buying new homes from developers are protected by the Unfair Terms in
Consumer Contract Regulations (UTCCRs), the court of appeal confirmed
for homeless people, the court decided, in line with the OFT's views,
that the UTCCRs apply to tenancy agreements and other contracts
relating to land transactions. It ruled that there is no basis for
excluding land transactions from the scope of the UTCCRs, and that
such an exclusion would be at odds with the purpose of the
legislation, which is to provide a high level of protection for
The court also ruled that a public or government body can be a
supplier, and a tenant a consumer, within the meaning of the UTCCRs.
Newham had claimed that it was not a supplier, as it was fulfilling a
statutory duty as a housing authority; and that the tenant was not a
consumer, as she was seeking a benefit from the state.
OFT chairman John Vickers said:
'This important judgment confirms that tenants - including tenants
in public sector accommodation - have consumer protection from unfair
terms. So do buyers of new homes. With housing as with other
services, consumer contracts must be clear and free of unfair
As directed by the court, the OFT will now consider whether the
terms of Newham LBC's standard non-secure tenancy
agreement are potentially unfair and will raise any concerns directly
with the authority.
* Newham LBC's reponse to today's judgement HOUSING POLICY IS NOT UNLAWFUL.
1. The appeal was brought against the decision of the administrative
court in the judicial review by three tenants of Newham LBC's placement policy on housing homeless people. One of the
tenants also complained that Newham's standard tenancy agreement
contained unfair terms. Newham argued that the UTCCRs did not apply
to their tenancy agreement. The OFT intervened as an interested party
because it is the lead regulator with enforcement powers under the
UTCCRs. It was asked to defer any action regarding the unfair terms
complaint until after the judicial review had been heard. The Court
did not consider the fairness of the terms and was not asked to do
2. At the judicial review, Mr Justice Newman found that contracts for
land were not excluded from the EC Directive which the UTCCRs
implement and that to exclude such contracts would impede the
purposes of the Directive and create a shortfall in protection
available to consumers (see PN 133/03). Newham's appeal against that
ruling was heard on 17 and 18 December 2003.
3. The Court of Appeal also ruled that Newham's housing placement
policy for the homeless was lawful. The OFT was not involved in this
part of the case.
4. Nearly four million UK households live in social rented accommodation
and 2.1 million UK households live in private rented accommodation.
Today's ruling applies to tenancies agreements after 1 July 1995
where the landlord is a 'seller or supplier' and the tenant a
'consumer' within the meaning of the UTCCRs.
5. The Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs)
superseded the UTCCRs 1994, and apply to standard contract terms used
with consumers. The UTCCRs protect consumers against unfair standard
terms in contracts they make with traders. The OFT, together with
certain other bodies, can take legal action to prevent the use of
potentially unfair terms. A term is likely to be considered unfair if
it causes a significant imbalance in the parties' rights and
obligations under the contract, to the detriment of consumers. The
UTCCRs say that a consumer is not bound by a standard term in a
contract with a trader if that term is unfair. Ultimately, only a
court can decide whether a term is unfair.
6. The OFT published 'Guidance on Unfair Terms in Tenancy Agreements'
in November 2001 and a consumer leaflet entitled 'Unfair tenancy terms - don't get caught out' in April 2002.