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Poor communication can cost…

A tenant who was a serial late-payer, caused a complaint from the guarantor over the lack of communication about rental arrears. Katrine Sporle, The Property Ombudsman, discovered that the issue had arisen because of an unchecked box on the agreement.

Katrine Sporle

Link to The Property Ombudsman

Complaint

Katrine Sporle image

A case that The Property Ombudsman (TPO) was asked to review came from a guarantor concerning the communication of rental arrears.

The guarantor said that the agent failed to notify her of outstanding rental arrears of £2,500 that the tenant had accrued during the tenancy. The guarantor also complained that, after being informed of the arrears, the agent failed to provide the requested information, the rental statement of account.

The agent said that they sent letters to the guarantor regarding arrears on a regular basis during the first year of the tenancy. However, when the tenancy renewed, the ‘Guarantor Required’ box was unchecked, which prevented automated letters being sent. The agent could not conclude whether this was human or system error.

The guarantor requested compensation for the rent arrears she paid to the landlord. She considered that the situation could have been avoided or minimised had she known at an earlier stage as she could have discussed the issue with the tenant.

Investigation

Under Paragraph 13b of the TPO Lettings Code of Practice, the agent was required to have procedures in place to notify the landlord, tenant and guarantor in a timely manner of rent that had become appreciably overdue. Further, when requested, the agent was required to provide a statement or schedule of rental payments received, to show how arrears arose, as per obligations under Paragraph 13c of the Code.

After examining the written evidence provided, the Ombudsman was satisfied that the agent had procedures in place to notify relevant parties when the tenant had not paid rent, 7, 14 and 21 days after it was due.

During the first year of the tenancy, it was apparent that the tenant paid the rent late every month and both the tenant and the guarantor were notified appropriately. Through this communication, the guarantor was able to contact the tenant directly in order to remind him to make the required payment.

Had the agent checked the tenant’s files they would have realised that they should contact the guarantor.

The arrears were always cleared prior to the next rental payment being due. It was evident that the agent communicated in line with their obligations under the Code of Practice. However, after the tenancy was renewed, the agent only contacted the landlord and tenant to advise of unpaid rent. The Ombudsman was not satisfied that they had made any attempt to contact the guarantor during this period.

Moreover, for the last nine months of the tenancy, it did not appear that formal notification of ongoing outstanding rent was communicated to relevant parties, although it was accepted that the agent was in contact with the landlord with regard to serving notice to end the tenancy, due to the build-up of rental arrears.

Whilst the Ombudsman appreciated that the majority of contact regarding late payments would have been automatic through the system, she considered that it was unreasonable that the agent had not checked their file at all for two years, in order to realise that there was a guarantor who should have also been contacted.

The agent’s file clearly detailed that there was a guarantor, and they also had a copy of the Deed of Guarantee and Indemnity on file, which detailed her responsibilities.

The Ombudsman considered that it was the agent’s responsibility as the managing agent of the property to maintain regular communication as and when it required.

With regard to the guarantor’s request for documentation to show how the tenant’s rental arrears had accrued, the Ombudsman was not satisfied that any of the requested information was provided by the agent.

She considered that the agent did not act in accordance with their obligations under Paragraph 13c of the Code.

Outcome

The agent did not act in accordance with their obligations under Paragraphs 13b and 13c, as they did not contact the guarantor when the tenant failed to make rental payments for nearly two years and did not respond to requests for information.

These inactions caused the guarantor aggravation, distress and inconvenience which the Ombudsman considered merited an award of compensation. It was not an award to reflect the monies the guarantor paid to the landlord, as she was contractually liable to pay these in the event the tenant did not meet their financial obligations.

This case was supported and an award of £500 was made.

June 24, 2019

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