TPO

Complaint from a landlord about the suitability of the tenant 

A landlord contacted TPO concerning both the suitability of the tenant that the agent introduced to the property and the occupation of the property by other individuals not named on the Tenancy Agreement. 

The landlord understood that the property was to be let to a sole, professional tenant. She acknowledged that she was told by the agent that there was a shortfall in the tenant’s ability to meet the rental payments, but that this would be met by the tenant’s girlfriend, although she would not live at the property. Upon the tenancy commencing, the landlord found that the property was occupied by three individuals. The tenant told the landlord that the agent had been aware that the three of them were to live at the property together. 

The landlord and her family experienced harassment from the occupants of the property, ultimately resulting in the conviction of one of the occupants. Possession proceedings, which resulted in the eviction of the tenant and other occupants, were prolonged by discrepancies in the Tenancy Agreement. The landlord was left with rental arrears, legal costs and repairs to the property, which she had been unable to recover. The landlord was seeking compensation from the agent of her losses of around £15,000. 

The agent maintained that the tenant was adequately referenced, that the landlord was involved in this process and that she was aware that the tenant’s girlfriend would be staying at the property.  The agent explained that they drew up the Tenancy Agreement in the tenant’s sole name although they acknowledge that it was signed by three individuals. 

In accordance with Paragraphs 10b and 10g of the TPO Code of Practice, the agent was required to undertake suitable references against the tenant (and any other adult occupants of the Property) appropriate to his circumstances and to provide the landlord with all relevant facts relating to the tenant’s application and referencing so as to allow her to make an informed decision regarding the tenancy. 

In this case, the agent’s internal notes show that they acknowledged that, due to the rent shortfall, a joint tenant or guarantor would be required. The agent emailed the landlord confirming the rent shortfall and inferring that this would be met by the tenant’s girlfriend. However, there was no indication that the landlord was aware that the girlfriend would be living at the property, or that the agent recommended that the girlfriend be credit checked, or that a guarantor be obtained. In the circumstances the agent should have advised the landlord of the necessity of a joint tenant or guarantor. 

Clearly, it was not in the landlord’s best interests to allow a situation in which the girlfriend was being relied upon to make up the rent shortfall but had no formal liability to pay the rent. If the girlfriend was to occupy the property then she ought to have been named as a tenant on the Tenancy Agreement and subject to full referencing checks, however, no referencing of the girlfriend took place. The agent had obtained no proof of the girlfriend’s ability to make up the rental payments on the tenant’s behalf. The Ombudsman would not have expected the agent to have recommended that the Tenancy proceed on these terms. 

The Tenancy Agreement drawn up by the agent was in the sole name of the tenant, but had been signed as tenant by three individuals (the tenant, the girlfriend and a third individual), each signature witnessed by a member of the agent’s staff. 

The landlord said that she was told by the tenant that the agent was well aware of the intention for the three of them to live in the property, and the Ombudsman could only conclude that this was correct as the agent unquestioningly allowed the three to sign the Tenancy Agreement. Further, the agent acknowledged allowing the Tenancy to proceed in the sole name of the tenant when they were aware that his girlfriend was also intending to occupy the property. 

The signing of the Tenancy Agreement clearly put the agent on notice that the tenant was not intending to take sole occupation of the property, or even to occupy the property with just his girlfriend. The agent should have refrained from signing the Tenancy Agreement on the landlord’s behalf until she was aware of the situation, had agreed for the tenancy to proceed, and all three intended occupants had passed referencing checks. The agent did not do so, and allowed the Tenancy to take effect without further communication with the landlord. 

Ultimately, as a result of the serious shortcomings in the service provided by the agent, the property was occupied by three people, rather than the single tenant the landlord had requested. Of those three occupants, only one, the tenant, was subject to referencing checks and those checks identified that he could not afford the rent in its entirety. Similarly, only the tenant had any straightforward liability to pay the rent, the remaining occupants had no such liability as that matter would have to be determined by the impact of their signature to a Tenancy Agreement which did not name them as tenants. This same issue also led to the landlord experiencing difficulty in regaining possession of the property, as the Court required notice to be served on all three occupants before possession proceedings could commence. The agent’s actions exposed the landlord to significant risk in terms of rental arrears, the condition of the property, and her ability to assert her rights as landlord, and it was evident from the landlord’s account that those risks materialised and gave rise to significant financial losses, aggravation and distress. 

The Ombudsman’s role was to restore the landlord to the position she would have been in had the agent fulfilled their obligations towards her under the TPO Code of Practice. It was the reasonable conclusion that, had the agent acted in accordance with the landlord’s best interests and contacted her before signing the Tenancy Agreement on her behalf, to explain that the property was to be occupied by three people, two of whom had not been referenced, and one of whom had been referenced and found unable to meet the rent, the landlord would have instructed the agent not to proceed any further with the Tenancy. The losses associated with the Tenancy would, therefore, have been avoided. 

Outcome 

The complaint was supported to the extent that: 

• The agent advised the landlord that a rent shortfall would be paid by an unreferenced individual who had no formal liability to pay the rent.
• The agent did not act when they were put on notice that three people, two of whom were not referenced or named on the Tenancy Agreement, intended to occupy the property.
• The agent failed in their obligation to act in the landlord’s best interests and exposed the landlord to significant and avoidable risk. 

The landlord requested that the agent compensate her losses of £15,500. This was considered appropriate compensation for the serious shortcomings in the agent’s service and the associated losses, aggravation and distress experienced as a result. An award of £15,500 in compensation was made.