Desperate prospective tenants anxious to secure a tenancy from a distance - say via 'phone or email, away from landlord or letting agent premises (This is distance selling) - do not have the right to a cooling period as accommodation is exempt from cooling off, under Sale of Goods and Services Act (SGSA); however, guarantors and landlords may have have such a right, depending on whether they are deemed to be consumers. It is all about vulnerability of purchasers not expected to know better. A landlord with one property is a business, but he is also a vulnerable consumer - i.e. entitled to 14 days hindsight to consider the wisdom of the purchase. The same landlord with many properties is more likely to be deemed to be a business not in need of protection.
The cooling period was previously 7 days but extended to 14 days under rules introduced on 13 June 2014 - The Consumer Contracts (Information, Cancelation and Additional Charges) Regulations 2013
One can only imagine how this will affect last minute student prospective tenants signing up in late September, subject to a parental guarantor. And the guarantor later invokes the 14 day cooling clause!? With no Guarantor and little prospect of securing alternative student tenants in mid October after academic term starts, where does this leave the letting agent and landlord letting to students? What advice does the agent give his landlord client? And without a guarantor the tenant may be prohibited from moving in, resulting in a potential one year void when needed for the next academic year. The agent or landlord will likely have turned away many other last minute prospective tenants in reliance on any initial payment and promise of a guarantor. Will this discourage distance selling? Let's say that whilst vetting a guarantor, he realises he is not going to pass the credit check. He then resolves to refuse to answer the credit queries, thereby failing the credit check - a 14 day delay can scupper any prospect of student letting in October. Where does that leave everyone... legally? Worse, the tenant demands a full refund of the non-refundable administration fee when told he must secure an alternative guarantor, but none is willing to act for him!
This is a thought provoking issue. Consumer Protection Regulations (CPRs) apply to consumers, as such they enjoy 14 day cooling periods. Guarantors and some landlords with small portfolios are likely considered consumers too. Guarantors are entitled to 14 days cooling, whereas those they guarantee (tenants), are not. This becomes problematical when the two are intertwined and the guarantor withdraws within 14 days, leaving a prospective or actual tenant without a guarantor. If the tenant has already moved in, would the tenant's occupation be deemed to be 'performance', as regards the guarantor's liability? Or could the guarantor walk away with impunity leaving an unprotected landlord within 14 days? Would this leave the landlord with no guarantor and unable to evict the tenant. Never having allowed it to happen this is uncertain. A wise agent will make every effort to ensure landlords sign any Terms of Business at an agent's office. Cooling period terms are best explained in both the Terms of Business and any Parental Guarantee.
However, a student's guarantor may post any signed document if in another part of the country if unable to physically travel. This is where it can become complicated. It was on this very basis that the writer successfully defended a court case in April 2014 prior to the extention from 7 to 14 days cooling. Following significant abortive agency work and vetting, the guarantor sought recovery of the agency administration fees, following the guarantor's refusal to answer legitimate questions by the credit-check company, constructively excluding himself as a suitable guarantor.
This topic is such a grey area that even the judge at the hearing dodged the question when challenged as to the validity of her initial intimation that the tenant was entitled to 7 days cooling (prior to 13 June 2014). Even the judiciary do not understand all the exceptions and nuances of the law!
The Legal position summarised is as follows:
Agents can rely on a consumer contracting out of the cooling period, if the landlord / agent has provided the consumer (guarantor or client) with prior notice and made them fully aware of the strict criteria, absent which consumers can cancel - in some cases up to a year and 14 days later.
Consumers normally suffer no costs during cancelation periods. Even if consumers agree to waive the right to cooling they may still have a right to cancel if,exceptionally:
- the client is not provided with information on the right to cancel, (where a right to cancel exists) or
- the client is not provided with notice, if they are not actually entitled to cancel or
- b. the client is not provided with information on payment of reasonable costs, or
- c. the client is not supplied with the service (in response to a request to commence) during the cancelation period.
- d. However, clients lose the right to cancel a service contract when fully performed as requested AND they had acknowledged this at the outset.
- e. And If a consumer cancels a service after specifically requesting it to start during the cooling period then the consumer must pay the reasonable costs incurred (subject to the above criteria).
Just to clarify (ha ha) – the cooling period.
Face to face consumers visiting agent's offices are not entitled to a cooling period under distance selling rules. HOWEVER, AND VERY IMPORTANTLY, CONSUMERS must be told when THEY ARE NOT ENTITLED TO A COOLING PERIOD ideally in writing or in an evidential way (e.g. recorded telephone call), otherwise, by not providing this information CONSUMERS then become entitled to cancel WITHIN 1 YEAR AND 14 DAYS AFTER THE CONTRACT DATE! Is that ironic?
consumers are entitled to know when they are not entitled to a cooling period otherwise they become entitled by default... what!?*$