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“Reckless referencing can have very serious consequences for agents,”

man under magnified glass imageLast year I reviewed nearly 1,400 complaints concerning the actions of letting agents. In a significant number of these the landlord complainant expected that I would support the complaint and make an award to cover rent arrears that had accrued, based on the perceived inadequacy of the referencing conducted on the tenant.

I am aware that referencing can be a cause for concern, particular where a landlord considers that the referencing was not carried out properly and, if it had been, he states that he would not have proceeded with the tenant and, as such, expects that the agent should reimburse him the rent arrears that have arisen. If such a case is referred to my Office, I will consider if the tenant was fully referenced, in accordance with the obligations contained within section 10 of the TPO Code of Practice.

The agent must always ensure that the landlord is properly advised of the referencing results.”

Most agents choose to use the services of a recognised, third party reference provider. Should an agent choose to carry out the referencing themselves, I expect to see that they have carried out a similar level of diligent referencing as that undertaken by a reference provider. The requirements are contained within section 10 of the Code; the agent should be seeking to ensure as far as they are able that a suitable tenant is found who can afford to pay the rent for the property.


It is important to carefully verify the identity of the applicant. In one case referred to me, a couple approached a letting agent, explaining they were looking to rent a property. Cursory identification checks were made and referencing documentation provided by the couple was deemed satisfactory. No further checks or verification of the referencing documents were made.

In fact the man had used his wife’s documentation to rent a property for him and his girlfriend, his girlfriend pretending to be his wife. A careful check of photo ID would have highlighted that the proposed tenant presenting herself as ‘Mrs X’ was not, in fact, the Mrs X represented by the documentation. When the tenants vacated the property with significant rent arrears, the landlords instigated court proceedings against ‘Mr and Mrs X’, the tenants named on the tenancy agreement.

It was incredible that the agent had accepted these ‘make your own’ bank statements.”

The court struck out the proceedings against Mrs X; the real Mrs X had not signed the tenancy agreement. Additionally, the girlfriend (name still unknown when the case came to my office) was not a signatory to the agreement and any possibility of claiming rent arrears from her was clearly going to be very difficult. I made a significant award for the aggravation caused to the landlords but advised that they would have to pursue Mr X for the rent arrears through the proper channels.

The TPO Code has always included an obligation to verify that the applicant has the right to live and work in the country, checking the necessary visas if applicable. Once the Immigration Act 2014 has been fully implemented, expected sometime this year after the current pilot, this will become a legislative requirement. Agents will want to ensure that they are fully conversant with these obligations.

Should agents carry out their own referencing, they should carefully check that the prospective tenants can afford to pay the rent. A usual industry norm is that the tenants’ annual salary should be at least two and a half times the annual rent in order to satisfy affordability criteria. I would expect that both pay statements and bank statements had been seen; the latter will reveal affordability by way of highlighting other regular commitments that the tenant may be making. At least three months of statements should be taken.

The agent must ensure that the landlord is properly advised of referencing results, in order to allow the landlord, rather than the agent, to make an informed decision as to whether to let the property to that tenant. Failure to highlight any negative referencing results, or indeed failure to reference properly in the first place, is likely to lead to a supportable complaint should the matter be referred to my office.


However, no amount of referencing can guarantee that a tenant will comply with the obligations within the tenancy agreement and pay the rent. Should an agent have failed to meet their obligations under section 10 of the TPO Code, it is likely that I will make a compensatory award for the failure of the agent to adequately equip the landlord with all the necessary information. However it is the tenancy agreement that affords the landlord the correct avenue to pursue the rental arrears against the tenant and my award will generally not cover those arrears.

I will view the matter differently if I consider that the agent has been reckless in their approach to referencing. In one case, where the tenants had moved into the property but paid no rent after the first month, it was apparent at first glance that the references provided by the tenants were little more than ‘make your own’ bank statements. I found it incredible that the agent has accepted such documentation, and taken no steps whatsoever to ask the tenants about the matter or advise their landlord client. No other documents were asked for or provided. The agent merely reported to the landlord that all was satisfactory.

In this case, conducted with a total disregard for an agent’s obligations under the TPO Code, and in what could only be described as a reckless way, it was apparent that the agent had set up a tenancy agreement with tenants from whom there was no prospect whatsoever of recovering any of the approximately £5,000 of rental arrears. I made an award of compensation to the landlords amounting to the rental arrears together with a sum intended to compensate them for the distress, aggravation and inconvenience which the agent’s abysmal actions had caused to them.

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