Rent2Rent Scheme Gone Wrong

Rent2Rent Scheme Gone Wrong

12:24 PM, 20th April 2013, About 11 years ago 70

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Rent2Rent Scheme Gone WrongI rented my property to a company who in turn sub-let the property for the same term. The tenancy was an AST in the company name and I retained a deposit that was not insured.

The company provided me via email a tenancy agreement and I introduced additional clauses to accommodate sub-letting but apart from that I accepted the agreement they provided. I met the director of the company, initially he was going to find me tenants but after only one viewing and no offers he suggested that I rent the property to his company and my rent would be guaranteed. All my dealings were with him, he said he would find tenants for my property and my rent would be guaranteed. I accepted three months copies of his company bank statements as proof of income. I was going to live abroad and hoped to rent the property for at least two years, however unforeseen circumstances brought me back to London and I gave notice requiring possession of the property at the end of the initial term of one year.

During the year several issues arose. The rent was always late. I emailed and called from abroad, it was paid but always late and on four occasions later than five days. The lease allowed for a £25 charge and interest for rent over five days late. Secondly, he reported that the oven wasn’t working and the kitchen sink was blocked and leaking. He said he would deal with it and deducted £200 from the rent. I requested an invoice on several occasions but never received anything.

On my return to London, the property was not handed back at the end of the tenancy. It was three days later that I got the property back. That morning when I attended the property I found the locks changed and the tenants still in bed with all their personal effects still in the house, food in cupboards etc. they said they were waiting for the van and the keys to their new place being provided by the company. I left to return later that day, they had just started loading a van and some three hours or so (and three days later) I eventually entered the property with a representative of the ‘company’ to deal with a checkout.

The property wasn’t clean, the fridge/freezer was frozen over, oven dirty, floors, skirting boards dirty, kitchen cupboards dirty (they just emptied the cupboards and left), bathrooms were dirty, guest cloakroom etc. Furniture was left in the wrong rooms and on different levels, the locks had been changed back which was good but windows were dirty, the back garden was reasonable but the front garden was an overgrown mess.

I wanted to deduct stoppages for the cleaning but the representative for the company didn’t agree, I had the deposit in full in cash and said we should resolve the cleaning issue now but she refused and left the property without signing the inventory out. I organised professional cleaners and two days later they attended and during their cleaning discovered the oven was not working and the sink was leaking and blocked, as they had not been repaired!! I organised an oven repair for £140 to discover the oven was beyond repair so I purchased and fitted a new oven. I organised the clearance and repair of the sink and I cleared the front garden.

Three weeks later as I hadn’t heard from the company I wrote sending copy invoices and deducted the cleaning costs, the cost of unblocking the sink but not the repair.  I deducted £200 for the repairs I had been charged for but had not been done, I deducted £25 for each late payment, the initial checkout fee and a fee for returning later that day to deal with the inventory checkout again and finally I deducted two days additional rent for vacating late. All these are covered within the terms of the agreement bar £200 deducted from my rent for repairs not done, however without an invoice. I have proof the works were not done this was justified. I sent a cheque for approx £400 left from the deposit following the deductions and requested to meet and discuss if the company had any queries etc. The cheque was cashed and about six weeks later I received a letter saying they would take me to court for not insuring the deposit and that I should pay them all the deposit back. I refused, again suggesting we meet and received a letter demanding £500 back on top of the £400 already paid or he would take me to court!! I wrote again and said I was happy to meet to resolve the matter because I could not see how the company was coming to their figures? I finally received a letter stating they do not have time for this but would take me to court and I would have to pay four times the deposit in compensation.

That’s exactly where we are. They applied to the small claims court, I have appealed and am now waiting for a court date.

I believe the tenancy should have been a company let? That it does not require the deposit to be insured and therefore the only question is the cost of legitimate costs for damages, cleaning etc from the deposit. However I know the Judge will decide the type of tenancy but I’m wondering if there is any other case I can rely on to support my case?

I felt I had to follow through with this issue as the ‘company’ can claim 3 times the deposit up to six years after the termination of the tenancy even if I handed back the full deposit. I believed I did everything right but was guided by this man who operates an agency sub-letting properties for owners living abroad. The claim to the court was filed in the man’s name not the company name as stated on the tenancy agreement. My question is if a property is let to a named company, even if the tenancy states it is an AST, is it a company let?

