Part VI          

The consumer approach: focussing on the agreement

Introduction

                             6.1              We have already indicated that we want to develop a consumer approach to the regulation of the residential housing relationship. Whilst not a new idea,[1] it has not until recently attracted a great deal of attention in the housing context. As the discussion in this Part will show, consumer law should now be seen as an integral part of modern housing law.

                             6.2              We see considerable advantage in this approach. It should ensure that the terms of agreements are fairly balanced, rather than having unfairly balanced contracts which have to be overridden by other statutory rules. Furthermore, the Office of Fair Trading and other bodies acting on behalf of the Director-General of Fair Trading[2] can require suppliers (landlords) to change the terms of the contract itself without reference to an individual consumer (occupier). In addition, undertakings can be required as to future use of similar contractual terms.

                             6.3              We build on the recent extension of consumer protection legislation in the UK to housing. The provisions of the Unfair Terms in Consumer Contracts Regulations 1999[3] now apply to tenancy agreements and we think would equally apply to contractual agreements under our proposed scheme.

                             6.4              The discussion which follows is divided into a number of sections.

                             6.5              At the moment, the rights and duties of landlords and occupiers are arbitrarily distributed between statute, the common law and the agreement. Most agreements are positively misleading in some respects, opaque in others. This is because, as we explained in Part II, statute has overridden contracts. The essence of our proposal is to relocate the regulatory provisions within the agreement. Neither the landlord nor the occupier should have to look outside the agreement between them to know where they stand.

                             6.6              We provisionally propose that the agreement between the landlord and the occupier should be the place where their respective rights and obligations are definitively set out.

                             6.7              As already stated, our approach to the reform of housing law is based upon treating the occupier as a consumer. It is logical therefore that the existence of a contract should be required to trigger statutory regulation. This means that for an agreement to fall within our proposed scheme it will have to fulfil normal contractual requirements. In particular there must be consideration and there must be intention to create legal relations.

                             6.8              We provisionally propose that our scheme should, subject to the discussion in Part IX, apply to any contract for rent which confers a right to occupy premises as a home.[4]

                             6.9              Among issues considered in Part IX is a provisional proposal to move away from using the distinction between a tenancy and a licence as a factor determining which agreements come within and which agreements fall outside our proposed scheme. If adopted, this would have the effect of including contractual licences in our scheme.

                          6.10              Equally it would exclude from our scheme those agreements where no rent is payable and there is no other consideration.[5] It will also exclude those family and other arrangements which are clearly designed to operate informally. Therefore acts of generosity in allowing someone to occupy property rent-free would operate outside the proposed scheme.

The application of the law on unfair contract terms to housing agreements

The purpose of applying a consumer law approach to housing

                          6.11              The Office of Fair Trading states that their Guidance on Unfair Contract Terms in Housing aims “to help ensure fair and equitable relations between landlords and tenants”.[6] Historically, governments have intervened in the housing market to provide a legislative counter-balance to the inequalities of bargaining power that exist there. Contractual terms have been over-ridden by statute law. This has been a source of confusion, as documents do not have the legal effects that they appear to have; and landlords and tenants have often failed to understand how statute law affects their position.

                          6.12              The more recent emphasis on ensuring that the terms of consumer contracts are appropriately balanced from the outset suggests that the modernisation of housing law must also reflect this consumer approach. We recognise the need to ensure that the unfair contracts approach is suitably adapted for the housing market, and the need for reciprocity of fairness as between the interests of landlords and occupiers.

                          6.13              A consumer approach will focus the attention of both the parties and the courts on the terms of the contract. We believe the benefits of this include

                                                        (1)      greater clarity, given that the two parties will have in front of them a single document with all the relevant terms in plain English[7], rather than having to find and understand various statutory provisions;

                                                        (2)      the ability to translate such a document into other languages for the benefit of those whose first language is not English;

                                                        (3)      additional flexibility in what can be agreed;

                                                        (4)      an appreciation that being a residential landlord – whether on a large or small scale – is as much about providing a service to customers as it is about temporarily granting a right to occupy land; and

                                                        (5)      a clearer recognition of the role of consumer protection in housing.

                          6.14              We propose to increase this emphasis on the contract in two principal ways.

                          6.15              First, we propose that all agreements should be put into writing. This will be backed up by setting out, in statutory form, default terms which will apply either where the parties choose to use them or to cover gaps in a written contract that does not use the default terms. To assist, we propose the provision of easily accessible model agreements for general use. The issues arising from this proposal are discussed in this Part.

                          6.16              Second, we propose that the written agreement should set out clearly the circumstances in which possession may be recovered by the landlord.[8] Our detailed proposals on security are set out in Parts VII and VIII.

Objections to the consumer approach?

                          6.17              Some may object that a consumer approach is not appropriate for renting homes. For example, a defective house cannot simply be returned to the landlord for a cash refund[9] (although of course the same could be said of services). We intend to be guided rather than led by the consumer approach, to ensure that it is applied appropriately in the housing context.

                          6.18              It may also be suggested that a consumer approach will not be effective, in that many – both landlords and occupiers – may not understand the documents that are generated by the approach. This may be a problem for some, but we think there are advantages in having their rights and obligations set out in a single document. The fact that occupiers may be given a longer and more complex document than they are now is, we think, a small price to pay for the advantages the new scheme offers. They should have access to one of the most important contracts they enter into. It should certainly be a great deal easier for those – both lawyers and others – who advise on housing matters to provide clear advice, to both parties.

                          6.19              Others may argue that it would be preferable if the statement of landlords and occupiers rights appeared in a clearly drafted statute than a contract. Although styles of drafting legislation have changed over the years, we do not think that the lay person would find a statute any easier to comprehend than a contract. It is not a realistic alternative to expect the parties to consult the statute themselves. We still think it desirable that the contract should provide as definitive statement as possible of the parties’ rights and obligations. In any case, the terms will actually emanate from a statutory instrument.

                          6.20              Finally, some may suggest that the consumer approach is not appropriate for social housing provision. However, unlike many other areas of social welfare provision, housing provision has long relied on contractual agreements. We think that a consumer approach to social housing provision is therefore a very appropriate means to ensure that landlords and occupiers focus on their individual rights and responsibilities. We see no inconsistency between this and the desirability for other aspects of social housing management to be developed on a more communitarian, less individualistic, basis.

