The complaint

A landlord who used the services of a letting agent to secure a tenant for their rental property ended up with a financial loss due to substandard tenant referencing. The landlord brought their dispute to The Property Ombudsman for resolution.

The tenant’s annual salary was £14,300 instead of the £30,000 they had declared.”

A typical referencing process includes ensuring a potential tenant has a level of income sufficient to meet monthly rental payments. In this case, the referencing report showed the tenant’s annual salary was £14,300 instead of the £30,000 they had declared.

Despite this substantial discrepancy, the landlord was not alerted to this nor informed regarding the overall outcome of the tenant referencing.

Once the tenancy began, rent was paid for the first two months, but subsequent rent was either missed or partially paid. At this point, the landlord discovered the salary discrepancy and in an effort to redeem their services, the letting agent started providing a fully managed service.

An eviction notice was served to the tenant but due to court delays it was nine months later when the tenant moved out of the property, Understandably, the landlord retained the full tenancy deposit as agreed by the tenant.

The investigation

Adjudication aimed to determine whether the landlord’s financial losses could be attributed to the agent. The letting agent disagreed with the rent arrears claim, stating the landlord was managing the tenancy and could have acted more swiftly in serving notice to the tenant. It was determined this was untrue, with evidence showing the agent had upgraded their service level to full management with the eviction notice being served by agency staff.

The complaint was upheld with £7,873 awarded for rent arrears, £1,970 for legal and eviction expenses and £750 compensation for aggravation, distress and inconvenience.

Lessons learnt

Here are some best practice guidelines when carrying out tenant referencing so claims and disputes can be avoided.

– Where a tenant or guarantor fails to meet the agreed referencing criteria, agents must obtain confirmation in writing from the landlord whether they wish to proceed with that application.

– The landlord must be provided with all relevant facts (subject to compliance with data protection laws) relating to the application to enable the landlord to make an informed decision, regardless of whether the tenant has met, or failed to meet, the referencing criteria.

– In this case, a large salary discrepancy was found during referencing but the landlord was not informed, leading to financial losses when the tenant could not pay rent.