The Ombudsman Files – £15k pay out for letting agent failure
A landlord lodged a complaint with The Property Ombudsman alleging that a letting agent made mistakes at various points from the start. Ombudsman Rebecca Marsh decides the case.
The Complaint
A complaint was made to The Property Ombudsman (TPO) against a letting agent over various issues: accepting tenants who failed referencing, neglecting to collect a deposit and secure a month’s rent in advance, failing to notice and address missing rent until prompted by the landlord, issuing a tenancy agreement with incorrect details, and mishandling the eviction procedure with invalid notices despite assurances.
The agent’s delays in rent recovery and failure to manage non-paying tenants prompted the landlord to intervene directly in the eviction process, which had to be restarted. Despite acknowledging their service failures, the agent declined to compensate the landlord, who sought reimbursement for associated costs and losses.
The Ombudsman’s findings
The agent signed a tenancy agreement on behalf of their client for a joint tenancy for a non-student couple. Within two months, the landlord had already reached out to TPO due to her significant concerns about the tenancy and how it had been administered.
- Acceptance of Tenants who did not pass referencing
The 12-month tenancy began without notifying or seeking authority from the landlord, as the agent deemed it unnecessary under the contract.
Paragraphs 11b, 11f, and 11g of the Code mandate agents to conduct thorough referencing of prospective tenants.
The agent did conduct referencing, revealing that the tenants were unsuitable due to financial instability.”
The agent did conduct referencing, revealing that the tenants were unsuitable due to financial instability. One had no declared income, and the other relied solely on benefits, necessitating a guarantor and additional tenant to cover rent.
Despite these findings, the agent failed to act on recommendations, secure a guarantor, or inform the landlord. This breach of the Code was acknowledged by the agent.
Although granted discretion in tenant selection, the agent was obligated to act in the landlord’s best interests. By placing financially unsuitable tenants without safeguards or landlord consultation, the agent failed to meet this obligation. The Ombudsman supported the complaint, noting the agent’s failure to act in the landlord’s best interests and awarded compensation accordingly.
- Failure to take a deposit.
The landlord discovered that the agent had placed tenants without taking the deposit amount of £1,385 which was recorded in the tenancy agreement.
The agent claimed the tenant had said the deposit was paid but failed to check their own records. Upon realising no deposit was paid, the agent advised the tenant to prioritise paying outstanding rent for the landlord’s re-mortgaging needs but took no further action to collect the deposit. The Ombudsman found the agent’s failure to ensure all required payments were made in advance of the tenancy not in the landlord’s best interests or compliant with the terms of business agreement, the tenancy agreement or the code.
This failure left the landlord without a security deposit to cover property damage and cleanup costs, causing financial loss and significant distress. The ombudsman supported this complaint and awarded compensation.
- Failure to secure a month’s rent in advance.
The landlord found that the tenants failed to pay the first month’s rent in advance as required by the tenancy agreement. The agent did not explain why they did not collect this rent before the tenancy began, contrary to their obligations to collect and manage payments as per the terms of business. The agent’s failure to ensure rent was paid in advance impacted the landlord, leading to support for this complaint and a proposed compensation.
- Failure to notice missing rent or try to recover it until pushed by the landlord through multiple calls and emails.
The tenant failed to pay a deposit, a month’s rent in advance, and the next month’s rent. The landlord then began pressing the agent for action after discovering no income had been received. The agent confirmed their efforts began at the end of the month’s missing rent, resulting in the collection of £1,200, the only payment received after over two months. Despite the agent’s claim of pursuing rent arrears on behalf of the landlord, their efforts were limited to issuing standard monthly letters for a six-month period, followed by cumulative arrears letters for a further four months, including a pre-action protocol letter mentioning contact with the guarantor, despite the agent not obtaining one as required by contract.
Despite the agent’s claim of pursuing rent arrears on behalf of the landlord, their efforts were limited to issuing standard monthly letters.”
The landlord consistently pursued the agent, formally complaining and seeking advice from TPO. The landlord did not terminate the agent’s services, trusting their commitment to resolve the issue without additional cost. However, the agent did not adequately demonstrate their role in collecting rent or keeping the landlord and tenants informed of the situation.
- Issuing of tenancy agreement with incorrect address and landlord name making it invalid subsequently for eviction purposes.
The agent agreed to serve a Section 8 Notice at the landlord’s insistence, as the tenants were two months in arrears. The landlord later received the Tenancy Agreement and discovered significant errors, invalidating it.
The agreement incorrectly named the landlord and listed the wrong property address. Despite the landlord’s formal complaint, the agent acknowledged errors in the address but not in the landlord’s name, offering £100 compensation. The agent’s handling did not appropriately consider the landlord’s circumstances, including recent bereavement, affecting her financial stability and escalating her dissatisfaction. The Ombudsman supported this aspect of the complaint.
- Mishandling of eviction procedure: issuing invalid notices and failing to follow through procedure, while reassuring the landlord it was in hand
Due to the absence of a valid tenancy agreement, formal eviction notices were ineffective.”
Due to the absence of a valid tenancy agreement, formal eviction notices were ineffective, leading the agent to seek advice before proceeding with action following the expiration of the initial incorrect notice. This prolonged the process of removing the tenants and exacerbated the agent’s failures on the landlord. Subsequently, the agent issued another incorrect Section 48 notice and omitted grounds from the subsequent Section 8 notice, necessitating multiple reissues. The relevant Code Paragraphs 16a and 16d highlight the agent’s obligation to serve notices correctly and promptly upon receiving landlord instructions, which the agent failed to fulfil.
Despite being led to believe that the tenants would vacate, the absence of a valid Tenancy Agreement rendered any notices invalid, allowing the tenants to remain. The agent sought advice from an eviction company to rectify the Section 8 notice, but ineffective action persisted leaving the landlord to engage the eviction company directly to regain possession.
Valid notices were eventually served at additional cost, culminating in an eviction hearing with possession granted and costs awarded against the tenants. Despite agreeing to a payment plan, neither tenant made payments, complicating their debt settlement. The agent’s repeated failures to issue correct notices and expedite the eviction process justified a compensatory award for the landlord’s losses.
Conclusion
The Ombudsman supported all the complaints after finding that the agent failed on multiple grounds in their obligations to their client. At every stage of the tenancy, the agent failed to exercise reasonable skill and care which caused significant financial loss, aggravation, distress and inconvenience to the landlord.
At every stage of the tenancy, the agent failed to exercise reasonable skill and care.”
The Ombudsman made a total award of £15,085. This included compensation of £7,200 for six months’ rent, acknowledging the likelihood of non-payment by the tenants; £1,500 for legal costs stemming from invalid tenancy documentation; £1,385 for the uncollected deposit that could have covered repair costs; and £5,000 for the landlord’s endured distress.