                          6.21              The European Council of Ministers passed the Directive on Unfair Terms in Consumer Contracts in 1993.[10] It applies a test of “fairness” to standard terms in consumer contracts. The Directive was first implemented in the UK by the Unfair Terms in Consumer Contracts Regulations 1994, but it was not clear whether they covered housing. This uncertainty was removed by the 1999 Regulations[11] of the same name, which revoked and replaced the 1994 Regulations. They make it clear that the EU Directive applies to housing contracts.[12]

                          6.22              Enforcement action started to be taken on such agreements from the time the new Regulations came into effect.[13] The impact of this has become clearer since November 2001, when the Office of Fair Trading published its Guidance on Unfair Terms in Tenancy Agreements. This interprets[14] the Regulations as they apply to terms in assured tenancy agreements which have come to the attention of the Office.[15] The guidance reflects the Office of Fair Trading’s view of the law; there have been no definitive judicial statements on the correctness of their views.[16]

Further developments

                          6.23              In April 2000 the European Commission published a report on the implementation of the European Directive in its first five years. It raised a number of questions relating to suggestions for improving the Directive, and threw these open to EC wide consultation. In February 2001, after public consultation throughout the UK, the British Department of Trade and Industry published the UK Government’s answers to these questions. Whilst they do not deal specifically with housing agreements, any changes would be likely to affect such agreements along with other consumer contracts.

                          6.24              The Law Commission is working on proposals to create a new unified and simplified unfair contracts regime to replace the two distinct regimes which currently operate under the Regulations and the Unfair Contract Terms Act 1977[17] (“UCTA”).

Relationship with our proposed default terms

                          6.25              The Regulations do not apply to terms that reflect “mandatory statutory or regulatory provisions”.[18] Recital 13 of the Directive states that the phrase “mandatory statutory or regulatory provisions” includes “rules which, according to the law, shall apply between contracting parties provided no other arrangements have been established” on the basis that such mandatory (and default) provisions “are presumed not to contain unfair terms”.[19] The exemption therefore applies to default rules intended to apply in the absence of any express contractual provisions, but which may be excluded by agreement, and to terms which attempt to reflect such default terms. This appears to cover our proposed default terms and any express terms in an agreement which reflect our default terms, provided they are in plain intelligible language and are not significantly different from our default terms to the detriment of the consumer.

                          6.26              Terms “required” by competent authorities – such as an industry regulator – acting in the course of their statutory jurisdiction or function may also be excluded as “mandatory statutory or regulatory provisions”, although it is likely that terms which are merely “approved” by the regulator are not excluded.

                                                        (2)      It could also apply to terms required of a private landlord by the local authority under a licensing scheme[20] (such as, that for houses in multiple occupation under Housing Act 1985, or the Department for Transport, Local Government and the Region’s proposed selective licensing of private landlords in areas of low demand).

                                                        (3)      The residential management codes produced by the Royal Institute of Chartered Surveyors do have statutory authority[21] but are probably not covered, in that they do not impose mandatory requirements on the terms of a tenancy agreement.

Requirements of transparency and fairness

                          6.27              The aspects of the Regulations most relevant to housing agreements are those relating to transparency and fairness, procedural and substantive.[22]

Transparency

                          6.28              The Regulations require all relevant terms to be expressed in “plain, intelligible language.”[23] The Guidance stresses that terms must be in plain language so that they are intelligible to occupiers without legal advice, that occupiers must have an adequate chance to read them before becoming bound by them and that important terms should be drawn to occupiers’ attention. The Guidance objects to legal terminology such as “indemnify”.[24]

                          6.29              The Regulations provide that if a term is ambiguous, the interpretation which is most favourable to the occupier will prevail.[25]

                          6.30              The Guidance takes the view that excessive lack of clarity in a term can be a source of unfairness in itself. The significance of this is that the whole term is rendered invalid.

                          6.31              The Regulations prohibit procedural unfairness. Thus terms which are substantively fair may be rendered unfair in light of the surrounding circumstances at the time of the conclusion of the contract.[26] Recital 16 to the European Directive states that the relevant circumstances include the respective bargaining strength of the landlord and occupier, any inducement provided by the landlord to enter the contract, unfair surprise and whether the contract was entered into fairly and equitably. However, these circumstances have not been set out in the Regulations. One relevant circumstance could be any previous enforcement action taken against that landlord’s use of related terms. The Guidance suggests it will consider factors such as the length and complexity of the contract and whether the occupier was given adequate time to read the terms.

Substantive unfairness

                          6.32              The main aim of the Regulations is to eliminate substantive unfairness. Under the Regulations, a term will be unfair if its substance causes a “significant imbalance” in the parties’ rights and obligations, to the detriment of the consumer (in our case, the occupier).[27] There need not be a particular imbalance to a particular occupier. A term will be unfair simply if it is has the potential to cause detriment to occupiers. The Guidance stresses that a term can be unfair irrespective of the landlord’s intention in drafting it, and whether or not it is actually used in a way that is detrimental to the occupier.

                          6.33              The Regulations contain a long, non-exhaustive indicative list of terms – known as the “Grey List” – which may be regarded as unfair in consumer contracts. The Guidance applies the Grey List to current housing agreements, taking a broad view and listing an extensive range of terms which it sees as potentially unfair. The Guidance also goes beyond the Grey List and sets out other termsfound in UK housing agreements that are considered to be potentially unfair. This reflects the view of the Office of Fair Trading (based on evidence from complaints received) that by using pre-formulated standard agreements, landlords are in a stronger bargaining position than occupiers.

                          6.34              In applying the test of fairness, the Guidance emphasises the breadth of the requirement of good faith[28] and focuses on terms which give power to the landlord that the landlord would not otherwise have or protect the landlord in a way that puts the occupier at a disadvantage.[29] The general starting point for the Office of Fair Trading is to ask what would be the position for the occupier if the term did not appear in the contract.

                          6.35              The Guidance generally objects to terms which give the landlord sole discretion to impose obligations on the occupier, beyond the requirements of good estate management. The Guidance stresses that, even if a term is actually ineffective, because it is unenforceable at common law or under some other statute, it is still unfair because its presence in the contract is misleading and could cause the occupier to agree to things that they otherwise would not. Therefore, many standard terms commonly used in agreements are likely to fall foul of the Guidance.

                          6.36              Under the Regulations, if a court finds a term to be unfair then it will not be bindingon the occupier and the landlord will not be able to rely on it.[30] This means the occupier will have a defence against any action taken by the landlord to enforce the term, whether by repossession, injunction, damages or otherwise.

                          6.37              The rest of the contract will continue if it is able to exist without the unfair term.[31] The effect of removal of the term is that the general housing law, both common law and statute law, will apply to regulate the parties’ obligations in the area that was covered by the unfair term.[32] In the context of our scheme, this means that the appropriate default term is substituted for the unfair term.

                          6.38              It is less clear whether occupiers can take their own court action to have unfair terms struck out. Under current housing legislation, each of the three principal Acts confers a power on the county courts to make declarations. However, they are inconsistent and unclear.[33] In particular, none of them appears to give the courts the power to make declarations as to what are the express terms of the original tenancy agreement. (This can be contrasted with section 1 of the Employment Rights Act 1996, which gives an employee a right to receive a written statement of the terms of the employment contract and to go to the Employment Tribunal to provide a declaration as to the terms, if none is forthcoming.)

