Can I hold the letting agent liable?

by Readers Question

8:18 AM, 27th January 2014
About 7 years ago

Can I hold the letting agent liable?

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Can I hold the letting agent liable?

A tenant has left a property with damage worth more than the deposit held, as well as owing one month’s rent and, by breaking the lease without notice, defaulting on the remaining three months of the lease. The tenant was originally supplied and vetted by a reputable letting agent and we paid the usual professional fees for referencing etc.

Only AFTER the payment of the first month rent did we discover that we had unknowingly taken on a DSS benefits tenant. We would never have agreed to a DSS tenant had we known, as the vast majority of people commenting other threads on here at the moment would seem to agree.

We took the satisfactory referencing at face value from the agent.  Can I hold the letting agent liable?

Now, we find ourselves done over – the tenant is refusing to pay, the council is refusing to take any action.

Do we have recourse against the agent for failing to inform us properly regarding the status of the tenant?

Thanks

Maxwell



Comments

John Gell

12:57 PM, 28th January 2014
About 7 years ago

What a mess Maxwell. Much will depend on the contract you have with your agent and it may be that you just have to put it down to experience and carry on a wiser man.

What level of investigation did you undertake before appointing your agent? It's important to be aware that not all agents are the same and it's perhaps not generally realised that anyone can set up in business as a letting agent regardless of ability, expertise and level of client protection offered.

It is therefore vital that landlords undertake due diligence before appointing a letting agent. There's a blog on the subject at http://simplylet.biz/news/Diligence

Lima7 Seven

13:45 PM, 28th January 2014
About 7 years ago

This won't help you with your current issue, but what I've started doing now when I engage an agent (I normally go for 'tenant find' only) Is to present them with a document detailing MY terms and conditions and get them to agree to it. This document lists stuff like the minimum reference checks I expect to see, and what sort of tenants I'm looking for. I've found it saves a lot of arguments later.

Hope this helps

Mark Alexander

13:58 PM, 28th January 2014
About 7 years ago

Reply to the comment left by "Lima7 Seven" at "28/01/2014 - 13:45":

Very interesting, please post your checklist here.

Many will be able to learn from it, others may be able to improve it for the benefit of you and the entire Property118 community 🙂
.

Lima7 Seven

14:36 PM, 28th January 2014
About 7 years ago

Reply to the comment left by "Mark Alexander" at "28/01/2014 - 13:58":

There's nothing special in my T&C, but by explicitly listing them there can be no arguments about it afterwards. Most of these points may seeming blinding obvious, but each one has been added due to bitter experience. By writing them down the agent can't claim "you never said no benefits!" or "you didn't ask for bank statements".

Here are some of the items...

• I’m looking for a ‘tenant find’ service only. I expect this to include the check-in of the tenant.
• Deposit will be held by myself and insured via mydeposits. I am already registered with mydeposits and do not want to be charged any ‘introduction fees’
• I expect you to carry out all the normal checks including.......
1. Bank accounts and income (I’d like to see copies of last 3 bank statements, and last 3 payslips). If the prospective tenant is self-employed then I’d also like to see the last three months bank statements for his company)
2. Credit checks (as a minimum, confirmation of no CCJs)
3. Employment checks (confirmation that the prospective tenant is currently actively employed, is not on sick leave and is not facing disciplinary action, and has not handed in his notice)
4. Residential checks – where has the tenant lived and for how long (utility bills covering at least a 3 month period)
5. Reference checks from previous landlords.
6. Checks against the various ‘bad tenant’ databases – such as http://www.landlordsbestfriend.co.uk , the National Landlords Association http://www.landlords.org.uk , http://www.uklandlordregistry.co.uk/ , http://www.landlordreferencing.co.uk
7. Proof of identity – Photocopy of passport or driving license.
• I would like to see copies of the results of all these checks.
• Inform prospective tenants of any non-standard clauses in my tenancy agreement. – see below. (or simply give them a copy and tell them to read it!)
• Contracts will be for 6 months only, after 6 months they will be treated as ‘rolling contract’

I also specify what I expect to be done at the checkin - again, all good agents ought to be doing this anyway, but I don't won't to give them any excuse for forgetting.

