Inadequate Referencing
Complaint
The Landlord let the property to the Tenant who paid no rent after the first month. She subsequently complained about the Agent’s referencing. The Agent responded, acknowledging that it had been a fraudulent application but defended their referencing
as adequate in the circumstances.
Investigation
I found that the Agent had obtained a bank statement for the Tenant which showed no salary going in and no money available in the account. The employer’s reference was in the form of a fax, the only indicator of the sender’s identity being a stamp of simple design, not identifying the business activity or contact numbers. In addition, the first month’s rent was paid by the Tenant’s parents and the Agent had made no enquiries relating to the Tenant’s financial commitments. Despite this information which should have put the Agent ‘on notice’ that the Tenant may present a significant risk, I was provided with no evidence to show that they advised the Landlord appropriately prior to the tenancy proceeding.
Outcome
I concluded that the checks made by the Agent were inadequate to identify whether the Tenant could afford the rent, had any means to do so and to determine if the information obtained from the employer was genuine or not. Accepting that no amount of referencing guarantees that a tenant will pay the rent, the Agent had every reason to doubt that the Tenant could pay the rent and should have warned the Landlord appropriately prior to the tenancy being agreed. That the Agent had done nothing to establish whether the employment reference was genuine, despite all of the other information indicating that the Tenant had no money and no income, demonstrated a serious failure in their duty of care to their client. I awarded £3,086, being the full rent unpaid after deduction of the deposit. The Agent agreed to the award and requested that the Landlord assign the rights to them to chase the Tenant for arrears to them. This seemed a reasonable request and an appropriate assignment document was drafted by the Agent and accepted by all parties.
Learning
Obtaining the appropriate information on a prospective tenant is a prerequisite. However, the agent has a duty of care to their landlord client to check that information and advise of any anomalies or discrepancies prior to their client entering into a contract with the tenant. Where I consider that the agent has been, in effect ‘reckless’, I will award the full amount of unpaid rent.