                          6.39              The Regulations require various enforcement agencies,[34] including the Director General of the Office of Fair Trading and local authorities with trading standards functions,[35] to consider all complaints about unfair terms (except frivolous or vexatious ones[36]) and to give reasons[37] if they do not take the matter further. The enforcement agency may apply for an injunction[38] which the court may grant on such terms as it sees fit.[39] The court may grant an injunction not just against the use of the particular unfair term in question but also against any similar term or terms having like effect, used or recommended for use by any person.[40] Alternatively, the enforcement agency may seek an undertaking from the landlord that the term will no longer be used.[41] Office of Fair Trading cases are usually resolved by the Director General accepting informal undertakings in lieu of court proceedings.

Limitations

                          6.40              The Regulations contain three key limitations. They are

                          6.41              We believe that the first two limitations should be specifically waived in housing legislation because of special circumstances in housing, and that the third should be dealt with by consumer legislation.

                          6.42              The Regulations define a “supplier” as “any natural or legal person who… is acting for purposes relating to his trade, business or profession, whether publicly owned or privately owned.” The definition of “supplier” appears to include letting and estate agents, local or public authorities, Government departments and housing associations.[42] The Regulations define a “consumer” as “any natural person who… is acting for purposes which are outside his trade, business or profession”.

                          6.43              The Guidance assumes that, in general, a landlord should be considered a “supplier” and an occupier (tenant) should be considered a “consumer” within the meaning of the Regulations. Private landlords will be covered by the Regulations where they are “acting for purposes relating to their trade, business or profession.” The Regulations do not explain this any further. The Office of Fair Trading has indicated that there will be circumstances under which private landlords will not be considered to be acting for such purposes. These presumably include where landlords are not making their living out of letting, but have some other business and are only letting their home temporarily while waiting for a better opportunity to sell it or while working in another area.

                          6.44              There are persuasive arguments for applying the requirements of the Regulations to housing without limitation to those falling within the definition of “supplier” and “consumer”.

                          6.45              We provisionally propose that all those who enter into contractual agreements within the scope of our proposed scheme should be deemed to be suppliers and consumers within the scope of the Regulations, and thus the requirements of fairness and transparency should apply to all agreements covered by our new scheme.

                          6.46              At present, the Regulations are designed to target unfair terms in pre-formulated standard contracts only. They do not apply to terms that have been individually negotiated.[43] The onus is on the landlord to demonstrate that a term has been individually negotiated.[44] A term will always be regarded as not having been individually negotiated where it has been drafted in advance[45] and the occupier has thus not been able to influence its substance.[46]

                          6.47              This position may change in future in general consumer law. The Department of Trade and Industry Response supports bringing individually negotiated terms within the scope of the European Directive, though with the express qualification that such terms should not be regarded as unfair if the supplier has taken reasonable steps to ensure that the particular consumer understands both what has been agreed and its foreseeable implications for him or her.

                          6.48              The Law Commission will be provisionally proposing that the new unified regime of unfair contract terms should extend the Regulations to both negotiated and non-negotiated terms.[47] If this happens, all terms in housing agreements, other than core terms, will be subject to the test of fairness, whether they have been negotiated or not.[48]

                          6.49              We wish to promote fairness and transparency in the terms of housing contracts. We also wish to encourage negotiation of terms, but not at the expense of fairness and transparency. We believe that the whole agreement should be fair and transparent (except that the idea of fairness does not apply to core terms[49]). This logic applies as much to the negotiated terms as to the new default terms (proposed at paragraph 6.117 below). The default terms will be designed to be fair and transparent, even though they fall outside the scope of the Regulations.[50] The only way to make negotiated terms fair and transparent is to subject them to the Regulations test.

                          6.50              We provisionally propose that, in relation to agreements covered by our scheme, the requirements of fairness and transparency should not be limited to non-negotiated terms, and should cover negotiated terms as well.

                          6.51              The test of fairness in the Regulations does not apply to terms which relate to the “definition of the main subject matter of the contract” or to the “adequacy of the price or remuneration”.[51] The extent of the “core” is thus not precisely defined. The Guidance explains that – in the context of housing agreements – these “core terms” include those stating the rent, the details of the property and the length of the agreement. It may well be the case that a requirement for payment of a deposit would be regarded as a core term. (On the other hand a term dealing with the return of a deposit at the end of the agreement would probably not be part of the core.)

                          6.52              Core terms are only excluded from the fairness test if they are in plain and intelligible language. Thus they are subject to the requirements of transparency but not of fairness. We do not propose to impose any regulation on the issues covered by the core terms.

                          6.53              We provisionally propose that the definition of core terms should be left to consumer legislation rather than being included in a Housing Act.

                          6.54              Where a core term, or other term – not being a compulsory term – has been agreed orally, there needs to be a system to enable corrections to be made if the landlord attempts to issue a written contract which does not accurately reflect these orally agreed terms. One solution would be to use the existing law on rectification. But we are not sure whether this is a remedy that would be easily available to occupiers.

                          6.55              We invite views on whether a special jurisdiction should be created, for example in the rent assessment committee, or the county court, to amend written agreements that do not accurately reflect previous oral agreements.

                          6.56              Aside from the Regulations, other areas of law can also render a purported contractual term invalid. Terms agreed, rather than implied, must comply with the ordinary rules of contract law on, for example, certainty and illegality.

                          6.57              The courts have been robust under previous security of tenure regimes in disregarding “sham” terms, which the parties did not mean to be taken literally but were intended by the landlord to avoid statutory provisions. Shams have faded in importance as landlords have been able to use assured shorthold tenancies, without the uncertainty of avoidance devices. However, one landlord recently sought to enforce a term allowing a rent increase sufficient to take the tenant outside of the scope of the Housing Act 1988.[52] Following other decisions on shams, this was held invalid by the Court of Appeal. It is reasonable to assume that the courts will continue to declare obviously sham terms invalid.

Discrimination law

                          6.58              Another area of law which may render contract terms invalid is discrimination law. Identical provisions exist in section 77 of the Sex Discrimination Act 1975 and section 72 of the Race Relations Act 1976, with similar provisions in section 26 of the Disability Discrimination Act 1995, which render void any contract term which is discriminatory. An example of the effect would be that if a landlord decided to negotiate more restrictive nuisance clauses for single mothers than other occupiers (in particular single fathers) or tougher restrictions on making noise for black occupiers than white occupiers. Such terms would be void.[53]

Human Rights Law

                          6.59              When drafting the compulsory terms and the statutory default terms, the Secretary of State will need to ensure that such terms are drafted so as not to be in breach of human rights. If a default term is incompatible then an occupier of a landlord which is a public authority could rely on human rights arguments to challenge the validity of the default term adopted by the landlord.

                          6.60              One of the foundations of our scheme is that agreements should be committed to writing. This is to ensure both parties can be as clear as possible about their legal position. Contracts for the renting of residential accommodation are, in our view, just as important as contracts of employment, where a requirement to provide a written version of the contract has existed for many years. If there is no written agreement then a statutory agreement should be imposed.

