Distribnuted to: all registered housing associations.

Summary: Advises registered housing associations to seek legal advice in order to satisfy themselves that their tenancy agreements, leases, etc. comply with the terms of The Unfair Terms in Consumer Contracts Regulations 1994.

Legislation: European Communities Act 1972, Section 2(2)
European Community Directive 93/13/EEC
Statutory Instrument 1994 No.3159

1 Background

1.1. The Unfair Terms in Consumer Contacts Regulations 1994, which implement European Community Directive 93/13 on unfair terms in consumer contracts, came into force on 1 July 1995.

1.2. Whilst neither the Directive nor the Regulations mention land or property, the Department of Trade and Industry has advised that it would be prudent to assume that the Regulations could extend to transactions in land and property. On this basis, the terms 'consumer' and 'seller' would include 'tenants' and 'landlord' and housing association tenancy agreements and leases would be covered.

2 The Regulations

2.1. The Regulations require that the terms of tenancy agreements and leases, as 'consumer contracts', must be in 'plain, intelligible language' and that they must not contain any terms which could be held to be unfair ( as defined in Regulation 4).

2.2. Agreements which are deemed to be unfair will not be binding on the tenant, or leaseholder.

2.3. The Director General of Fair Trading will consider any complaints made to him about the fairness of any contract term drawn up for general. He may, if he considers it appropriate to do so, seek an injunction to prevent the continued use of that term or a term having like effect.

2.4. The court, on application by the Director, may grant an injunction on such terms as it thinks fit.

3 Tenancy agreements, leases, etc of registered housing associations

3.1 Associations are advised to take their own legal advice in order to ensure that the tenancy agreements, leases, etc. which they use are in 'plain intelligible language' and that they do not contain any terms which for the purposes of the Regulations could be deemed to be unfair.

3.2 All new tenancy agreements should meet the requirements of the Tenants' Guarantee 1994 for assured periodic tenants issued in R3 - 36/94.

3.3 The Housing Corporation will issue new and revised Guarantees in December 1995 for leaseholders and shared owners, special needs and hostels, almshouses residents, members of fully mutual co-operatives and assured shorthold tenants. These should then be incorporated in all new agreements.

4 Consultation on changes to existing tenancy agreements

4.1 Associations are reminded that secure tenants have the statutory right under Section 103 of the Housing Act 1985 to be consulted on proposed changes in their tenancy agreements. After consultation, associations may make changes to the agreements of all their secure tenants.

4.2 Assured tenants have the individual right under Part 1 of the Housing Act 1988 to agree changes in their tenancy agreements. Associations must therefore, consult and agree changes on a individual basis.

5 Enquiries

Please direct enquiries on this circular to the Regulation Division, HousingCorporation Headquaters, telephone 0171 393 2090.