Buy-to-Let Landlords. Are you a Business or “Consumer”?

In a period of increasing constraints on the private rental sector a recent insurance case reflects the growing trend for landlords being unable to play the "consumer" card when it comes to buy-to-let. 

The courts have until now been open to treating landlords as "consumers" under the UTCCR Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs), therefore benefitting from the protection from unfair terms in contracts.  (See Foxtons v OFT and the CMA guidance for lettings agents).

This has changed in Ashfaq v International Insurance Company of Hannover plc [2017] EWCA Civ 357 a buy-to-let landlord took out a "Residential Let Property Owners insurance policy". Following a fire at one of his student let properties the landlord attempted to rely on his position as a consumer to prevent the insurance company avoiding an indemnity claim amounting to £336,000.

The claimant landlord made a material omission (a conviction) on the insurance application form. Seeking protection of UTCCR's he claimed to be a consumer.

Faux LJ gave this short shrift: "…  the fact that he was carrying on the trade or profession of company director [in a different area of business]  does not mean that he was not also carrying on the trade, business or profession of a building's owner letting out property for profit".  In other words, he operated a business of letting property.

Buy-to-let landlords should take note and expect not to benefit from consumer protection terms in relation to their lettings activities.