Whistleblowers: Rent contracts revised

May 18, 2001

The Office of Fair Trading has rebuked three institutions for imposing unfair or questionable terms in contracts for student accommodation. The rest of the sector has been warned to take heed.

Acting on complaints, the director-general of fair trading has instructed Keele University, Derby University and Writtle College to drop or revise terms in their student accommodation contracts that he has deemed unfair. A report from the OFT's unfair contract terms unit confirms that the institutions have made the changes without the need for court proceedings.

The OFT said it would draw attention to its concerns over university hall accommodation contracts with representative bodies. The Association of University Administrators has issued guidelines about the rules after an approach by the OFT.

Six unfair or "questionable" elements were found in halls of residence occupancy licences set by Keele University. The OFT found that the university's contracts could make students liable for "unspecified hidden charges". One contractual clause imposed by Keele could have had the effect of making the student liable for damage to accommodation even where the university was at fault or after the premises had been vacated by the student, the OFT said.

Keele was told to remove another clause that excluded the university and the staff's liability for negligence, the OFT said.

Another clause "had the effect of making the student liable for payment for accommodation when the university was already receiving payment from another occupant".

A Keele spokesman said that the university had worked cooperatively with the OFT after it was first approached in October 1999 about 1998-99 occupancy licences, following a student complaint.

He said the OFT had said there was potential that the terms could be interpreted and relied on unfairly, "not that any unfair effect was actually being experienced". The university denied that it had excluded negligence by employees in assessing liability for damage.

Writtle College was also told to change or remove six terms of its contracts. Writtle's contracts allowed the college to keep students' deposits when they failed to take up a place, the OFT said. Deposits could be kept even if a student left after the closure of a course.

The contract also allowed Writtle to deem the student body "collectively responsible" for damage and make deductions to deposits without allowing any provision for appeals.

Writtle also absolved itself of any liability for its own negligence in cases of loss or damage to students' personal items.

The college's head of student services, Geoff Owen, said that although the OFT had just published the details, the matters dated back two years. "It took us a year to agree with them a new wording, but we agreed in time for the current first-year intake."

Mr Owen said most of the terms altered or removed are still common practice across the sector and that many were looking to the Writtle case to see if they should change their own contracts.

Derby University was told to change or delete three contractual terms. One unfair clause bound the student to an unspecified charge for overdue rent. This has been altered to specify a standard charge if rent is more than 14 days late. Two other clauses used ambiguous language.

The OFT's unfair contracts unit said: "All three included exclusions of the supplier's liability for his own negligence such as terms requiring the student to accept that the college did not take any responsibility for the loss or damage of any personal items on campus. Other questionable terms included those setting out additional charges for late payment. The OFT objects to terms setting high or unspecified penalties for late payment of fees. Collective liability charges also raise concerns."

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