Annual Report: Referencing & Rent Arrears

Published on Tuesday, 04 October 2016. Posted in Case Studies

This landlord claimed their agent was negligent and in breach of contract for its failure to adequately reference two tenants who went on to accrue significant arrears, resulting in a court possession order. The agent, who used a recognised third party referencing company, disputed the claims and the landlord lodged a complaint with TPO seeking nearly £20,000 for rent arrears together with compensation for emotional trauma and distress.

Annual Report Case Summary: Landlord rent arrears

This case concerns a dispute referred to The Property Ombudsman (TPO) from a landlord who alleged that the agent had been negligent and in breach of contract as a result, she said, of unacceptable and inadequate referencing that was carried out in respect of the tenants.

The complainant explained that the tenants accrued rent arrears and it became necessary for her to make an application to the court to obtain a possession order. The complainant said that the agent’s negligence was the sole cause of the financial loss she incurred and was seeking nearly £20,000 for rent arrears together with compensation for emotional trauma and distress.

The agent denied the allegations, saying that they had complied with the requirements of the TPO Code of Practice at all times.  Paragraph 10b of the TPO Code of Practice required the agent to take references that were appropriate to the circumstances and in line with arrangements agreed with the complainant. Those references were required to be by way of a referencing service provider or by direct application to third party referees or by any combination of the two. 


The agent had instructed a recognised third party referencing company who provided a ‘Tenant Comprehensive Report’ in respect of both tenants and recommended that the tenants would be acceptable for the tenancy. There was nothing in the reports provided to flag that further investigation or supplementary referencing was warranted or required. The agent was entitled to take the referencing results in good faith and the Ombudsman was satisfied that they met the requirements of the TPO Code of Practice.

The complainant’s view was based on events that subsequently took place during the tenancy and, accordingly, her belief that the referencing was inadequate. However, referencing does not provide a guarantee of future performance of the tenancy agreement or certainty that a tenant will pay the rent. The referencing process seeks to minimise the risks in letting a property and in this case the process undertaken by the agent was appropriate.

Whilst appreciative of the complainant’s dissatisfaction and frustration at the tenants’ significant rent arrears, the Ombudsman explained that while the agent was responsible for finding and referencing the tenants, they were not responsible for the actions (or inactions) of the tenants.

The Ombudsman could not hold the agent accountable for the rent arrears that accrued and made no award to reflect those monies simply because the complainant has been unable to obtain them from the tenants. The Order for Possession obtained by the complainant required the tenants to pay to the complainant the rent arrears and costs and the complainant was advised to seek independent legal advice as to how to enforce this order.

The complaint was not supported.

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