Case studies

When we receive a complaint, our aim is to resolve it as soon as possible. When we recognise common issues coming through our complaints processes, we take the opportunity to write case studies, summarising the issues, how the decision was reached and how to avoid it happening in future, to offer the reader a greater understanding of specific areas.

Topic:

Holding deposit (after tenant fee ban)

Resolution requested:

Refund the holding deposit

Award:

£288.46

Complaint

What the tenant said:

  • She arranged to view the property on 13 July 2019
  • Two days later, the agent confirmed the landlord had agreed to proceed and confirmed the monthly rent amount
  • On the same day, she paid one weeks’ rent as a holding deposit
  • Three hours later, she requested it be refunded, because the move in date was too soon and there was a suggestion that the landlord may want to sell the property in the near future
  • The agent refused, saying that the holding deposit was non-refundable
  • A conditional agreement was then made to delay the move in date and not sell the property until the tenancy ended
  • On 3 August, she asked the agent why the holding deposit had not been refunded
  • She questions whether the holding deposit, in this case, was a prohibited fee under the Tenant Fees Act 2019 (the Act) as she was not told why it was being kept by the agent

Agent

The agent responded:

  • The property was taken off the market, after the tenant made an offer to rent the property and the holding deposit was received
  • The application for referencing was processed before the tenant somewhat confusingly said they did not want to proceed and then asked if she could move in at the beginning of August
  • The tenant was asked to confirm her position by 24 July 2019; however did not respond until 3 August 2019 which was past the deadline for agreement date and the holding deposit did not need to be refunded

What evidence was provided?

  • Emails, holding deposit form, text screenshots

Decision

What decision was made?

Based on what you have read, what do you think the solution was?

  • The holding deposit was returned to the tenant
  • The agent was allowed to keep hold of the holding deposit
  • The holding deposit was shared equally between the agent and tenant
Well done! That is correct!
Nice try! It was actually

What was decided and why?

    1. The prospective tenant paid the holding deposit on 15 July 2019
    2. This made the deadline for agreement date the 30 July 2019 (the 15th day after the holding deposit was paid) and which the evidence confirmed both parties initially agreed to
    3. The agent offered the prospective tenant until the 24 to confirm if they were going to enter into the agreement
    4. The agent, having made all reasonable attempts to make sure the tenancy went ahead, heard nothing more until after the 30 July and the tenancy did not start
    5. While the prospective tenant had not kept to the ‘deadline for agreement’ date, and in theory should have forfeited their holding deposit, the overriding issue was that the agent had not provided the reasons for keeping the holding deposit, in writing within seven days after the ‘deadline for agreement’ had passed

Future

How can you avoid this happening in future?

  • Just taking a holding deposit and saying that it is non-refundable is not allowed
  • A tenant must be clearly told why you are requesting a holding deposit, the amount required and in what circumstances it can be retained
  • Where a tenancy does not go ahead, the tenant is entitled to be refunded with a portion of the holding deposit where it is reasonable to do so
  • Following the introduction of the Tenant Fees Act 2019, a holding deposit must be refunded where a tenant does move in unless it is agreed that it can used as part of the deposit or the first month’s rent
  • If the Tenant Fees Act 2019 rules for retaining the holding deposit are not followed, it will be refunded to the prospective tenant or to the person who paid it

Under the Tenant Fees Act 2019 schedule 2 and the Landlord Agent Guidance p33, the rules on Holding Deposits are explained in depth.

Topic:

Outstanding rent and general poor service

Resolution requested:

Pay the outstanding rent

Award:

£3,200 owed in rent, £100 for inconvenience, delays and general poor service

Complaint

What the landlord said:

  • There have been errors in the amount of rent paid by the agent for a number of months and the agent has not responded to their attempts at sorting this out
  • There has been a lack of transparency and no communication in relation to work carried out at the property which was never authorised
  • He gave notice to the agent to hand the property back so they can manage it themselves which has been ignored and more work is now going on which was also not authorised

Agent

The agent responded:

  • They accept that the rent amounts paid to the landlord were incorrect; that they have now been re-calculated and the amount still owed for the work carried out deducted
  • There was a verbal agreement for the work to be done
  • Notice has been given to the tenant, to end the tenancy, so the property can be returned to the landlord

What evidence was provided?

  • Emails, letters

Decision

What decision was made?

Based on what you have read, what do you think the solution was?

  • Half of the £3,200 was awarded to the landlord as they had joint responsibility
  • The £3,200 was awarded in full to the landlord, plus £100 in compensation
  • The £3,200 was award in full to the landlord
Well done! That is correct!
Nice try! It was actually

What was decided and why?

