Residential tenants are heavily protected by law, and even if they violate the tenancy agreement, it can be a long and costly process to evict tenants from your property. Many landlords have been stung by this, and as a result are extremely wary of who they hand possession of their property to.
One of the benefits of serviced accommodation is that the contract with the guest is not a residential agreement. Instead, you are granting a “license to occupy”, which is governed by consumer legislation. While there are still regulations to comply with, if you use the right terms and conditions then you will be protected in most situations. You will be able to eject the guest if they break your terms and conditions, bill their credit card for any damage they cause and charge cancellation fees should they choose to cancel outside the agreed period.
As a serviced accommodation operator, when you take a booking from a customer, you are entering into a contract with the guest. Your terms and conditions act as the written terms of the contract, and so you must ensure that every eventuality is covered. Anything not covered in the terms and conditions will not be legally enforceable, should the guest decide to dispute your handling of the situation.
Firstly, as you entering into a consumer contract, it is important to have clarity around who the guest’s contract is with. Very often this can be unclear – how many times have you been onto a website, only to find no company name, address or registration number (even though this is a legal requirement)? You should state very clearly in your initial booking confirmation email exactly who the contract is with. If you are acting as an agent – either through a joint venture, or the management model – then you should also make this clear. For instance, here is an excerpt from a booking confirmation email from our management company:
Terms & Conditions: By making this booking you are agreeing to our terms and conditions, which are attached. Please note that Southampton Apartments are an agent and not the supplier for your booking. The supplier for your booking is PDK Serviced Accommodation Ltd, registered in England and Wales number 10290858, registered address Kemp House, 152 City Road, London, United Kingdom, EC1V 2NX.
As well as stating who the consumer contract is with, you should attach the terms and conditions to your initial booking email. In legal terms, this is known as a “durable copy” – e.g. it is a copy of the document that you can store, rather than being hosted on a website where it could be updated after the booking. Sending a durable copy of the terms and conditions is an important step to ensure that they are legally enforceable.
It is important to specify the point at which the booking becomes a contract. Once a contract is in place, you are obliged to fulfil the contract and become bound by the terms and conditions.
Although the guest is not as protected as with residential property, there are a number of key protections in place around consumer contracts. One of the key protections is that you are not allowed to have unreasonable terms and conditions. For instance, if your terms and conditions stated that you could cancel a guest booking anytime, with no prior notice, that would be deemed an unfair term and condition and would not be enforceable. The point at which the booking becomes a contract is therefore very important, as you will be contractually obliged to provide the guest accommodation.
In your terms and conditions, you should make the point of a contract once payment has been made. There is a major advantage to operating this way: those time-wasting guests (yes, they do unfortunately exist!) who book in initially and then become completely uncontactable are not bound by a contract. Instead, we can cancel bookings after 24 hours if no payment has been made as no contract was ever in place for the booking.
Because you are entering into a consumer contract, basic contract law applies – and in the UK, you must be 18 to enter into a contract. As it would not be possible to have a contract with a 16 or 17-year-old guest, your terms and conditions need to state that the person booking the property needs to be aged 18 years or above. Considering the risks of letting teenagers run rampant inside your property, you might want to also state that the person booking may not book on behalf of anyone under 18.
PAYMENTS AND PRICING
Your terms and conditions should clearly state what payments will be required, and by when. You should also include acceptable payment methods – for instance, debit card, credit card or bank transfer.
You should avoid taking cash from guests if at all possible. There are three reasons for this: firstly, there are security issues with staff carrying large amounts of cash, not to mention logistical issues of then having to pay the money into the bank. Secondly, the typical quality of guest paying with cash is very low. With no commitment prior to arriving at the property, the cancellation rates are very high and even after arriving they could choose to decline the booking on a whim. Thirdly, should they cause damage to the property, you will have no means to automatically charge them – unlike if you have stored their debit or credit card details.
If you are taking a security deposit, you will need to include this in your terms and conditions. There are advantages and disadvantages to taking security deposits, and you will need to decide for yourself whether it is worthwhile. In our business, we do not see the benefit of all the additional work required when we already have the guest card details stored. However, if we were operating in higher risk areas such as London, or with more expensive high-end properties, we would probably reconsider.
You need to state that the price of the guests booking will not change even if the price for their stay goes up or down in the meantime.
It is a legal requirement to state how many days prior to their stay the guest can cancel their booking without incurring any penalties. If they were to cancel within the penalty period, you should also state what penalties would be applied.
