, each with their own unique terms. Some terms in tenancy agreements are intended to impose a penalty on the tenant should he or she fail to act in accordance with other terms in the agreement. We have been successful in arguing in court that a term such as this constitutes an unfair contract term and that the term was an unfair penalty.

Example 1: the landlord states in the tenancy agreement that if he does not receive the rent on the due date then he will be entitled to an additional percentage of the rent that was paid late as compensation.

Example 2: the landlord states in the tenancy agreement that if at the end of the tenancy the property is not left in a clean and habitable condition the tenant will immediately forfeit his or her right to the return of the entire deposit.

Unfair contract terms

Generally, contract terms are are regulated by the Consumer Rights Act 2015.  A term is considered potentially unfair if it creates an imbalance in the rights and responsibilities of the landlord and tenant to the extent that the tenant is adversely affected.

For Private Residential Tenancies (i.e. tenancies in the private sector which began after 1st December 2017), the Scottish Government has created a Model Tenancy Agreement for landlords to use.  If your landlord uses the Scottish Government’s model tenancy agreement, they should also give you the ‘easy read notes‘ which will explain the tenancy terms in plain English.  However if the landlord does not use the model, a tenancy agreement must still include nine statutory terms and the “supporting notes”.

It is possible for a landlord to make additions to the Model Tenancy Agreement, but these can be challenged if they are seen to be unfair, or requesting additional fees, or if they breach the Private Housing (Tenancies) (Scotland) Act 2016, or other relevant housing laws.

Penalty Charges

A penalty is unfair if it is greater than the actual loss that the landlord incurred as a result of the breach of the term of the tenancy by the tenant.

Example: a landlord charges a penalty of 10% of the monthly rent if the rent (£500) is not paid on time. In this case the landlord would have to show that as a direct consequence of the late payment he incurred a loss of £50. If the landlord is unable to justify the penalty charged then it is likely to be considered unfair.

What can you do about it?

It is usually the courts which have the ultimate say over whether a contract term is unfair or constitutes an unlawful penalty.  For private rented accommodation issues arising after 1st December 2017, the First Tier Tribunal (Housing and Property Chamber) has taken over the functions of the Sheriff Court.

At the advice centre we are aware that terms such as those described above are present in many tenancy agreements entered into by students. If you believe your landlord is trying to enforce such a term against you please get in touch with the SRC Advice Centre where our staff will be able to advise you further.

Reclaim Unlawful Letting Agent Fees

Many letting agents (and some landlords) charge fees to prospective tenants. These fees may be given various names: “administration fee”, “reference fee”, “credit check fee”, “application fee” and so on.

Under the current law, these fees are illegal. (Sections 82 and 90 of the Rent (Scotland) Act 1984 are the main bits of law relevant to this).

Unfortunately, so many agents charge them that it is difficult to find a flat without paying a fee. However, if you have paid an illegal fee, then section 88 of the same Act gives you the right to get your money back.  Speak to the Advice Centre about how to do this.

In 2015, the Advice Centre carried out a mystery shopping exercise, to find out which letting agents still charge fees.  You can download the results over at our Fearless Flathunting page.

For more information on this and other housing issues, check the Shelter website or speak to the Advice Centre.