On 1 October 2014 the Consumer Protection (Amendment) Regulations 2014 came into force. These amend the Consumer Protection From Unfair Trading Regulations 2008 (the CPRs) so that there is a civil right for consumers to recover their money as well as a criminal liability.
The Amendment Regulations add a new Part 4A to the CPRs which creates a Consumer Right to Redress. This allows a consumer to unwind a contract and recover their money by themselves in a civil court. Until now a consumer could only complain to the local authority trading standards department and hope that they pursued a prosecution.
The newly amended CPRs provide that where a service has not yet been fully performed or a lease ended a consumer can within the first 90 days after signing the contract or entering into the lease, reject the service or lease, and obtain a refund. There is also a right to a discount or redress in some cases within the same time period. These rights are, of curse, only available if the trader has also carried out an unfair practice under the CPRs which induced the consumer to enter into the contract in the first place. This is not a general right for consumers to exit contracts.
Application to the Property Sector
This new right does not apply to property purchases. It does however apply to estate and lettings agents' terms of business, to holding fee agreements between agents and tenants, and to residential tenancies for a holiday or which fall under the Housing Act 1988. Tenancies which fall outside the 1988 Act are not covered at all.
The most common areas of complaint in property are hidden charges from agents or properties not being to the described standard. The CMA has already been clear in its Guidance to Lettings Professionals that hidden charges or a failure to fulfil the requirements of the CAP guidance on property letting adverts are unfair commercial practices. It is likely that landlords could unwind agency agreements where these charges start to appear after they have committed themselves. Equally, tenants facing unexpected non-optional charges as a requirement of being granted a tenancy will also be able to unwind the contract and recover their holding fees. Additionally tenants who move into a property a find that they have been the victim of misleading advertising will be able to move out, terminate the tenancy, and recover the rent. This is likely to immediately lead to a claim for negligence by the landlord who finds himself out of pocket as a result of his agent's actions.
Many agents are still not in compliance with the CAP guidance on rental advertising and advertise property without making clear what additional charges prospective tenants will face. There also remains a great deal of property advertising which could, at best, be described as optimistic. This will also need to be stopped urgently. If not there is an increasingly volunteers tenant market, especially in the cities, who have a new ability to act to protect themselves.