Only £100 compensation offered by Redress scheme?

by Readers Question

8:32 AM, 15th January 2019
About 9 months ago

Only £100 compensation offered by Redress scheme?

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Only £100 compensation offered by Redress scheme?

I have let my flat via a London letting agent. They produced a very good Reference Report on a tenant through a Referencing Agent. The tenant paid for 6 months and then lost employment and hasn’t paid since.

We are taking the tenant to possession Court shortly. It turns out that the reference report was inaccurate in that she was evicted from her previous flat, was out of work when she moved in and it stated that she was in a highly paid job. Also the letting agent didn’t inform us at all that she hadn’t paid the rent for 3 months and we discovered this from our Bank.

We have taken the case to the Redress Ombudsman that they use and he concluded that the letting agent had done little wrong as they relied on the conclusion of the Referencing Agent. They offered us just over £100 compensation when the rental debt is currently well over £10,000. This seems unjust.

Any advise would be welcome.

John



Comments

Neil Patterson

8:36 AM, 15th January 2019
About 9 months ago

Hi John,

Have you considered taking legal action against the tenant to recover the debt >> https://www.property118.com/free-guide-enforcing-judgements/
and is there any recourse possible that the agents can take against the referencing company?

Gary Nock

11:04 AM, 15th January 2019
About 9 months ago

Ultimately the decision on the offering of tenancy is that of the landlord based on the recommendation of the agent. The agent is somewhat culpable in that they have relied upon the referencing agency without exercising due diligence and did not act quickly on the unpaid rent. As both a landlord and an agent we have systems in place that flag unpaid rent up and it is chased when one day late. Virtually all of our landlords have rent insurance guarantee ( some refuse it) and this ideally should have been offered to you prior to the tenancy commencing, although the agent is not legally obliged to. Morally I think they are. You are somewhat hamstrung now as the redress scheme has ruled that you are only entitled to £100 compensation. The way forward as Neil states is to pursue the tenant now both for eviction and for the unpaid rent. They have also obtained the tenancy fraudulently by providing false information to the referencing company who have failed in their due diligence to spot this. Our referencing agency check with the employers and previous landlords and would have picked up on the fraud. The referencing company must only have done a very basic reference rather than a comprehensive one. Unfortunately the referencing contract was with the agent and not you so no point going down that liability route. The fraudulent application would be good evidence to put in the County Court claim though. Don't even bother trying to report the fraud to the police as you will be told "It's a civil matter".

Paul Shears

12:45 PM, 15th January 2019
About 9 months ago

I have only used a tenant reference agency twice in the past eight years.
Previously and currently I rely on my own investigations which prove to be very revealing and frequently include on site research around a potential tenant.
Of the two that I have paid for, one was done in less than one hour and recommended acceptance.
The other took about a day and also recommended acceptance.
Both of the tenant reference reports were added virtually no value and there was certainly no where near good enough "research" if you can call it that.
I had absolutely no hesitation in rejecting one of the tenants and although I accepted the other tenant following my own investigations, she became my shortest duration tenant ever and the only one to ever move out because she claimed she could not afford the annual rent increase. She gave me copies of her most recent bank account statements which, whilst bizarre (She paid herself pocket money via a phone App), clearly showed that she was financially responsible.

LordOf TheManor

14:05 PM, 15th January 2019
About 9 months ago

Here's the info you need:

https://www.justlandlords.co.uk/news/breakthrough-case-finds-that-referencing-checks-werent-thorough-enough/

Also: You're not obliged to take the Ombudsman's advice - so don't sign to say you accept their decision.

Chris

16:30 PM, 19th January 2019
About 9 months ago

I now only take tenants who pass referencing and the referencing company will offer rent guarantee insurance on.

Mark Alexander

18:36 PM, 19th January 2019
About 9 months ago

Reply to the comment left by Chris at 19/01/2019 - 16:30
Exactly what I was going to say

John

22:02 PM, 21st January 2019
About 9 months ago

I now dont trust the report that the referencing Agency supplied to the letting agent infact I would say it was fraudulent. It stated that she was in a £90,000 pa job when she was unemployed and the previous landlord tells me he had to go to court to get her evicted as she was about 6 months in arrears . They claimed that they had viewed recent bank statements but they could only have seen old statements. They dont mention that she had just been evicted.
I took it to the letting agents Redress body which was the Property Ombudsman who concluded that the letting agent had done little wrong as they went by the Referencing Agents report.
I was offered just £150 compensation when the rental debt is almost £20,000.
It seems to me that:
1) The letting agent used a referencing company so they can take no blame if things go wrong.
2) That the Property Ombudsman is not unbiased at all and takes the side of the letting agent as they dont want to lose the letting agent as a client and that the letting agent would move to one of the other two redress bodies..

Paul Shears

23:40 PM, 21st January 2019
About 9 months ago

Reply to the comment left by John at 21/01/2019 - 22:02
Absolutely spot on! My sincere sympathises that you have had such a painful lesson. This is prevalent in every walk of life that I am aware of.
My neighbour has, to a cost near bankruptcy, taken the same view.
Unfortunately this now has a knock on effect on others.
Filling out forms and passing problems on to others has become an increasingly disastrous policy. If your lucky, you can get away with it. This then reinforces the view that the right course of action was followed. But when your luck runs out, these situations get incredibly messy.
Ultimately there is no absolute solution to this type of problem, but doing as much yourself as possible, I have found, minimises the risk.


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