Letting agents – check-in duties
• Collect monies from the tenants. This will include the deposit, 1st months’ rent, cost of Inventory (50%), full cost of protecting the deposit with mydeposits. (plus any agency fees)
• Get the tenants to sign the following.....
1. Inventory,
2. tenancy agreement
3. data protection act opt-out clause in the event of the tenant claiming housing benefit.
4. The section 21 notice requiring vacant position at the end of the tenancy.
• Take a head and shoulders photo of the tenants.
• Make sure the tenant is aware of my bank account and sort code, plus instructions for paying rent by standing order (on the same day every month as they moved in)
• Make sure the tenant has my contact details.
• Make a note of all meter readings. Inform utilities (gas, water, electric, council tax etc) of the details of the new tenant. Deliver copies of all such letters to landlord.

Mark Alexander

15:13 PM, 28th January 2014
About 7 years ago

Reply to the comment left by "Lima7 Seven" at "28/01/2014 - 14:36":

That's a very comprehensive list.

Two things I would add are

1) professional referencing with an established RGI provider to a level whereby RGI is offered

2) Same information for guarantor as required for the tenant is a guarantor is required in order to obtain RGI.

Just two other observations.

Serving s21 before the deposit protection certificate and prescribed information have been served would render the s21 not valid. If your agent is collecting the deposit at checkin and you are protecting the deposit afterwards then service of the s21 by the agent at check in is pointless.

Have you considered offering a "deed of assurance" to become more attractive to the very best long term tenant prospects?

The one extra thing my family do whenever possible is to visit the tenants existing home.

The link below is to my brothers website but the strategy outlined is universally adopted by my entire family

See >>> http://lettingagentsonline.co.uk/free-guide-to-finding-perfect-tenants/

Lima7 Seven

15:53 PM, 28th January 2014
About 7 years ago

Reply to the comment left by "Mark Alexander" at "28/01/2014 - 15:13":

Please excuse my ignorance but what is RGI?

thanks for the tip about not serving section 21 straight away.

Lima7 Seven

16:00 PM, 28th January 2014
About 7 years ago

Hi,

I have considered taking action against my current agent. As far as I can tell the only check they really did was to ask my tenants accountant "in your opinion can XXXX afford the rent" He ticked the box and that was that!

Their T&Cs include “Fully and satisfactorily referencing the prospective tenant”.

However their small print includes "Our services will be provided using diligence and care. We cannot give any warranty or guarantee regarding the quality, fitness for purpose or otherwise of a tenant or for services provided by a third party and we cannot accept liability for any failure on their part."

The tenant managed a months rent and hasn't paid a penny since. I'm currently in the process of evicting him.

My solicitor advised that the chance of getting any money out of them is low.

I don't want to name names, all I'll say is that they operate Countrywide

Mark Alexander

16:06 PM, 28th January 2014
About 7 years ago

Reply to the comment left by "Lima7 Seven" at "28/01/2014 - 15:53":

RGI = Rent Guarantee Insurance.

It pays out if the tenant doesn't and also covers any costs of eviction.

It requires landlords to have certain conditions in their contracts and to follow procedures in a timely manner though so doesn't always pay out if a landlord messes up the process, hence it does get critisised sometimes. Nevertheless, if the RGI provider is willing to underwrite the risk of not paying, usually for less than £100 a year, that's a good sign to a landlord that the tenant is likely to be a relatively safe bet. obviously the RGI company also insist on doing the referencing and typically charge £15 to £25 for that.

Here's another option which is fully managed, again from my brothers website >>> http://lettingagentsonline.co.uk/rent-on-time-every-time/

He now owe's me two beers for the plugs I've been giving him today, especially since Property118 is a shareholder in a rival business! LOL
.

Lima7 Seven

16:11 PM, 28th January 2014
About 7 years ago

Reply to the comment left by "Lima7 Seven" at "28/01/2014 - 15:53":

ok it's Rent Guarantee Insurance. got it.

John Daley

16:18 PM, 28th January 2014
About 7 years ago

Reply to the comment left by "Lima7 Seven" at "28/01/2014 - 16:00":

Hi,

I have to say that Lima 7's approach is one I fully support. Regardless of the actual terms of the instruction, if you clearly express in writing what you want and get them to sign it you have a contractual relationship that is reasonably certain.

If it then turns out that they have done a poor job and all these stories have at their heart the Agent taking your money and doing far less than anyone would think of as a reasonable job, you can at the very least ask for your money back and have a reasonable case for claiming your subsequent losses through the simple and low cost small claims procedure.

I think that these are core skills for landlords because the quality of tenant selection will dictate whether the subsquent letting goes well or not. Bad tenants tend to leave a trail behind them and it's your job to find it or get someone else to do it for you. That's why you pay a fee for this.

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