How to Make a Claim Against a Letting Agent who Supplied a bad tenant

HOW TO MAKE A CLAIM AGAINST A LETTING AGENT WHO SUPPLIED A BAD TENANT

Last week, I was advising a client who had got a bad tenant from a letting agent. He wanted to know if he could he make a claim against the agent.

Here is the background to this case: After not getting rent for two months and the tenant having caused lots of issues with neighbours, the tenant left, with the agreement of the landlord and before the end of his fixed one year term. The landlord was happy to just be rid of him. Naturally, the tenant left the property in a mess.

Incredibly, the letting agent still expected to be paid commission for the remainder of the 5 months left of the fixed term – their commission was being paid monthly.

My client asked what rights he had with the letting agent and could the letting agent continue to demand commission for the duff tenant they had given him.

CASE STUDY: MAKING A CLAIM AGAINST A LETTING AGENT WHO SUPPLIED A BAD TENANT

In the case of Hale v Blue Sky Property in 2016, the letting agents, (Blue Sky Property Group, who are an Association of Residential Letting Agents (ARLA) agent), had used a third party referencing agent and had just accepted their recommendation – without seemingly doing any further checks at all.

This, sadly, is not untypical – and is well short of what we advise our clients to do and what any letting agent should be doing, in our view.

The agent, in this case, accepted the tenant as being satisfactory, despite the fact the credit report revealed be had a county court judgement (CCJ), which the tenant’s application from specifically said he did not have.

If the letting agent had bothered to do further checks, they would have found the female tenant had no job and that the person named as her employer was actually a relative. Also, the male tenant had lots of debts which accounted for a large part of his salary. This would also have been evident had they bothered to ask for bank statements.

In this case, the landlord who had lost around £4,000 in unpaid rent and interest and a similar amount in legal costs and expenses, initially complained to the Ombudsman, who found in favour of the agents.

No surprise there. It is our view that all these various Ombudsmen are far too close to their respective industries. Remember Mark Alexander’s eventual Court of Appeals victory against The West Brom Building Society – in that case too, the Financial Ombudsman Service had originally found for The West Brom.

MAKING THE CLAIM AGAINST THE LETTING AGENT

Back to this case, though.

The landlord took out a claim at county court against the agents for breach of contract under the Supply of Goods and Services Act 1982.

Happily, the judge found that the agents were at fault. The judge said: 1) the agent should have reported the CCJ to the landlord (even though the judgment had been paid), 2) the low credit score should have been reported to the landlord, 3) the discrepancy between what the tenant had said on the application form and what they found from the credit report should have led to further investigation, 4) The agent should have insisted on seeing further information.

They should have asked for sight of three months of bank statements. We always do this, in ALL cases, however good the credit score and other references. Bank statements would have shown that the tenants had debts and were in no position to afford rent payments.

The landlord won and got an award for costs against the letting agents too.

At the minimum, key paperwork such as bank statements and wage slips should be obtained and all references should be followed up – in particular, employers’ references as they will be paying salaries. For self-employed applicants, landlords and their agents must ask for six months statements. ID checks are essential too.

Some crappy agents claim they cannot share information with landlords as to do so “would be a breach of data protection laws”. This is utterly untrue and if an agent even thinks this is the case, you should not do any business with them. In fact, you should run a mile.

As long as the letting agent makes it clear to an applicant that they can pass any relevant information onto the landlord, they can indeed pass it on. This should be the default setting, built into all decent letting agent’s systems.

And if an agent does not have it built in, I would argue they are in breach of their duty to their landlord client anyway.

ARLA AND THE OMBUDSMAN

In this case, I would love to know what ARLA were doing. Frankly, this is not good enough from them. As to the Ombudsman, I am not in the least bit surprised.

It is a shame this had to go to court at all – and shame on ARLA and the Ombudsman for it having to be taken down that route. But it does show is always worth pursuing a claim against letting agents if they can be shown to have let your property to an unsatisfactory tenant, which then leads to you experiencing losses.

Proper checking of tenancy applicants takes up time. There is no excuse for short cutting this and leaving the landlord to suffer the consequences.

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