                          6.61              We do not believe that agreements as a whole covered by our scheme should be rendered invalid if they are not put into writing. Instead we believe that if no written agreement is used then, the agreement will still exist, but the terms will be those provided as the statutory default terms (as well as the compulsory terms which apply to all agreements). These will also replace any orally agreed terms which are not included in the written agreement. We also propose that the landlord should be subject to sanctions for any significant delay in providing a written agreement.

                          6.62              At present there are four sets of requirements relating to writing. They are

                          6.63              The scheme which we provisionally propose is firmly based on the contract between the landlord and the occupier. As between those parties, that contract should be valid and enforceable whether or not it is in writing. As we will explain in due course, the landlord is to be under a legal obligation to reduce the agreement to writing, but we believe it is necessary, in order to protect the interests of the occupier, to confirm that an oral contract is valid (and that it will be so even though the occupier has not yet gone into occupation of the property).

                          6.64              The contract between the landlord and the occupier may comprise a lease or a licence. A lease is, in most cases, an estate in land, and is therefore potentially binding on persons outside the landlord-tenant relationship (third parties). Whether the lease has this proprietary impact will depend on its compliance with statutory formality requirements and on its registration.[54]

                          6.65              As the application of our scheme is not dependent upon the contract being a lease, it is immaterial for these purposes whether the contract complies with the requirements as to formality or registration. It may of course become highly significant, in the event of third party involvement, to determine whether a contract within our scheme does comprise a lease or a licence, and whether it has proprietary effect. But it is not a question which will require to be answered as between landlord and occupier. Thus we are able to propose that a contract which purports to grant a lease but which does not satisfy the statutory formalities so to do can nevertheless be subject to the regulation effected by our proposed scheme.

                          6.66              We provisionally propose that a housing agreement which is made orally or which otherwise fails to comply with statutory requirements as to formality or registration of leases shall nevertheless be treated as a valid agreement between the landlord and the occupier and shall be subject to the regulation of our new scheme.

                          6.67              These proposals do however raise a further question: at what point should the agreement become fully effective? On land law principles, oral agreements only take effect when the tenant enters into possession.[55] Were our scheme to apply only to leases, this might be the preferred approach.

                          6.68              However we have suggested that all housing agreements should come within the scope of our proposed scheme. Given our emphasis on the importance of the contract, it might be thought that questions of validity of the agreement should be determined by principles of the law of contract. In that case, the agreement would become effective when the oral agreement was made, even if entry into possession was delayed.

                          6.69              It is possible to imagine, however, that the parties enter an oral agreement but then one discovers something about the other, short of a misrepresentation, which makes them want to think again. On this view, it might be preferable that the moment when the agreement becomes binding on both parties is when one or both of the parties acknowledge the existence of the agreement, say by confirmatory letter; or indeed by the completion of the written agreement prior to the occupier moving in.

                          6.70              We invite views on whether an oral agreement should become effective as soon as the oral agreement was made; or only after there has been written acknowledgement of the agreement in a letter; or by completion of the written agreement prior to the occupier going into occupation; or, assuming that a written agreement has not been provided, only after the occupier has entered into possession.

                          6.71              We also propose that default terms should be imposed if the oral agreement is not put into writing within a defined period of time.[56] In addition we propose that the landlord who fails to provide a copy of the written agreement should be subject to the sanction of loss of rent (and possibly criminal sanctions).[57]

Requirements for provision of information about the terms of the agreement

                          6.72              Under the current law there are three different provisions requiring landlords to give written information about the terms of the tenancy.

                                                        (1)      Assured shorthold tenancies. Following amendments to the assured shorthold tenancy regime in 1996, it is now provided that a tenant who has not been given a written statement of certain key provisions[58] in the assured shorthold tenancy agreement may require the landlord to provide that evidence.[59] Failure to provide this information is a criminal offence.[60]

                                                        (2)      Accelerated possession proceedings.[61] The rules relating to the accelerated possession procedure[62] provide that the procedure cannot be used unless the claimant is able to provide a written copy of the tenancy agreement available for the court to peruse. This amounts, in practice, to a further requirement that the terms of the tenancy be set down in writing, which particularly impact upon private sector landlords.

                                                        (3)      Secure tenancies. Landlords letting secure tenancies are under an obligation to provide written details of the express terms of the secure tenancy,[63] the provisions relating to the Right to Buy, and the provisions of sections 11 to 16 of the Landlord and Tenant Act 1985, which relate to the landlord’s repairing obligations.[64] Local authority landlords are required to provide the latter two elements of this information annually.[65] There is no obvious sanction for failure to comply with these provisions, though no doubt any such failure would be regarded as maladministration by the Local Government Ombudsman.

                          6.73              This collection of statutory provisions is a clear example of the fragmentation of the current law. We believe that all occupiers should have a written statement of the terms under which their right to occupy a home has been created.

                          6.74              We provisionally propose that all agreements covered by our new scheme should be put into a written form.

                          6.75              We further provisionally propose that the duty to put the agreement into writing should fall on the landlord; that the landlord should be required to provide a copy for the occupier; and that in any court proceedings that might arise under the agreement, the landlord should be required to produce a copy of the written agreement. [66]

                          6.76              We do not propose to impose any requirement that the agreement should be signed, but we would assume that landlords would wish to obtain a signature on the agreement or a receipt for it as proof that they had complied with the duty.

                          6.77              The model agreement should include a warning to the occupier to keep the contract in a safe place. If the occupier loses his or her copy of the contract, we would not want to see occupiers having to issue claim letters about possible breaches of contract just to make landlords show them their copy.

                          6.78              The requirement for writing will be limited to those agreements covered by our new scheme. We deal in Part IX below with the question of what categories of agreement should be excluded from it. Generally we do not consider that there is any need to extend the requirement for writing to them. Most are less formal arrangements with fewer rights and less scope for disputes. If there are particular circumstances in which a written contract would be desirable, for example for people living in accommodation provided by social landlords on a hostel or supported housing basis, there is nothing to prevent landlords in such cases voluntarily providing occupiers with a written agreement. The terms of the written contract in these cases will, however, depend upon the nature and purposes of the provision. We therefore consider that written contracts for supported housing should be negotiated with the occupiers as part of the development of the provision and not be statutorily prescribed.

                          6.79              Occupiers need to be able to be sure who their landlord is in case of problems. It may be unclear who is legally liable to meet the landlord’s obligations. Although the occupier will know the identity of the person to whom they pay the rent that person may only be an agent and the occupier may not have an address or even a name for the landlord. There are currently several overlapping and inconsistent provisions on this, enforced in a variety of ways.

                                                        (1)      On assignment – where a landlord assigns his interest in premises, which includes a dwelling, to a new landlord, then the new landlord is to give any tenants notice in writing of the assignment and of his or her name and address.[67] Failure to do this is a summary offence, punishable by fine.

