The True Cost of Guaranteed Rent
A case that The Property Ombudsman was asked to review came from landlords about non-payment of rent and damage to the property. The landlords let the property to the agent as a tenant under a three-year agreement, giving the agent the authority to sub-let the property in return for a guaranteed rent. The complaints concerned events at the end of that agreement, including rent for a period when a sub-tenant’s belongings remained in the property, and damage to the property and contents that was found when the landlords regained possession.
It is the Ombudsman’s view that such arrangements between landlords and agents act as a mechanism by which property management services are provided, and consequently fall within her Terms of Reference. In this case, there was no management agreement detailing the terms of the guaranteed rent arrangement. The agent’s obligations towards the landlords were determined in accordance with the terms of the tenancy agreement between them.
The tenancy was due to end in November 2017, but the agent had indicated that it had been terminated early by mutual consent. As such, they did not consider that there were rent arrears. Having examined the tenancy agreement between the landlords and the agent, there was no provision entitling the landlords or the agent as tenant to terminate that agreement early, and there was no evidence that early termination of the agreement was agreed to by the landlords, or even discussed with them. It was the Ombudsman’s view, therefore, that the agent remained liable for the rent until the tenancy agreement came to an end.
The complaint was supported and an award made of £1,144 for the rent due.
The landlords explained that there was damage and associated costs to the property at the end of the tenancy, namely:
- Removal of rubbish
- Replacement of a door knob
- Removal of paint from fixtures
- Replacement of damaged fridge freezer
- Replacement of missing set of keys
- Arrears on the pre-paid gas meter
The landlords’ total claim for these matters was £780. The agent denied their liability for these monies but did not provide any supporting documentation such as an inventory from the commencement of the tenancy or a check-out report.
Under the terms of the tenancy agreement, the agent was liable for the utility costs for the duration of the tenancy, for removing all rubbish from the property, and were required to deliver up the property at the end of the tenancy in a clean and tidy condition and in good order. While fair wear and tear was excepted, the agent provided no evidence to support their claim that items for which the landlords were claiming should be discounted as fair wear and tear.
In the absence of evidence from the agent, the Ombudsman upheld this element of the complaint and make an award of £780.
Outcome
An award of £2,124 in compensation was made, being the rent due of £1,144, the damage and other costs of £780, and a further £200 for the avoidable aggravation caused by the manner in which this matter has been handled by the agent. This was in full and final settlement of this dispute.