This case concerns a dispute referred to The Property Ombudsman (TPO) from the property’s landlords who claimed that the references that had been obtained by the agent should not have been accepted as they were, in their opinion, “seriously flawed.”
The landlords had explained to TPO that the tenant who had successfully applied to rent the property through the letting agent, had what they described as “serious flaws” in their lifestyle and working life, which had included a known history of her running brothels and also that she had a previous tenancy rescinded by another landlord as a result of their criminal activities at that property.
This information had not been identified at all by the lettings agency during the tenancy application process.
Other information supplied by the tenant was also claimed to be false by the landlords. The tenant’s declaration that she worked as a manager in a local Chinese restaurant was found to be untrue, secondly, the tenant’s bank details were incorrect and out of date and the wage slips which had been provided to support the tenant’s application were, in fact, not for that tenant at all.
The tenant had ‘serious flaws’, including a history of running brothels and having had a previous tenancy rescinded because of her criminal activities…
The landlords had stated to The Property Ombudsman, that although the tenant had always ensured that she paid the rent in full, during the tenancy period, more criminal activity took place, which had quickly become local knowledge.
As a result, following the tenancy, the landlords decided that they would sell the property and they had been forced to do so at a significantly reduced price. The landlords then said that they wanted the agent to compensate them for this loss that they had incurred, saying that had they carried out thorough referencing, it would have highlighted these serious issues.
Under section 10 of the TPO Code of Practice, when referencing the tenant, the agent’s obligation is to ensure that they are diligent in identifying fraudulent applications and in validating the tenant’s authenticity.
The agent must evidence that all the appropriate references were taken, either by using a professional referencing service provider, by direct application to third party referees, or through a combination of the two (paragraph 10b).
In the circumstance where an applicant’s referencing acceptance is conditional, the agent is then required to ensure that any conditions are met and/or to obtain confirmation in writing from the landlords that they wish to proceed with the tenancy application (paragraph 10f).
An agent must ensure that they provide their landlord with all the relevant facts relating to the tenancy application to enable them to make an informed decision as to whether to proceed with the tenancy to that tenant (paragraph 10g).
NOTES ON THE CASE
Taking paragraph 10 of the Codes into consideration, the Ombudsman noted the following:
- The landlords had instructed the agent under their Tenant Introduction Service and the tenant had made an offer to rent the property shortly after a viewing.
- The agent then sent application forms for the tenant to complete and referred the application to a third party referencing provider.
- The agent’s records showed that they had contacted the tenant to request a copy of her work permit or visa and they had asked that she provide them with an alternative contact number for her employer. This was due to the fact that the referencing provider had been experiencing difficulties making contact. The agent also asked that the tenant should provide six months’ payslips to support her application. The tenant provided the payslips and a copy of her P60 shortly afterwards.
- The agent then wrote to the landlords to explain that suitable references had been received for the tenant. Subsequently, the landlords and tenant entered into a tenancy for a six month period.
The Ombudsman was satisfied that the agent had utilised a reputable referencing company to conduct checks on the tenant in accordance with the obligation under Paragraph 10b of the Code of Practice. However, shortcomings in the agent’s service were identified. From the evidence provided, the Ombudsman found the following:
- The Tenant Assessment Report recommended overall that the tenant was acceptable for the tenancy, but had highlighted that there was a potential issue with the listed address as there was no record of the tenant having lived there.
- Whilst the tenant’s driving licence and bank statement gave the address provided by the tenant, the Ombudsman considered that the agent had an obligation to inform the landlords that the referencing provider had not been able to find a record of the tenant living at the declared address. There was no evidence to suggest that they had done so. The agent had merely written to the landlords to explain that suitable references had been received.
- An agent should request a prospective tenant’s previous addresses for the last three years. Given that the tenant’s visa stated that she had been granted leave to remain in the UK since some three years previously, she had only provided the details of one previous address on the tenancy application form. This should have alerted the agent to a potential issue and they should, therefore, have been ‘on notice’ that additional information may have been required.
- There was no evidence to demonstrate that the agent had explained to the landlords that an employer reference – a crucial detail – had not been obtained.
- The landlords had believed that the wage slips and bank details provided by the tenant were false. However, the wage slips were in the tenant’s name and the national insurance number matched that on the P60. The bank account also matched the bank statement she provided. There was no evidence to support the landlords’ belief.
Overall, the Ombudsman was not persuaded that the agent demonstrated that all appropriate referencing checks had been carried out and the landlords’ complaint was therefore supported by the Ombudsman.
Whilst there were clearly some serious shortcomings in the agent’s service, it was explained to the landlords that there is no guarantee that a tenant will act in accordance with the obligations set out in the Tenancy Agreement even if positive references are obtained.
There’s no guarantee that a tenant will act in accordance with the obligations in the Tenancy Agreement even with positive references.
Certainly, referencing was unlikely to have highlighted the issues that occurred in this tenancy.
Nevertheless, the Ombudsman believed that the agent’s shortcomings in this case had indeed caused undue and avoidable aggravation and inconvenience to the landlords.
An award of £400 in compensation was made to reflect this.