                                                        (2)      On request – a tenant has the right to make a written request for the landlord’s name and address to the person who demanded or who last received the rent payable, or to any other person acting as agent for the landlord, and that person must provide a written reply within 21 days.[68] Again failure to do this is a criminal offence, punishable by fine.

                                                        (3)      Service of notices – there is an obligation on landlords to provide tenants with an address in England and Wales at which notices, including notices in proceedings, may be served on them by tenants.[69] Failure to comply with these requirements renders any rent or service charge not due until the requirements have been satisfied. While this does not make the rent irrecoverable from the tenant, such failure does mean a tenant who delays paying is not in arrears. Thus there may be delay in the payment of the rent, to the temporary benefit of the tenant and to the detriment of the landlord. However, tenants may not understand they are still liable for the rent which may lead to a problem with arrears once the details are provided.

                                                        (4)      Service charges and demands for rent – there is a general requirement that any written demand for rent or other sums due under the tenancy must include the name and address of the landlord and, if that address is not in England and Wales, an address in England and Wales at which service of notices on the landlord by the tenant may be made.[70] However, there is no specific sanction for failure to comply unless part of the amount demanded is a service charge, rather than rent. If so, then the service charge element – but not any rent element – will be treated as not being due until the details are provided, in a similar fashion to that described above.

                          6.80              We believe that these examples demonstrate even more incoherence and the need for simplification. In line with our general approach, we feel that any requirement for information on a landlord’s identity should be contained in a single provision.

                          6.81              We take the view that such information should be available to occupiers. Agents frequently refuse to act in relation to premises without instruction from the landlord but refuse to give the occupier the landlord’s name and address. Without this information, occupiers may have the greatest difficulty in dealing with the day-to-day issues that inevitably arise. It is also a key issue in the quick resolution of disputes about alleged unlawful eviction.

                          6.82              We provisionally propose that the rules relating to the core terms in Part A of the agreement should include specific requirements for providing occupiers with information about the landlord’s identity (and those of any agents) and a place of business as an address for service.

                          6.83              Under the current law there is a requirement that in situations where rent is payable weekly the landlord must provide a rent book. Failure to do so is a criminal offence.[71] However the limitation that the rent be “payable weekly” means that in many situations where a rent book might be thought appropriate, for example where rent is payable fortnightly or monthly, these requirements do not apply. Also the statute does not define a rent book.

                          6.84              We appreciate the benefits of ensuring that rent accounts are clearly documented. However, there are problems with the current law.

                          6.85              We provisionally propose there should be a new evidential rule, to be used in any claims for arrears, that – in the absence of a system for recording rent payments – there will be a statutory presumption that the rent has been paid. The presumption would be rebuttable.

                          6.86              The question then arises of what form such a recording system should take. Rent books no longer appear to be widely used in the private sector, particularly where payment is not in cash. In the public sector entries are normally computerised, but rent books tend not to be updated weekly where the rent is paid by housing benefit. It is important that an occupier have access to evidence of rent payments, but imposing a uniform requirement for rent books does not seem to be the solution.

                          6.87              Where payments are made automatically by the occupier, copies of his bank statements should suffice. Where payments are made by the occupier in cash or by a third party, for example housing benefit, the system must afford the occupier an opportunity to verify the entries.

                          6.88              We provisionally propose that the current rules on rent books should be replaced by a compulsory term in the agreement that, in the absence of the occupier having a record of payments made, the landlord should provide a system of payment which is documented, whether in a paper rent book or computer equivalent, and in such a way that the occupier can verify entries.

                          6.89              We think housing agreements should contain three sets of terms: core terms, setting out the essential information about the agreement; compulsory terms, setting out provisions about security and other compulsory obligations; and default/negotiable terms containing the other obligations on the parties.

                          6.90              We provisionally propose that the structure of the contract should be prescribed by Act of Parliament. The details of the contents of each part of the contract should be set out in delegated legislation.

                          6.91              The format of written agreements is a key issue in consumer law. It is essential that important contractual obligations are not hidden in the “small print”. We envisage the regulations containing a Schedule which sets out a full model agreement[72] including the core and compulsory terms, as well as the default terms.

                          6.92              For the avoidance of argument we think that it will be essential that the regulations which set out the details of the structure of the agreement and set out the clauses to appear in the agreement are drafted in a way that enables them to be incorporated directly into the model agreement.

                          6.93              This model agreement would be capable of being copied for direct use by a landlord. It could also contain marginal notes and instructions.

                          6.94              We provisionally propose that the statutory instrument setting out the terms would also set the requirements as to the format and presentation of the written agreements.

                          6.95              We also provisionally propose that the regulations are drafted in such a way that the terms of the agreement set out in the regulations can be translated, verbatim, into the model agreement.

                          6.96              The core, compulsory and default terms should enable both the landlord and the occupier to have a clear picture of what they have agreed are their rights and responsibilities. Use of terms set out in the regulations will also ensure that agreements are compliant with the Unfair Terms in Consumer Contracts Regulations.

                          6.97              We provisionally propose that the Secretary of State should be obliged to consult relevant interests in the housing industry to ensure that the model agreement terms are fair and clear and that, so far as possible and practicable, terms should be drafted in plain English.

                          6.98              Assistance with drafting the model agreements can be gained from the range of model contracts currently available, particularly for housing associations. Models from other legal systems such as the Scottish model secure agreement[73] may also assist.

                          6.99              The Scottish model agreement is accompanied by a summary which the guidance anticipates will be explained to tenants before they sign the full agreement, on the basis that the full agreement is too long to be understood before signing. We can see the virtue of having a synopsis available to occupiers and potential occupiers. However, we would not propose making it a requirement on all landlords to provide one.

                      6.100              We invite consultees’ views on whether it would be appropriate to require landlords to provide occupiers with summaries of their agreements.

                      6.101              The core terms are those which go to the heart of the agreement and cannot be determined in advance. These include

                      6.102              We provisionally propose that the core terms should be included in the written agreement.

                      6.103              We invite views on whether other terms, for example the amount of any deposit, should be included as a core term.

                      6.104              We believe that the written agreement must set out these terms on its face and in clear terms. They will need to be included in the requirement for writing and in any model agreement. The terms will have to be drafted with gaps which will require completion by the parties with the details of each individual agreement.[74]

                      6.105              These terms will also be the “core” terms as defined in regulation 6(2) of the Unfair Terms in Consumer Contracts Regulations. As such they will not be subject to the requirement of fairness, as long as they are expressed in plain and intelligible language.[75]

Part B – compulsory terms

                      6.106              These are terms which cannot be over-ridden by agreement. They must be reproduced in full, without amendment. They fall into two sections: the terms relating to security of tenure, and the legally implied terms.

