Misinformation, Arrears and No Guarantee
Complaint
Following the eventual eviction of the Tenants, the Landlord complained to the Agent that their referencing process had been flawed as it had not divulged a number of financial issues of which, had she known, meant she would not have agreed to the tenancy. The Agent acknowledged some shortcomings, but refused to make an offer equivalent to the loss of rent that the Landlord was seeking.
Investigation
It was apparent that the Landlord had made it clear to the Agent that she would only accept tenants who could qualify for a rent guarantee insurance scheme. The Agent had acknowledged that requirement and assured the Landlord that the Tenants would be credit checked to a degree that would allow suitable insurance to be arranged. However, the Agent did not specify that, as their instruction was on an introduction only basis, the Landlord would be unable to take out the policy operated by them. Moreover, whilst the Agent informed the Landlord that the Tenants had passed the credit check, they did not inform her that an adverse credit history had been discovered and that, in order for the insurance offered by the Agent to be valid, the Tenants required suitable guarantors. The Tenants failed to pay the rent from the second month and the Landlord requested the referencing documentation from the Agent during the subsequent legal process.
Outcome
I considered that the Agent’s incorrect advice had directly led to the Landlord entering into the tenancy from an uninformed position being unaware of both the Tenants' adverse credit history and the guarantor requirement of the insurance policy. I noted that the Agent had made goodwill offers of £1,500 increasing to £2,850 both of which were refused by the Landlord. I also noted that the Landlord’s legal costs had been paid via a separate insurance. I therefore made an award equal to the rent arrears of £5,780 less the security deposit of £1,424 which the Court had ordered be released to the Landlord. I also made an award of £300 for the aggravation, distress and inconvenience suffered by the Landlord.
Learning
Section 10 of the Code of Practice outlines TPO agents’ obligations when undertaking referencing. Regardless of whether a third party referencing provider is used, the agent remains duty bound to consider the results and highlight any potential areas of concern to both the landlord and the tenant to allow both parties to make an informed decision as to whether they wish to proceed with the tenancy on the terms previously agreed.