Property Redress Scheme expels agent who failed to pay landlord £150,000 in rent

Agent took on eight properties on rent-to-rent basis but struggled to fill them due to the Covid pandemic.

A letting agent has been expelled from the Property Redress Scheme (PRS) after they failed to pay £150,000 in rent to a former landlord client

The agent had been ordered to pay the landlord £25,000 by the PRS, the maximum it can award, and has now been removed from the scheme for failing to comply.

The landlord will continue to try to recover the amount owed via the courts.

The case involved rent-to-rent arrangements for eight properties, which the agent struggled to fill due to the pandemic.

The landlord agreed to reduce rent payments while the agent tried to find tenants, but the agent failed to comply with the landlord’s contractual obligations.

Unregistered handyman

The agent was also found to have used an unregistered handyman following a gas leak, resulting in the landlord reporting the incident to Gas Safe and the HSE. This all amounted to a significant financial loss for the landlord.

Following the decision, Sean Hooker, head of redress at the PRS, said: “Guaranteed rent, or rent to rent, operators are becoming more and more common in the private rented sector, as it offers a lower barrier to entry into the property market.

“Whilst there are reputable operators who have been providing the service for many years, there is a significant proportion of the market who are less experienced and need to make sure they fully understand their obligations and responsibilities.”

43% increase in complaints

The PRS has reported a 43% increase in complaints relating to guaranteed rent since 2018.

Paul Shamplina, founder of eviction specialists Landlord Action, and chief commercial officer at Hamilton Fraser, said: “In my view, if the rent-to-rent arrangement is not carried out diligently the landlord loses control of what is happening at the property and this is where the problems begin.

“With many years’ experience of dealing with evictions I would advise any landlords entering into such an agreement to tread very carefully.”

The Hamilton Fraser group of companies, including the Property Redress Scheme, Landlord Action and Mydeposits, have combined their expertise to create an ‘Ultimate guide to rent to rent’.

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