OFFICE OF FAIR
TRADING News Release (01/09) issued by COI News Distribution
Service. 14 January 2009
The OFT has
secured an agreement from a major builder of UK retirement
apartments to amend its leases, especially in relation to the
re-sale of properties.
McCarthy & Stone plc has agreed to remove from future
contracts, and not enforce in existing contracts, a term in its
leases that involved charging consumers a 'transfer' fee
of 1 per cent of the sale price when the property was subsequently
sold. The OFT considered this term was likely to be in breach of
the Unfair Terms in Consumer Contracts Regulations 1999 (the
UTCCRs). The company said that it did not agree with the
OFT's view but co-operated with discussions and agreed to the
changes. The company has also agreed to amend various other terms.
The OFT has raised the issue of 'transfer' fees with
the proposed body that will be responsible for delivering a code
of conduct and redress scheme in the homebuilding industry, which
has agreed to consider the matter and facilitate discussions with
the industry. This body is being formed in response to the
OFT's Homebuilding market study.
Mike Haley OFT Director of Consumer Protection said:
'These changes will benefit thousands of elderly and
potentially vulnerable residents selling their homes. We are
pleased that the changes have been accepted and implemented
without the need for further action by the OFT. Moving forward, we
welcome the opportunity to work with the code body for the
homebuilding industry as a means to improve lease agreements
across the sector.'
NOTES
1. McCarthy & Stone plc retirement apartments are typically
house-manager assisted retirement housing including communal areas.
2. For the financial year 2006/7 McCarthy & Stone Plc
properties had an average gross selling price of £190,700 and the
average age of purchasers of standard developments was 77
(McCarthy & Stone Annual Results, 2007).
3. The UTCCRs apply to standard contract terms with consumers.
The UTCCRs protect consumers against unfair standard terms in
contracts they make with traders. The OFT, and certain other
qualifying bodies (such as local authority trading standards,
national regulatory bodies, and Which?) can take legal action to
prevent the use of potentially unfair terms. A term is likely to
be considered unfair if, contrary to the requirement of good
faith, it causes a significant imbalance in the parties'
rights and obligations under the contract, to the detriment of
consumers. The UTCCRs say that a consumer is not bound by a
standard term in a contract with a trader if that term is unfair.
Ultimately, only a court can decide whether a term is unfair.
4. The leaflet Unfair Standard Terms (pdf 71 kb) provides general
guidance for consumer advisers on the UTCCRs. The Unfair Contract
Terms Guidance is a comprehensive guide to what the OFT believes
to be fair and unfair terms in consumer contracts. The guidance is
based on the OFT's experience of enforcing the UTCCRs, and is
aimed at traders and their advisers as well as consumer advisers.
OFT has also published the sector-specific Guidance on unfair
terms in tenancy agreements (pdf 542 kb).