Can I hold the letting agent liable?

Hi Maxwell

The answer to your question is "POSSIBLY".

Did you provide written instructions to your agent regarding the types of tenants you were prepared to accept?

Did you agent reference the tenants through a professional tenant referencing company?

Was a guarantor obtained?

Did the agent reference to RGI standards and offer you RGI?

Just because you answer all of the above questions right does not mean you will win in Court. This will never be an easy claim, even with overwhelming evidence I'm afraid to say. Nevertheless, the prospects of facing a small claims court claim may just persuade your agents to settle with you out of Court. Be realistic with the amount you claim.

Another weapon in your armoury is the reference you can leave on http://www.allagents.co.uk/

I wouldn't recommend a barrister or solicitor for the amount you are claiming. If you decide to do anything, do it via the Small Claims Court.

The alternative is the Ombudsman but the Court process will be much quicker and is more effective in my opinion.

Good luck
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there are almost no reputable letting agents
you will never recover a penny from a DSS tenant
the council hate landlords and will obstruct anything you try
the courts will treat the tenant as vulnerable and you are wasting your time going there

Move on and forget them, never let to them again, they have nothing to loose and everything to gain from private landlords and a huge number take us for a ride
Only let to employed people and reference thoroughly
Never trust an agent - they have no skin in the game and most lie each time they speak

To be honest it may be more trouble than it is worth trying to take the agents to court but if they are members of any appropriate body or part of a franchised chain then you may find that they do actually have a concience where this type of thing is concerned (or at least the inclination to cover thier asses!).

I did have a problem with a letting agent failing to properly sign up a guarantor for a DSS tenancy and although it took a long time the agency did work with me to recover the majority of losses. It seems to be a matter of having a clear enough case for complaint and of getting hold of somebody senior enough to deal with the issue. Whilst I would never use this agent again as thier branch staff appear incompetent I cannot deny that thier senior management took the problem seriously and were extremely helpful. In this case I managed to avoid court action, either with the agent or the tenant/guarantor.

Firstly, you cannot opt out of taking DSS Tenants - a P45 or relationship break up is all that's needed to become a claimant (and you will not even be aware if that happens unless they choose to tell you). There is good advice here about referencing to the standard that allows Rent Guarantee Insurance (RGI) - I would say this is best advice for "hands off" investors.

Secondly, property is medium risk as an investment; high risk if you (wrongly) think you can do it without knowledge or "passively". Passive investment via a bog-standard Agent really means you exist in a warm cocoon until this kind of thing happens and then you either pay heavily for immediate expert advice or take massive risks. You suddenly become very alone.

Agents are just that - your Agent - YOU are still legally responsible for the legal obligations around the Tenancy and the property.

Remember you "gave" the Tenant possession - its their home until the Tenancy ends, not yours. So, you must be wary of giving them any avenues to take you to court.

What jumps out here is that you (I think) are assuming the Tenancy is over. Do you have a signed surrender from the Tenant?

If not, YOU can't end it early without following S8 (which needs a min of 8 weeks contractual arrears) or S21 (that cannot give you possession before the end of the initial Term). Just by stopping paying / moving out the Tenant has not legally ended it either. So, if you enter the property without notice, change the locks, start to fix it up, conduct viewing, let it etc you will be open to court action. Arrears and damage don't change this.

If it was me, I would try to secure a surrender first (or have any existing document checked) so that I legally get my property back to be able to fix it and get the rent tap turned back on.

If not, you risk the Tenant successfully suing you for wrongful eviction.

Other points:

Check the Agency agreement in great detail re what they are responsible for/what you are responsible for - if it is silent on an item then its down to you...then see them and set out what you expect them to do to help you.

Check that the deposit was protected and PI served (and that you can prove PI was served). If it wasn't, the Tenant can easily take you to court for damages (up to 300% of the Deposit in £) and win and also the S21 route for possession is not available to you unless you convince the Tenant to accept the deposit back.

Check that a bulletproof check in inventory was taken and signed off by the Tenant. without this you will probably fail to secure the deposit against the damage (unless the Tenant chooses to allow you to). You can't just "take" the deposit against damage or missing rent without following due process, especially if the Tenancy is still valid.

