Rent2Rent Scheme Gone Wrong

by Readers Question

12:24 PM, 20th April 2013
About 6 years ago

Rent2Rent Scheme Gone Wrong

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Rent2Rent Scheme Gone Wrong

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.

Marie



Comments

Rob

10:47 AM, 23rd July 2013
About 6 years ago

Thanks tessa, so a NHA contract is the correct contract?

Rob

10:56 AM, 23rd July 2013
About 6 years ago

I've had a very confusing call to My Deposits who said we don't deal with company lets only residential, when I said well it is residential but it's let to a company, there reply was I don't know, I said is there anyone there that does know and he said I doubt it. Letting agent is still insisting I have to protect it!

Mark Alexander

11:02 AM, 23rd July 2013
About 6 years ago

Reply to the comment left by "Rob " at "23/07/2013 - 10:56":

I'd show your letting agent Tessa's post if I were you Rob. There are very few, if any, solicitors in the UK as respected as Tessa in this area of law.

If you call my|deposits back and say "Tessa said I don't need to protect a deposit if a residential property is let to a Limited company" I think you will find that the person you are speaking to will bow to Tessa's superior knowledge, as should your letting agent. If not, change your letting agent!

Rob

11:07 AM, 23rd July 2013
About 6 years ago

To be honest I won't be using them again lol. Although the agent has put in the NHA that the landlord will secure the deposit with my deposits, so should I get them to amend the NHA or will it not matter?

Tessa Shepperson

11:07 AM, 23rd July 2013
About 6 years ago

Reply to the comment left by "Rob " at "23/07/2013 - 10:47":

The piece of paper that people sign will not affect the type of tenancy that it is.

In the same way that describing a baby boy as a girl will not actually change its sex. Or describing a four pronged implement as a spade will stop it being a fork. It is what it is. (Street v,. Mountford [1985])

However it is best to use the correct type of agreement as that prevents confusions.

NHA is not a term I use, when I first read that I had no idea what you were talking about! (National Health Authority???) I assume you mean non housing act.

Rob

11:13 AM, 23rd July 2013
About 6 years ago

Non housing act is what the agent told me it was , I've never heard of it.

Mark Alexander

11:20 AM, 23rd July 2013
About 6 years ago

Reply to the comment left by "Rob " at "23/07/2013 - 11:13":

Rob, Tessa has a whole suite of contracts and several other things which landlords and letting agents can download from her website for just £20 a month. I don't understand why a lot more small letting agents don't use this service, although I believe quite a lot already do. Tessa's website even has a tenancy agreement wizard to make it very obvious which is the correct agreement to use.

By the way, I'm not on commission or any other form of retainer from Tessa. It's just a VERY good service which I am pleased to promote as Tessa is always so helpful to Property118 readers.
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Mark Alexander

12:58 PM, 26th July 2013
About 6 years ago

I have just published an article which is the flip side of the coin to this one which I've entitled "Rent to Rent Success Stories" - please see the link below.
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Mary Latham

13:50 PM, 24th October 2013
About 6 years ago

I have only just found the time to catch up with this interesting discussion.

I am delighted for you Marie and very sorry that you had to go through the stress but I am sure that there will be many landlords reading this discussion who will be grateful that you took the time to post. I hope that it will give you some comfort to know that you may well have saved other landlords thousands of pounds and many weeks of stress. I will be sharing your story at my meetings and semionars as a warning to unsuspecting landlords - thank you

Follow me on Twitter@landlordtweets

My book, where I warn about the storm clouds that are gathering for landlords is here >>> http://www.amazon.co.uk/dp/1484855337

Mark Alexander

14:00 PM, 24th October 2013
About 6 years ago

Reply to the comment left by "Mary Latham" at "24/10/2013 - 13:50":

Hi Mary

You may also find this useful for your talks >>> http://www.property118.com/rent-to-rent-tips-advice-case-study-rent2rent/43559/

There will always be good and bad people and good and bad deals. The article I have linked to above offers subjective Do's and Do Not's and also includes details of a case study of a rent to rent deal which I feel quite sure you will approve of as we discussed this particular business model on the telephone a month or so ago.
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