                      6.107              The security terms are those which, under our proposals, set out the circumstances in which the landlord can go to court to seek an order for possession. These are discussed in detail in Parts VII and VIII.[76]

Section 2: Legally implied terms

                      6.108              Terms implied by common law currently include those such as the covenant of quiet enjoyment, the obligation not to derogate from grant and the covenant to behave in a tenant like manner which currently only apply to tenancies. These will have to be adjusted to ensure they apply to all the agreements (licences as well as tenancies) covered by our scheme. They also need to be restated in up-to-date language which sets out transparently the nature of the parties’ obligations.

                      6.109              The statutorily implied terms as to repairs and fitness in section 8 and section 11 Landlord and Tenant Act 1985 would be included here if they are to be retained. (The Law Commission[77] has proposed that any new lease of a dwelling should include a requirement on the landlord that the dwelling should be fit when first let, and maintained in a fit condition thereafter. The Government supports this general approach,[78] but the Department for Transport, Local Government and the Regions is developing a new system for the fitness standards for rented housing. The exact delineation of the implied terms will therefore depend on the outcome of those changes.) In any event these terms are likely to require some revision if they are to apply to all residential occupancy agreements – licences as well as tenancies – covered by our proposals.

                      6.110              We provisionally propose that terms relating to security and other legally implied terms should be compulsory terms, which will need to be included in the agreement as fully written out terms, and not be subject to amendment.

                      6.111              If a landlord wishes to contract to do more than is required by the compulsory terms, for example offering to undertake a greater commitment to repair the property, then supplementary terms will be able to be included in Part C of the agreement.

                      6.112              We envisage that regulations should prescribe for Part C a list of other issues that will determine the rights and obligations of the parties. They will include matters such as the obligation to pay the rent, the obligation to use the home properly and not use it for illegal or immoral purposes and obligations as to insurance. The exact extent of the list will be determined by the Secretary of State, following consultation with interests in the housing industry.

                      6.113              We further envisage that, in relation to each of these issues, the parties should be free to negotiate their own terms (subject to the overriding requirement that any such term is fair).

                      6.114              In addition, the regulations will contain default terms covering each of these issues. They will be there for two main purposes.

                                                        (2)      They will also fill the void that would be caused by the failure of the landlord to provide a written agreement, or, where a written agreement is provided, a failure to deal with all the issues listed.[79]

                      6.115              Where the landlord decides to adopt the default terms, the agreement should still set out the terms in full, rather than simply referring to the statutory instrument.

                      6.116              If the landlord does not provide a written version of any oral agreement made before the occupier moves in, the default terms will apply instead of the orally agreed terms from the end of the 2 week period of grace.[80]

                      6.117              We provisionally propose that

                      6.118              We invite views on the issues which should properly be prescribed in Part C of the agreement.

                      6.119              It will in addition be open to the parties to include in their agreements terms relating to matters not included within the list of items prescribed in the regulations.

                      6.120              Normally express written terms will displace the default terms. However, if an express term is found to be unfair, so that under the Unfair Terms in Consumer Contract Regulations it is rendered invalid, it will replaced by the relevant default term.

                      6.121              We provisionally propose that legislation should make clear that the appropriate default term will apply where an express written term has been ruled unfair under the Unfair Terms in Consumer Contracts Regulations 1999.

                      6.122              As indicated above, the central importance of the written agreement to our scheme means that we do believe some sanction is necessary for failure to provide one, or to provide one that inaccurately or incompletely records what the parties have agreed.

                      6.123              In making our proposals we have borne the following factors in mind.

                                                        (2)      While failure to provide a written agreement means that default terms will be imposed and will apply instead of any relevant terms agreed orally,[81] this is not sufficient to enforce the requirement for writing.

                                                        (3)      We are not convinced that the sanction currently available for the landlord’s failure to provide an address for service,[82] which renders the rent not due until the address for service has been provided, is in the occupier’s interest. It may well lead to an occupier already in financial difficulty getting further into debt, as the liability accumulates and the whole rent becomes due once the address for service is provided.

                                                        (4)      While occupiers may be able to apply to the rent assessment committee or the court[83] for an order that the landlord should provide an accurate or corrected written copy of the agreement, this might not be sufficient to cover the whole of the writing requirement.

                      6.124              We consider first sanctions in relation to the provision of the agreement; second we give special consideration to the issue of the provision of information about the landlord.

                      6.125              We think landlords (some of whom may be former owner-occupiers letting only one property) should be given a period of grace, perhaps two weeks from when the occupier moves in, in which to put the agreement in writing if they have not done so already.[84] We would then propose that, if they fail to do so, they should be deemed to owe the occupier an amount equivalent to the rent for each day of delay – starting with the day on which the occupier went into possession of the dwelling and continuing up to a maximum of, say, two months’ rent. The occupier would be entitled to sue for this money or – more practically – to withhold rent[85] in order to recover it.[86]

                      6.126              We provisionally propose that where a landlord fails to provide a written agreement within (say) the first two weeks of the occupier taking possession, the landlord should be deemed to owe the occupier an amount equivalent to one day’s rent for each day’s delay, starting with the date of entry into possession. There would be specific provision for the occupier to be able to withhold rent as one way of recovering this amount. The amount due would be calculated by the number of days starting on the date on which the occupier entered into possession of the dwelling under the terms of the agreement (not from two weeks later) and ending on the date the written agreement was provided, subject to an upper limit of the equivalent of (say) two months’ (or such other period as may be agreed) rent.

                      6.127              After the two months’ period (or whatever other period is determined), there would be no continuing financial incentive for the landlord to comply. We are reluctant to impose criminal sanctions where these are inappropriate or ineffective. There are very few prosecutions for the current criminal sanctions in this area. However, we are interested in hearing from those involved as to why this is. If consultees feel that criminal sanctions are appropriate and useful then we would see them as an addition to the civil sanctions, rather than as a replacement.

                      6.128              We seek consultees’ views as to whether an ongoing sanction is required for cases where landlords still fail to provide a written agreement, despite the loss of rent. Do consultees feel that it would be useful and appropriate to create, in addition, a continuing criminal offence of failure to provide a written agreement by the end of the first two months of the agreement?

                      6.129              There remains the question of what constitutes failure to provide an agreement. We want to ensure that all the necessary points have been covered in the agreement. We want to encourage the parties to use the readily accessible model agreements to do this. We therefore think the sanctions above should apply even if a written agreement is provided but is incomplete, in the sense of not including all the terms required under the scheme.

                      6.130              We explained above that default terms will be implied into an agreement where either no term has been agreed or a term has been agreed but not put into writing.[87] In some cases landlords may want to adopt these terms wholesale; in others they will be forced to rely on them, because of their failure to put them into writing before the end of the two-week period of grace.