You should also include your right as a provider to cancel under exceptional circumstances. For example, if the boiler was to fail, there was an extensive water leak in the property or if there were major electrical issues which needed addressing.
CHECK-IN AND CHECK-OUT TIMES
You should include your check in and check out times on the terms and conditions. Guests often get confused about these times, so being able to reference the terms and conditions will make it easy to resolve any objections they might make. This is symptomatic of how useful the terms and conditions are, as in most cases you don’t want to have to enforce them legally. But being able to refer guests to the terms and conditions when they have a complaint or query will nearly always resolve the issue without having to take matters any further.
NATURE OF STAY
You can be as clear as you like in your listings and communications – sometimes, guests will have wildly different expectations of their stay to what you have told them. We have had guests turn up expecting a cooked breakfast in the morning, access to the swimming pool (what swimming pool?) and even free spa treatments.
Clearly stating in your terms and conditions the nature of their stay will help to resolve these situations. State what is included – for instance, access to the property, fresh bedding and towels, a fully equipped kitchen – and also what is not included.
Probably the most important area of your terms and conditions is with regard to damages. Unless you have addressed damages within your terms and conditions, you will be unable to bill your customer if (and unfortunately when) they occur.
The most common type of damage is smoking. No matter how many no smoking signs you put up around the property, some guests will always ignore the rules and light up. As well as the fire risk, the smell is a major issue – it tends to be soaked up by bedding, furniture, and carpets, and the smell lingers for a long time. You will need to treat the smell, and we have had excellent results using an O-Zone machine, which can be purchased for less than £100.
If a guest has smoked in the property, you should also be vigilant for burn marks and interference with smoke alarms. Guests often put socks or bags over smoke alarms in order to avoid detection, which can damage them. Although you should always check smoke alarms between guest stays, you should be particularly careful if a guest has been smoking.
With various issues around smoking, you should charge a relatively high fixed amount for breach of your no smoking policy, with around £150 being the industry standard. You should reserve the right to charge more, should the costs the rectify any damage be more than this.
The cost of replacing or repairing any damage occurred during guests stay should be included in your terms and conditions. This should also include any items which disappear from the property during guests stay. You should keep receipts or invoices as proof of costs, and submit these to the guest when billing their card.
As you have already stated what you will and won’t be providing as part of your service, you should also state what guests should and should not be doing within your property. This should include:-
1) No Smoking;
2) If you don’t want guests to bring pets with them, this should be clearly stated in your terms and conditions. You should make an exception for assistance dogs, as not only do they provide a critical service but also, this could otherwise be considered discrimination;
3) No dangerous or hazardous materials;
4) No tampering with fire safety equipment;
5) Don’t remove, damage or destroy any property;
6) Don’t use the property for any business purpose – particularly important if your guests turn out to be prostitutes and you need to eject them;
7) Don’t download or access any unlawful or obscene material;
8) Don’t cause unreasonable disturbance;
9) Don’t make excessive noise, particularly at night; and
10) Don’t fail to return keys, fobs or access cards.
It is important to retain the right to eject the guests if they breach your acceptable behaviour policy.
You need to make clear what will happen if you are unable to bill their card for any additional charges incurred. You should set out the process of how you pursue them, what notice will be given and the legal process you will go through should they fail to respond.
Because you are taking data from your guests, you have a legal obligation to tell guests exactly what data you are going to store, where you are going to store it, how long you are going to store it for and how you will use the data. You should pay particular attention to debit and credit card handling, as this will also be required for PCI compliance.
Having a complaints process for your customers to follow is a legal requirement. This does not need to be complex – it should simply set out who the need to speak to and how, what response they should expect and when, and what they should do if they are unhappy with the response.
Finally, there are some areas we need to include for legal purposes.
This includes limiting your liability – for instance, this would prevent a guest from claiming that because they missed a job interview due to an issue with your property, they are claiming £400,000 in 10 years lost wages…
Another area is third party rights. This ensures that if another person stays in the property other than the person who booked – and therefore the person your contract is with – that the terms and conditions extend to these guests, and the lead guest is still held responsible.
Because this is a legal document, you must state that the exclusive jurisdiction for it is under Engish Law. This prevents, for instance, an American guest claiming that the terms and conditions should be considered under American law, where they may not be enforceable.
There are lots of areas to consider when putting together your terms and conditions. However, you can use our template to get started, which we spent many thousands on with our solicitors. You can find the link at the top of this page – we hope you find it helpful!