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Landlord’s intention to sell obligations

I have recently seen an increase in complaints by tenants alleging that thefor-sale-sign letting agent was aware of their landlord’s intention to sell the property but had neglected to make them aware of these intentions. Obviously, many tenants would not wish to rent a property if they knew that they may be faced with uncertainty as to a new owner’s plans.

If faced with such a situation, an agent will appreciate that they need to ensure that they comply with the Consumer Protection from Unfair Trading Regulations 2008, which places an obligation on them to disclose any material information to a consumer. If a landlord client tells an agent that they will be placing the property on the rental market but are also intending to sell, it would be sensible to advise them that a potential tenant must be told of the situation to allow the tenant to make an informed choice as to whether to proceed with a tenancy. Furthermore, the TPO Code of Practice obliges agents to ensure that, while their duty and obligations are to their client landlord, applicants and tenants are regarded as consumers and customers and are treated appropriately, which I consider encompasses an obligation to be treated fairly and in accordance with best practice, with the disclosure of all relevant information.

‘Many tenants would choose not to rent a home if it was up for sale.’

Christopher Hamer

Chris Hamer

I accept it may be the case that an agent has not been advised of their landlord client’s plans. In a recent case, the tenants complained that despite being informed that the property was to be sold by the landlord, the agent withheld this essential information from them prior to the tenancy proceeding, particularly when the tenants advised that they would be interested in extending the tenancy agreement after the first term. However, on examining the documentation submitted, I was not persuaded that the agent was aware of the landlord’s plans to sell the property and hence they could not disclose what they did not know to the tenants. Although I understood that the tenants were disappointed and upset when the landlord decided to end the tenancy by exercising a break clause to allow the property to be sold, I did not support the complaint and hence made no award for costs incurred by the tenants in having to find alternative accommodation, as they had requested.

However, I will support a complaint and make an award of compensation, if it is apparent that at some point in the tenancy the agent was informed by their landlord client that the property was on the market to be sold or when the agent facilitates, for example, a for sale board being erected or viewings conducted, without first advising the tenants of the situation. Such a situation is clearly worrying for the tenant and will cause aggravation that can be avoided by prompt communication.

In one case referred to me, the landlord was committed to trying to sell and required the option to end the tenancy after three months, for which a reduced rent would apply to compensate the tenants. However, the landlord was wrongly told by the agent that he could not grant an assured shorthold tenancy for less than six months (this rule ceased to apply in 1996, the agent’s legal knowledge was 15 years out of date). This lack of knowledge on the part of the agent culminated in a muddle with the tenants being given inconsistent information and left feeling deceived, the landlord complaining that his wishes were not followed and the agent trying to cover their tracks by wrongly explaining the tenancy terms to the tenants. The prospect of an end to the tenancy after three months was not mentioned until the last minute. The tenants were left with the impression they would have to leave after three months and yet strangely, and I suspect in error on the agent’s part, not only were they given a six month term but also they, as opposed to the landlord to whom this was important, were given the right in the tenancy agreement to end it after three months. However one looked at the events, what came across was a muddle of poor advice, lack of attention to instructions, sloppy drafting of the tenancy agreement and a policy of stringing the tenants along with an economical and belated explanation of the landlord’s intentions. I supported this complaint, together with others relating to the service given by the agents during the course of the tenancy, and made an award of £325.

It’s a muddle of poor advice and sloppy drafting…

Finally, a number of complaints have been brought about as a result of a mortgage company repossessing a property from tenants and specifically that the agent should have checked that the landlord had the consent of their mortgagee prior to the let and there were no mortgage arrears that could jeopardise the tenancy. The TPO Code of Practice contains a requirement that a landlord client is advised of the need to obtain any necessary consents, for example from the mortgage lender, but I consider that advising a landlord of their obligations suffices. There is no further requirement to seek written confirmation that such consent has been forthcoming. It is the landlord who will enter into the tenancy agreement with the tenant and, ultimately, their responsibility to ensure that they are in a position to do so. It would be extremely upsetting for a tenant to receive a letter, often addressed merely to the occupier, advising that court proceedings are under way to seek possession and they have a very short time to vacate the property. I recognise that it is the actions of the landlord rather than the agent that has brought about such a situation, although ‘nudging’ the landlord in regard to his mortgage circumstances is important.

As is often the case, and my continuing message, prompt and accurate communication and the provision of a service consistent with the TPO Code of Practice can avoid many complaints being referred to my Office.

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