Home » Resources » Redress » Fraudulent tenant references

Fraudulent tenant references

"A landlord was concerned about the referencing of one particular tenant. He believed that the application was likely to be fraudulent and sought compensation from the agent, reports Katrine Sporle, The Property Ombudsman."

Katrine Sporle
COMPLAINT

The letting agent responded to the complaint, saying that the tenant passed full referencing checks and that they had no reason to suspect that the application was fraudulent.

INVESTIGATION

Italian passports imageIn accordance with Paragraphs 10a and 10b of the TPO Code of Practice, the letting agent was obligated to exercise due diligence in identifying any potentially fraudulent applications and to undertake the appropriate references against the tenant.

In accordance with Paragraphs 10d and 10e of the Code, the agent was also obligated to obtain proof of the tenant’s previous address and identity.

Evidence was provided to The Property Ombudsman which showed that the agent had obtained a copy of the tenant’s Italian identity card and proof of his address by way of a bank statement.

Whilst the employer details that had been provided were fake and the applicants had not actually lived at the given address, a referencing report was also carried out by a third-party referencing provider – which then verified the tenant’s income and employment, and the tenant’s landlord reference.

There were no red flags in the referencing checks to alert the agent that the application was fraudulent.

The referencing report did highlight that the tenant had not been identified on the electoral roll. They then advised the agent that it would be better to obtain a separate proof of address, which they did.

In this case, the agent had demonstrated, by their use of the third-party reference provider and their own checks, that they had conducted the reference checks with due diligence.

The employment reference had indicated that the tenant could afford the rent.

The landlord’s reference was favourable. There was no adverse credit history found. The tenant therefore passed the referencing checks and the landlord was advised accordingly.

THE DECISION

The Ombudsman was satisfied that the agent referenced the tenant in accordance with their obligations under the TPO Code of Practice. It was accepted that the tenant had provided incorrect information, but the agent had taken all reasonable steps to reference the tenant.

Katrine Sporle image

Katrine Sporle

There were no red flags within the referencing checks to put the agent on notice that the application was fraudulent or that the tenant was unsuitable.

The agent was able to evidence that they had acted in good faith when recommending the tenant and they could not be held accountable for the actions of the tenant, or for the damage they caused in the property.

In this case, the agent’s clear records were their defence to the complaint, allowing them to evidence the actions that they had undertaken when referencing the tenant and liaising with the landlord at the start of the tenancy.

There was another complaint made by the landlord regarding the payment of rent. The landlord stated that the agent failed to set up a standing order for the payment of rent and that this should have disqualified the tenant from the tenancy. Whilst an agent can request that the rent be paid by standing order, they cannot set one up on behalf of the tenant. In this case, the tenant would have been required to set up a standing order with their bank.

The only payment that the agent collected on behalf of the tenant was the first month’s rent and deposit. This is not unusual. It can often be the case that the first month’s rent and deposit to be made by direct transfer or by debit card, rather than by standing order, particularly in circumstances in which later payments are to be made directly to the landlord.

The Ombudsman was satisfied that this was appropriately handled by the agent.

The landlord also complained that the agent did not assist them after they raised concerns about the way in which the tenant was looking after the property. The agent was instructed on a tenant-find only basis and were not therefore involved in the day-to-day management of the tenancy and were not able to help in taking action against the tenant.

The Ombudsman did not uphold this part of the complaint.

OUTCOME

The Ombudsman did not support this complaint and did not consider that an award of compensation should be made.

January 30, 2019

What's your opinion?

Please note: This is a site for professional discussion. Comments will carry your full name and company.