                      6.131              Our aim is that both parties should be able to see, in one document, a statement of their rights and obligations, and thus be aware of what they are agreeing. Thus we have proposed that landlords should not merely refer to the statutory provisions in the contract, but write them out in full. Model agreements should be readily available in newsagents, Post Offices, advice agencies, libraries, the world wide web and so on. Landlords may also be assisted by their trade associations – a development we seek to encourage.

                      6.132              Where the landlord has provided a written agreement that meets all the statutory requirements but contains a provision that turns out to be invalid (for example, due to unfairness) our view is that the landlord has complied with the requirement for writing. Any sanctions should arise from consumer law provisions relating to unfairness.

                      6.133              We provisionally propose that the rent sanction should also apply wherever a written agreement is provided but which omits any of the issues prescribed in Part B and Part C of the agreement, but that this should not apply where all such terms are included in a written agreement but one or more term is found to be invalid.

                      6.134              We also provisionally propose that the written agreement should set out all the terms in full. A mere reference to the statutory provisions containing the relevant terms would not be enough to meet the writing requirement.

                      6.135              If there is to be a criminal sanction, we invite consultees’ views as to whether it should be limited to cases of complete failure to provide a written agreement, rather than including cases where an agreement is provided but is incomplete.

                      6.136              As this information is particular to each landlord, it must be a core term. No default term can cover it.

                      6.137              We provisionally propose that provision of information about the landlord should be treated as one of the matters on which written information must be provided, so any failure will attract the rent sanction we provisionally propose.[88]

                      6.138              Whether or not consultees feel there should be criminal sanctions for failure to provide a written agreement, there is clearly a stronger case for criminal sanctions where landlords do not provide an address for service. However, we would be equally in need of evidence that criminal sanctions are effective given that prosecutions are so rarely taken.

                      6.139              We invite views as to whether the threat of potential criminal proceedings in such circumstances might constitute a useful spur to compliance.

                      6.140              Like the employment relationship, housing relationships can last for many years. There may be good reasons why the parties might wish to vary the terms of the agreement. The question is how variations of the agreement can be made which avoid unnecessary procedural complexity, but at the same time are not unfair.

                      6.141              The main variation which landlords normally wish to make is to increase the rent. Landlords may also wish to vary other terms of the tenancy. Occupiers currently have no statutory rights to insist on variations and are rarely given any contractual rights.

                      6.142              At common law any attempt, in the absence of a variation clause or agreement between the parties, to vary the contract will be ineffective. Our emphasis on the written contract suggests that variations made in the absence of a variation clause should not be allowed. To avoid the problem of landlords forgetting to cover the question in their agreements, variation could be one of the matters prescribed for Part C of the agreement (default terms).

                      6.143              We note that the Unfair Terms in Consumer Contracts Regulations require variation clauses to be fair to the occupier. The way that types of variation clause are covered in the “grey list” suggests that there are limits on how they can be seen as fair.[89]

                      6.144              We now consider in more detail provisions relating to varying the rent, and provisions relating to other variations.

                      6.145              Housing statutes have long had provisions dealing with variations as to the amount of rent. They have both limited the use of variation clauses and allowed variations where there is no clause. As with other issues, the rules have not been consistent.

                      6.146              A particular problem has arisen from section 13(1)(b) of the Housing Act 1988 which removed any control from contractual rent variation clauses. Some registered social landlords have complained that the timing requirements in the section make it too difficult to use and that the alternatives are also awkward, leading to widespread problems over potentially invalid rent increases.[90] Recently the Court of Appeal struck down a sham use of a rent variation clause.[91]

                      6.147              Our view is that, given the effects of inflation, the default terms should make provision for a rent variation clause. It is quite appropriate that the tenancy agreement should provide for the review and variation of rents, at least on an annual basis.

                      6.148              We provisionally propose that the list of matters prescribed for the default terms in Part C of the agreement should make provision for a clause allowing rent to be reviewable and revisable on an annual basis.

                      6.149              Two distinct situations need to be taken into account: variation of statutorily implied terms; and variation of other terms.

                      6.150              Statutorily implied terms are listed in Part B of the agreement.[92] We envisage that any change to these terms should be reflected in an amendment to the statutory instrument which prescribes the terms of the agreement. There should be a term in section B of the agreement which warns the parties that statutorily implied terms may be subject to change by Parliament. Any sidenotes to such provision could refer to any website where up-to-date information could be found.

Variation of other terms

                      6.151              In the current secure tenancy scheme there is an effective bar in section 102(1) of the Housing Act 1985 on the use of contractual variation clauses.[93] Instead a statutory procedure is prescribed, as an alternative to agreement, which involves consultation of tenants over the changes. Challenges as to the adequacy of the consultation can therefore be made by judicial review.

                      6.152              Other landlords who fail to include a variation clause (or who include one which is wholly invalid under the Unfair Terms in Consumer Contracts Regulations) will have no power to vary non-rent terms without agreement.[94]

                      6.153              Our approach is that the parties should be able to know their rights and obligations by reading their contracts. We therefore envisage that agreements should contain a contractual variation clause.

                      6.154              This could be achieved either by including variation of non-rent matters in the list of items to be covered in Part C of the agreement. Or it could be left as an issue wholly to be negotiated by the parties, subject to the fairness requirements of the Unfair Terms in Consumer Contracts Regulations.

                      6.155              We invite views as to a whether non-rent variation clause should be included in the list of items prescribed for the default terms in Part C of the agreement or left wholly to negotiation between the parties.

                      6.156              It is central to our proposals that agreements should be written. In relation to variations to the agreement we equally think that they must be written and should not become effective until notified by the landlord to the occupier in writing. We have considered whether, after a variation has been made the landlord should be required to issue a completely new agreement including the revised term, but we have concluded this would be an unnecessary burden. We do think that, following a variation, the occupier should have the right to ask the landlord for a copy of the agreement as varied.

                      6.157              We provisionally propose that, to be enforceable, any variation to the agreement must be notified in writing by the landlord to the occupier.

                      6.158              We further provisionally propose that, following notification of a variation, the occupier should be entitled to require the landlord to supply a revised copy of the agreement.

                      6.159              Where landlords are able to seek an order for possession, without the need to prove any occupier default, but simply by giving notice,[95] the occupier’s lack of security may make it hard to enforce the landlord’s contractual obligations. Depending on the state of the local housing market, a landlord may feel able simply to look for a more compliant occupier. The ability to evict without reason limits the extent to which a landlord will comply with a term he or she does not like; the same could be true of occupiers in areas of low housing demand.

                      6.160              The problem is less serious with local authority landlords in that any such threat could be challenged by judicial review. A registered social landlord could be made the subject of a complaint to the Independent Housing Ombudsman or possibly the Housing Corporation. But with private landlords, who we would expect to be the main users of type II agreements, there is normally no redress, save a possible action for breach of contract.

                      6.161              This is a problem which applies not just to our proposals on a written agreement, but to any statutory implied terms even under the current law. An occupier’s adviser will always check the degree of security before going on to advise as to whether it is worth exercising rights such as those to have repairs done.

