COMPLAINT

This case concerns a dispute referred to The Property Ombudsman (TPO) from a landlord who claimed that their agency was negligent and in breach of contract for its failure to adequately reference two tenants who went on to accrue significant arrears, resulting in a court possession order.

Starting from the beginning, the landlord explained that the tenants accumulated rent arrears and it became necessary for her to make an application to the court to obtain an Order for Possession. The landlord said that the agent’s negligence was the sole cause of the financial loss she incurred and was seeking nearly £20,000 for rent arrears together with compensation for emotional trauma and distress.

Referencing seeks to minimise the risks in letting a property, it doesn’t guarantee payment of the rent.

The agent denied the allegations, saying that they had complied with the requirements of the TPO Code of Practice at all times.

INVESTIGATION

The Ombudsman’s role was to consider if the agent had complied with their obligations under the TPO Code of Practice and, if not, to consider the resultant impact on the landlord. It is not to consider if an agent has been negligent; that is a matter that only a court can decide.

Paragraph 10b of the TPO Code of Practice requires an agent to take references on the tenant that are appropriate to the circumstances of the application and in line with arrangements agreed with the landlord. Referencing should be by way of a referencing service provider or by direct application to third party referees or by any combination of the two.

Having considered the information provided, the Ombudsman noted the following:

• The agent had instructed a recognised third party referencing company who provided a ‘Tenant Comprehensive Report’ in respect of both tenants and recommended that the tenants would be acceptable for the tenancy.  There was nothing in the reports provided to flag that further investigation or supplementary referencing was warranted or required. The agent was entitled to take the referencing results in good faith.
• It was established through the agent’s Terms of Business what arrangements were agreed in respect of the referencing process. It was clear that the agent would “undertake thorough reference checks by any referencing means or services the agent chooses to use.” No evidence was provided to indicate that the landlord gave additional specific instructions to the agent concerning their referencing of the tenants.
• The Ombudsman was satisfied that the agent had met the relevant and appropriate requirements of their Terms of Business and the TPO Code of Practice.

The landlord’s view was based on events that subsequently took place during the tenancy and, accordingly, her belief that the referencing was inadequate. However, referencing does not provide a guarantee of future performance of the tenancy agreement or certainty that a tenant will pay the rent. The referencing process seeks to minimise the risks in letting a property and in this case the process undertaken by the agent was appropriate.

OUTCOME

Whilst appreciative of the landlord’s dissatisfaction and frustration at the tenants’ significant rent arrears (and breaches of the tenancy agreement), the Ombudsman explained that while the agent was responsible for finding and referencing the tenants, they were not responsible for the actions (or inactions) of the tenants. The tenancy agreement is a legal contract between the landlord and the tenant, the agent is not a party to that agreement. It is the tenant’s obligation to adhere to the terms, including making payment of rent.

The Ombudsman could not hold the agent accountable for the rent arrears that accrued and made no award to reflect those monies because the complainant has been unable to obtain them from the tenants. The Order for Possession obtained by the complainant required the tenants to pay to the complainant the rent arrears and costs and the complainant was advised to seek independent legal advice as to how to enforce this order.

The complaint was not supported and no award in compensation was made.