  1. The landlord wrote to the agent the first month she received a shortfall in rent; queried a replacement door for £800 in the agent’s statement, and asked that no more work be done without her consent. The evidence showed that this was a clear instruction to the agent
  2. There was no evidence that the landlord was informed or had agreed to any work being carried out to the property, or that the work was actually necessary, so the scheme could not take this into account when assessing the rent still owing
  3. At the time of the decision the rent owed to the landlord was £3200 which was awarded in full
  4. The landlord was distressed and inconvenienced by the shortfall in rent which was needed to pay the mortgage and for this compensation of £100 was a reasonable award
  5. The agent still has the option of taking legal advice if they want to continue pursuing any money for work from the landlord
  6. As the tenancy was coming to an end, the property should be returned to the landlord to self-manage

Future

How can you avoid this happening in future? 

  • Make sure all communication between an agent and their client landlord is in writing
  • An agent’s duties are set out clearly in the Competition and Market Authority Guidance for lettings professionals on consumer protection law (CMA Guidance) chapter eight

An Agent:

  • Owes their client landlord a duty to act with reasonable care and skill and in a timely manner
  • Must pay any rent collected to the landlord promptly and as agreed in the contract. A landlord can generally expect payment within five working days of the agent receiving the rent in their account
  • Must have a system in place to contact their landlord promptly if rent becomes overdue
  • Must get express permission to carry out work from the landlord, otherwise they will remain entirely responsible for any work that is done. As in this case there was no evidence of the landlord’s express permission to carry out any work or proof of the quality of the work carried out
  • Must not charge a landlord for work that is not actually necessary. This is likely to be a misleading action
Topic:

Administration error and poor service

Resolution requested:

Compensation for not sourcing the right tenant, issuing the wrong tenancy agreement, and allowing damage to the property, resulting in loss of rental income

Award:

£912

Complaint

The landlord said:

  • He had been using the agent on a ‘let-only’ basis for years and was generally happy with their service
  • Due to an administrative error by the agent, the tenant only signed a six month fixed term contract instead of a twelve month contract and the tenant left the property at the end of the six month period
  • The tenant had damaged the property to such an extent that it cost far more that the £1050 deposit to put it right
  • The agent’s mistake had cost him additional costs in finding another tenant, putting in an inappropriate tenant and he had to instruct another agent to sort out the repairs
  • Had he been better prepared for the tenant leaving, he could have avoided these additional costs and had a replacement tenant lined up

Agent

The agent responded that:

  • All the correct referencing was carried out on the tenant, which all came back fine, and rent was fully paid throughout
  • They accept that an administrative error was made but the landlord should have checked the tenancy agreement
  • As the error was not noticed by either the landlord or the agent, they could not be held solely responsible
  • They offered to refund the landlord 50% of their agency fee which was not acceptable to the landlord, who felt his losses were much higher

What evidence was provided?

  • Tenancy agreement and emails

Decision

What decision was made?

Based on what you have read, what do you think the solution was?

  • The agent refunded part of the tenancy fee to the landlord
  • The agent refunded the full tenancy fee to the landlord, plus compensation
  • The agent refunded the full tenancy fee to the landlord
Well done! That is correct!
Nice try! It was actually

What was decided and why?

Quality of tenant and damage

  1. The agent had a responsibility to make sure the tenants were suitable for the property and there was no evidence to suggest any issue with the referencing procedure
  2. However, the agent was employed by the landlord on a ‘let only’ basis and not to manage the property, so could not be responsible for any damages caused by the tenant during the tenancy; that apart from the administrative error there was no evidence of poor service
  3. Even if the tenancy was a 12 month fixed term contract, the landlord would still have had to carry out repairs and cover the costs of the mortgage, utilities and council tax before re-marketing and, or, letting a new tenant move in

Tenancy agreement

  1. The agent accepted making an error in issuing the wrong tenancy agreement which caused considerable inconvenience to their client, who had to go through the re-letting process six months earlier than expected, at additional cost

Outcome

  1. Through the early resolution negotiations, the landlord accepted he could have checked the tenancy agreements although there had been no problem in the past
  2. The agent offered to refund the full agency fee to the landlord, putting him back in the position he was in before instructing them, which was accepted by the landlord

Future

How can you avoid this happening in future?

  • Mistakes happen. Agents should acknowledge any errors and work to ease their client’s losses if possible; however, it is best practice for landlords to check their tenancy agreements as seen in this case
  • This agent’s willingness to reach a compromise prevented the complaint from being pro-longed and causing more inconvenience to the landlord