Distance Selling Regulations 2000

(European Communities Act 1972)

Full Title and Commencement:

Full Title: The Consumer Protection (Distance Selling) Regulations 2000, S.I. 2000 No. 2334

Commencement: The Regulations came into force on 31 October 2000

Scope:

These regulations act as secondary legislation under the European Communities Act 1985 which empower the Secretary of State to introduce regulations regarding consumer protection.

The primary intention of the Regulations was to regulate distance selling business transactions (i.e contracts concluded at a distance - e.g. mail order) where there is no face-to-face contact between the supplier and the consumer.  Tenancy agreements and related contracts are specifically included within the general scope of the Regulations and so the Regulations will apply to landlords in distance selling situations.

With reference to residential lettings, the three main situations where this might occur are:

-  tenancies agreements granted as distance contracts (i.e. no face-to-face contact with the tenant)

-  an agreement for a tenancy made as a distance contract (e.g. where a property is 'reserved' in advance)

-  guarantor agreements made as distance contracts

Key Provisions:

The regulations have two important effects for landlords (and agents) regarding distance contracts:

- allow the consumer the right to cancel the distance contract

- require that a supplier of goods or services provides certain specified information to the consumer

DISTANCE CONTRACTS

Under the Regulations, "distance contracts" means "any contract concerning goods or services concluded between a supplier and a consumer under an organised distance sales or service provision scheme run by the supplier who, for the purposes of the contract, makes exclusive use of one or more means of distance communication up to and including the moment at which the contract is concluded".

This means that if a tenant enters into a tenancy agreement and this has been done solely by "distance communication", the Regulations will apply.  "Distance communication" means that there has been no physical presence or meeting of the supplier (or his agent) and the consumer - in other words, the entire transaction has taken place by telephone, email, fax, letter or similar remote means.

RIGHT TO CANCEL

The Regulations imply a right to cancel by the consumer into any distance contract under the Regulations unless this right has been specifically excluded by agreement of the parties.  Such cancellation rights could have costly consequences where a tenancy has already begun - for example if the guarantor decides to cancel his rent guarantee.

Cancellation operates when the consumer gives a notice of cancellation to the supplier.  The notice of cancellation from the consumer should be given in writing.  Where it applies, the right to cancel can be exercised by the consumer within seven working days of concluding the agreement if the Written Information requirements have been complied with, or within three months and seven working days if they have not.

The right to cancel does not apply for the supply of services (assumed to include residential tenancies and rent guarantees) if the performance of the services has already begun and the consumer has been informed that there will be no rights to cancel the contract once this has occurred.

WRITTEN INFORMATION

When undertaking distance contracts, the supplier must provide to the consumer in writing (or in another durable medium which is available and accessible to the consumer) certain information specified in the Regulations.

In good time, prior to the conclusion of the contract, the supplier must provide the consumer with the following:

-     the identity of the supplier and, where the contract requires payment in advance, the supplier's address

-     a description of the main characteristics of the goods or services

-     the prices of the goods or services including all taxes;

-     delivery costs where appropriate;

-     the arrangements for payment, delivery or performance;

-     the existence of a right of cancellation (where appropriate - see note above);

-     the cost of using the means of distance communication where it is calculated other than at the basic rate

-     the period for which the offer or price remains valid;

-     where appropriate, the minimum duration of the contract, in the case of contracts for the supply of goods or services to be performed permanently or recurrently.

The above is clearly a general list:- of the information listed, some will not be appropriate for rental contracts.

Rental Agreements:

Rental agreements (i.e. short leases or tenancy agreements) are specifically covered by the Regulations (when concluded as distance contracts).  However, since the majority of lettings involve a physical meeting between the tenant and the landlord (or agent) either when conducting the pre-tenancy viewing or when signing the tenancy agreement (or both), then in these cases, the Regulations will not apply and have no effect.  Moreover, landlords and their agents should ensure that, wherever possible, distance contracts do not occur and tenancy agreements are signed by the tenant in the physical presence of the landlord or his agent.

If there has been no physical meeting between the parties either prior to granting the tenancy OR when the tenancy is granted, then the Regulations may apply, and a subsequent right to cancel may be implied in the tenancy agreement.

Guarantor Agreements:

More likely to occur in the lettings context is the situation where a third party is acting as a guarantor for a particular tenancy and is required to sign a rent guarantee.  Such guarantees commonly take place in the form of a written agreement between the landlord and the guarantor.  The Distance Selling Regulations will apply where the agreement has been concluded by distance (with no physical meeting) with the danger that the guarantor could opt to cancel the agreement after the tenant has been granted possession and the tenancy has started. Thus, wherever possible, such agreements should be concluded in person.

Where the guarantor does not live locally, some precautions should be taken to protect the landlord's position:

1.  Include the written information required by the Regulations (see ‘Written Information' above) in the agreement.

2.  Specify in the guarantor agreement that there shall be no right to cancel the guarantee under these Regulations once the tenancy has started.

3.  Ideally, try and sign the rent guarantee at least seven working days prior to the start of the tenancy - this is the standard cooling-off period afforded to the consumer under the Regulations.

Enforcement:

The Director of the Office of Fair Trading will investigate any complaints and may apply for an injunction.

Exclusions:

Contracts excluded by the Regulations include those for the provision of accommodation (i.e hotel, bed & breakfast, holiday and similar accommodation).  Rental agreements for short leases are, however, specifically included.

Sources for Further Information:

• The Stationery Office - Copy of the Regulations:  SI 2000 No. 2334 - (Tel: 0870 600 5522) or it can be downloaded from the Office of Public Sector Information website at www.opsi.gov.uk
• The Letting Centre, website: www.letlink.co.uk

This summary is intended to assist landlords and letting agents to understand the effect of the Regulations.  It is not an authoritative interpretation - this is a matter for the courts.  For more detail, you should refer to the text of the Regulations themselves.