Do you know of any similar case where the ruling had fallen in favour of the defendant in respect of an AST being a company let and falling outside the deposit protection scheme?

Any help would be gratefully appreciated.


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Mark Alexander - Founder of Property118

8:09 AM, 7th July 2013, About 11 years ago

Has anybody seen the article in The Sunday Times yet? If so what page is it on?


8:33 AM, 7th July 2013, About 11 years ago

Reply to the comment left by "Mark" at "05/07/2013 - 09:23":

So what happens if a normal AST is signed by a company, is their Lease invalid? What happens if the Landlord wants to end the Term to sell the property or wants the company to leave?


8:45 AM, 7th July 2013, About 11 years ago

Reply to the comment left by "Mark" at "07/07/2013 - 08:09":

In the Sunday Times App it's in the UK section, how Landlords are being ripped off by Rent to Rent schemes.

Mark Alexander - Founder of Property118

9:13 AM, 7th July 2013, About 11 years ago

Reply to the comment left by "T" at "07/07/2013 - 08:45":

I don't have the app, must grab the paper. Does Property118 get a positive mention?

Mark Alexander - Founder of Property118

10:01 AM, 7th July 2013, About 11 years ago

UPDATE - I've just got the paper. There is an article on page 13 entitled "Tanants hit by new rent rip-off scandal". The article shows Property118 in a positive light, as it should of course 🙂

I still haven't found the other article entitled "Landlords are being ripped off by Rent to Rent schemes." Perhaps the paper has slightly different content to the App?


22:15 PM, 8th July 2013, About 11 years ago

Can you please reply to my question above, what happens if a company signs an ordinary AST, would it be invalid? What happens if the Landlord wants to end the Lease to sell the property?

Tessa Shepperson

22:34 PM, 8th July 2013, About 11 years ago

Reply to the comment left by "T" at "08/07/2013 - 22:15":

Signing the wrong form will not mean that you have no tenancy at all. You will have a company let with the wrong type of document. This will be misleading for everyone and some of the clauses may be invalid.

I have a post on company lets on my Landlord Law Blog here which answers your other question


10:01 AM, 23rd July 2013, About 11 years ago

Reply to the comment left by "Tessa Shepperson" at "08/07/2013 - 22:34":

I have just let one of my apartments to a ltd company,they have put one of there overseas employees in there, it is only a 3 month let and the company are paying the rent. I read in a previous article that renting to a ltd company needs to be done on an commercial lease not an AST and because its a company let you do not have to secure the deposit. I've checked this with the agent that I rented it through and they said the contract that has been signed is a NHA (non housing act) and I do still have to protect the deposit. So 3 questions really, 1. Is a NHA the same as a commercial lease? 2. Is this the correct type of contract for a ltd company let. 3. Do I have to secure the deposit?

I may have read the info on this site incorrectly as the subject in question did have a lot of replies so for my own sanity I thought I would ask for clarification. Thanks for your help. Rob W.

Tessa Shepperson

10:21 AM, 23rd July 2013, About 11 years ago

Reply to the comment left by "Rob " at "23/07/2013 - 10:01":

If the tenant is a limited company the tenancy CANNOT be an AST (Housing Act 1988 s1). These types of tenancy are generally known as company lets.

As it is not an AST the deposit will not need protecting as the tenancy deposit regulations only apply to ASTs.

A normal 'company let' will generally be for the company to use the property to house its own directors or employees. As in your case.

If the company want to sublet to other tenants, then this probably will require a commercial lease. See this interview with David Smith (about 3.20 mins in)

Mark Alexander - Founder of Property118

10:40 AM, 23rd July 2013, About 11 years ago

Reply to the comment left by "Tessa Shepperson" at "23/07/2013 - 10:21":

Thanks for this Tessa.

I am pleased to confirm that Justin Selig, a commercial property and contracts solicitor at The Law Department is in the process of drafting a commercial lease agreement for the purpose of companies renting properties with the intention of subletting - AKA rent2rent. This is a joint venture between Property118 and The Law Department which is a Law society registered firm. Please see >>>

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