RLA Policy Consultant Richard Jones has written the following after an RLA member getting caught up in the business/consumer issue many landlords face. The article provides a warning when conducting business as a landlord and why being aware of consumer / business rights and legislation is an important aspect of being a landlord.
A member recently approached us for advice following the purchase of a fire extinguisher for one of his rented properties. The salesman called at his home. He purchased an extinguisher using a business cheque in his business name. He subsequently learned that an equivalent extinguisher could be purchased much more cheaply so he cancelled the purchase of the original extinguisher, believing that he was entitled to do so. Regrettably, the seller refused to agree to the cancellation of the contract. The seller was within its rights.
Under revised European Union legislation, which came into force in July of this year, normally you have a right to cancel a purchase made at your home within 14 days of delivery but only if you are a “consumer”. Had the landlord in question been buying the fire extinguisher for his own home undoubtedly he would have been a consumer, but if you are buying something for a business then you are not.
There is a lack of clarity around whether or not a landlord is a consumer or not. If you are a so called “accidental” landlord – such as letting out your own home, or if you let out a property which you have retained following an inheritance because you are not able to sell it – then you are still going to be a consumer.
On the other hand if you have a number of buy to let properties, perhaps two or more, then you will be treated as being in business for the purposes of this legislation. Irrespective of how many buy to let properties you may own, if you use a business name or use a business account to pay then the seller will be entitled to say that you are not a consumer.
Due to the lack of case law in this area it is difficult to be precise as to the circumstances in which you will not be regarded as being consumer where you are buying items for your rental properties or where you are dealing with a contractor or professional adviser such as an accountant or lawyer. It is important, therefore, that you are aware of the fact that you may not be able to rely on consumer rights in this situation. Sometimes the contract itself will allow you to cancel it but unless there is such a provision you may not be able to rely on the normal 14 day cooling off period which a consumer enjoys under the legislation. Similar rules apply when you buy something on the internet.