                      6.162              One of the arguments in favour of retaining the six months’ moratorium on the power of the court to order possession is that occupiers may need a period of protection against notice-only eviction so that they can enforce their rights to repairs, although it is open to question how realistic this protection is in practice.[96]

                      6.163              We feel that this issue needs to be considered here as well. It would be of concern if the effort spent on setting out rights for landlords and occupiers covered by our proposed type II agreement proved nugatory. This could lead to the conclusion that type II occupiers should have no contractual rights at all. We would regard this as unacceptable. Rights are not completely useless in all cases. Even an occupier who leaves or is evicted can still sue for damages for the period of time he or she had to endure living in a property in disrepair.

                      6.164              Though the issue not yet been tackled in English housing law, it is one familiar in other jurisdictions.

                      6.165              A regular feature of housing law in the Commonwealth and the United States is protection against “retaliatory eviction”.[97] When landlords take possession proceedings where they do not need to prove occupier default, occupiers can defend the eviction – and possibly claim damages – if they can prove the eviction is motivated solely by the occupier’s assertion of a statutory or contractual right. In some jurisdictions there is a presumption of such a motive if the eviction comes within a certain time of the occupier claiming the right (for example, by reporting a problem to the relevant enforcement agency).

                      6.166              It should be noted, however, that in those countries, much more rented accommodation is provided by the private sector. Here long-term security is provided by the social rented sector; the private sector caters much more clearly for those seeking short-term housing. To adopt retaliatory eviction as a defence would enable occupiers to slow possession proceedings brought against them. It would seriously undermine the usefulness of the type II agreement.

                      6.167              In any event, there would be serious problems in proving the landlord’s motivation.

                      6.168              In UK discrimination law, which also applies to housing, there are separate protections against “victimisation” for asserting rights against discrimination.[98] It does not appear that these could be used as a defence to an eviction but might form the basis for a claim for damages, the prospect of which may deter the landlord from acting in such a retaliatory fashion. It would only apply in a context where the anti-discrimination legislation operated.

                      6.169              In UK employment law no detriment can be imposed on an employee for claiming any of a set of statutory rights.[99] Normally an employee must have a year’s service to qualify for rights against unfair dismissal. But where a dismissal can be shown to be motivated by the employee’s assertion of a statutory right, then it will be automatically unfair and the employee will be protected even before completing a year’s service.[100]

                      6.170              In each of these examples, actions otherwise lawful are made unlawful if the motive is to dissuade someone from exercising statutory rights. It is one thing to say that landlords should be able to evict without reason, but it is another to say that they should be able to evict with impunity for positively bad motives.

                      6.171              Despite any initial attractiveness, such ideas also have significant drawbacks. First, they would, if adopted, tend to undermine the effectiveness of the procedures for seeking possession on the notice-only basis. This might dissuade potential private landlords from entering the market.

                      6.172              In addition, type II occupiers will know from the outset that their security is to be limited; many will only want limited security. More emphasis should be put on improving standards of property management, rather than re-introducing longer-term security of tenure to a sector of the market where only restricted security is appropriate.

                      6.173              We seek the view of consultees on the following questions:

                      6.174              Various accreditation schemes are now being developed to offer private landlords advantages – whether in referrals of potential clients or in priority processing of applications and so on – if they sign up to agreed standards of service. Those who use such accreditation schemes, for example local authorities and universities, might include in their accreditation scheme measures to deal with worries about landlords taking their contractual obligations seriously.

                      6.175              In the alternative, we invite views on whether consultees believe that a better approach would be to rely on promoting good practice.

                      6.176              One issue which we think that the consumer approach to housing law can encourage is a new approach to the resolution of disputes. Central to the Woolf reforms of the civil justice system is the notion that, in resolving civil disputes, the courts should be used as the forum of last resort.

                      6.177              In the specific context of possession proceedings, we are currently of the opinion that there will only be limited scope for use of the various forms of alternative dispute resolution. Indeed we have adopted the fundamental principle that orders for possession should be made by a court.[101]

                      6.178              In other housing contexts, such as neighbour disputes or disputes about repairs, we think alternative approaches may have much to offer. Particularly in the context of public and social housing, it does not seem sensible for large sums of public money to be spent, by both landlord and occupier, on litigation which could be put to better use repairing or improving the property in question.

                      6.179              Another argument in favour of seeking alternatives to litigation is the notable feature of housing relationships that they have the potential to be long lasting. Avoiding the inherently adversarial proceedings of the court proceedings may be critical to maintaining long-term relationships. Therefore in housing law, generally, we think alternative dispute resolution has a great deal to offer. We support the powerful steer of the Civil Procedure Rules and the recent comments of Lord Woolf in Cowl v Plymouth City Council.[102]

                      6.180              During the last decade a number of mechanisms have become available which provide alternatives to litigation as a means of resolving disputes between landlords and occupiers.

                                                        (1)      The Independent Housing Ombudsman[103] deals with disputes between registered social landlords and their occupiers, and has extended his scope to private landlords that wish to subscribe to his services.

                                                        (2)      The tenancy deposit scheme is a pilot scheme run by the Independent Housing Ombudsman, which holds the deposits of private sector tenants and provides a speedy resolution of disputes about the return of deposits.

                                                        (3)      The Office of Fair Trading and local authority tenancy relations officers are increasingly using persuasion to get landlords to adhere to the law, without having to start proceedings for civil and criminal sanctions against landlords to enforce compliance.[104]

                                                        (4)      Community mediation can play a very significant role in resolving neighbourhood disputes, although it is seriously constrained by insecure funding and its availability is limited.[105]

                      6.181              There may be some scope for mediation to avoid possession proceedings in the social rented sector where discretionary grounds are being considered by the social landlord or where there is a dispute about the alternative accommodation that is being offered to an occupier. It may also be of value in highly disputed cases to assist in the identification of the facts and issues to be determined by a court.

                      6.182              We think that considerable encouragement should be given to the appropriate use of alternative dispute resolution processes in the resolution of disputes about housing matters.

                      6.183              One way in which this could be achieved would be by providing for this in the terms of the tenancy agreement. We do not think that this is an issue on which there should be a compulsory term in the agreement, but we think it might be included in the list of issues covered in the default terms. Such a term might provide that, should particular types of problems arise – for example, relating to repairs, or noise nuisance – the parties should attempt to resolve the matter by mediation prior to considering taking proceedings in court.

                      6.184              We invite views on whether encouragement should be given to the appropriate use of alternative dispute resolution in the resolution of disputes about housing matters.

                      6.185              If the answer is yes, we also invite views on whether alternative dispute resolution processes should be included in the issues to be covered by the default terms and in relation to what types of dispute alternative dispute resolution might be particularly relevant.

                      6.186              In the next two Parts, we consider what the terms relating to security should be in relation to the type I agreement (Part VII) and the type II agreement (Part VIII).