In outline, the way forward is:

Gain legal possession either via Surrender or (over a number of months) S21 or S8. Note that S21 or S8 give you possession - they do not force the Tenant to move out but merely allow you to apply for eviction via a formal route over several weeks.

Fix it up and re-let once possession is obtained.

Gather all the info you can re the Tenant (new address, employer, NI, next of kin, any assets such as a car etc).

Tell the council housing dept what is happening and make liberal use of the word "arrears" when you do. Technically the Tenant should find it hard to get social housing IF he has intentionally made himself homeless through arrears so the pressure can help.

Keep immaculate records re losses ready for court. Also keep full records re the chasing of rent and any emails re the Tenant saying they do not intend to pay. Beware straying into harassment IF/while the Tenancy is still valid or again they can sue you.

Add them to landlordreferencing and make sure you check any future candidates there too. Add a note saying "call me for further details" for the benefit of future landlords. Crowd sourced info is extremely powerful IF the crowd uses it.

If there was a guarantor, formally make them aware of the losses (including future ones re the rest of the Tenancy) and that you intend to take action to recover. They will then lean on the Tenant for you. Again keep records of this for court.

The recovery process is essentially to prove your losses to a court and obtain a judgement against the Tenant. The issue is then recovery...if they (or the guarantor) have assets then recovery can be made (and should as people need life lessons). If not, then you might decide life is too short or you might decide that a CCJ might save others from being conned the same way and help this person with taking on some responsibility for their actions when credit becomes hard to come by.

If you do go to court, prepare a bundle that shows you off as an exemplary Landlord (all the Tenancy docs, Gas cert, risk assessment if you did one, etc).

Overall, its just a bump in the road, learn from it and move on.

Personally I would write to the governing body that monitors estate agents etc, & I would fight it in court, you have paid them to provide a service & they should have credit checked them which obviously they have not done, did they get references from employers??? that should have been part of your check so I would issue a CCJ issued against them (warn them first as they may come to some agreement with you) it doesn't cost much for a CCJ & can be done online in 10 mins I would not be surprised if they acted upon receipt of CCJ. I am NOT a lawyer this is just what I would do in this situation if for no other reason but to save other landlords encountering the same problem. I would also ask them for results of any checks they did make, but being DHSS is NOT a valid reason on its own BUT as I have said they obviously did NOT do the proper checks thus you got screwed (basically)

Hi Maxwell

With regards to the tenant, please consider joining LandlordReferencing.co.uk and registering them (both free), to warn all Landlords & Agents in your area (who use our service) about their actions, as well as future applications of tenure for up to 5 years.

http://www.landlordreferencing.co.uk/join/

When you enter into any business relationship it is vital to express in a written contract what obligations there are on each party. Breach of those terms will entitle either party to compensation for losses caused by that breach, or even the right to terminate the contract early. Additionally, if the agent fails to carry out his job to a reasonable standard the landlord will have a claim in negligence against him.

In this case, as soon as the landlord found out that the tenant was on DSS benefits he should have notified the agent that he was in breach of the contract, and either required the agent to remove the tenant at the agent's expense, or advised the agent that he would be held liable for any losses accruing from breach of the agency contract.

The answer to the question posed is 'yes, you do have recourse' assuming that the contract sets out what the agent's obligation is regarding DSS tenants.

Reply to the comment left by "Mark Smith (Barrister-At-Law)" at "28/01/2014 - 08:56":

Thanks Mark 🙂

Subject to reviewing the papers for a nominal initial fee, could you consider taking on a case like this on a "no win no fee" basis?
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Reply to the comment left by "Mark Alexander" at "28/01/2014 - 09:13":

For any p118 members I will look at the papers on any legal issue and offer a free 15 minute telephone consultation or a one-hour conference for £150+vat.

Some cases are suitable for no-win no-fee, and are assessed on a case-by-case basis.

Please contact me via my member profile

Hi Maxwell,

You will only succeed in bringing the referencing agent to law if you can prove that they have not done the work you instructed them to do to a reasonable standard.

If your instructions were vague or even verbal your'e stuffed. If you have got a clear written instruction and evidence that they have failed to deliver that or act to a reasonable standard it's worth going to the small claims court to claim your losses.

It is however a bit of a lottery, going to law always is, it might be enough to threaten them and they might seek to settle.

Best of luck.