Annual Report: Let Under False Pretences: Agent's Actions See Tenants Out of Pocket and Home

Published on Thursday, 17 May 2018. Posted in Case Studies

A case that The Property Ombudsman was asked to review came from tenants concerning their tenancy as well as the handling of their complaint by the agent.

This was an unusual situation. The tenants said that they had not been treated fairly by their agent who allowed them to enter into a six-month tenancy at a time when the property should not have been let as the landlord had recently been declared bankrupt. The tenants said that the agent took money from them, six months’ upfront rent, under false pretences. They went on to complain that the agent did not deal with their complaint fairly or promptly, and they had to constantly chase them.

Evidence made it clear that the agent was fully aware of the landlord’s situation. Emails to the agent provided both a Bankruptcy Order and a Certificate of Appointment to act over the landlord’s affairs.

In this case, the property had been let previously.  The landlord had been declared bankrupt some time during this previous let and the Trustee in Bankruptcy had contacted the agent at that time, explaining that they would be seeking an order for possession and advising that it would be best if the property remained vacant for the time being. The agent had not adhered to these instructions, and once the previous tenant had vacated they arranged a let to the complainants.

In such a situation, the Ombudsman would not have expected the agent to have arranged the let of the property, knowing that they had no instruction from the Trustee in Bankruptcy; indeed, the Trustee had specifically advised against it.  The landlord had told the agent that the bankruptcy had “been resolved” but had provided no proof of this.  The landlord had drawn up a tenancy agreement and proceeded with the let against specific instructions and without advising the tenants of the issues.

When considering this matter, the Ombudsman deemed the agent to have been reckless in arranging a tenancy agreement to commence and making the tenants pay six months’ rent upfront, which was passed on to the landlord without seeking any further advice or clarification. The agent could have reasonably foreseen that the property might have been repossessed during the period of the tenancy and the recovery of any money paid to the landlord was going to prove very difficult.

In accordance with Paragraph 1h of the Codes of Practice, the agent was also required to keep clear and full written records of the transaction. Despite providing copies of their files, their electronic records lacked detail, especially in relation to what was discussed with the tenants prior to the tenancy commencing.

Records showed that the tenants had passed referencing but had paid a total of £7,700 upfront. It was unclear as to why they were asked to pay six months’ rent upfront. The tenants said they were told that the landlord had requested this due to previous issues with tenants.  The Ombudsman was extremely concerned that the agent had, on their own initiative, decided to take six months’ rental payment and pass it straight to the landlord, knowing that the landlord had been declared bankrupt.

The Ombudsman was also critical of the agents’ lack of contact with the tenants regarding their complaint. At the beginning of the tenancy, the tenants received a letter stating that an order for immediate possession and sale of the property was being sought through the Court. These letters were emailed to the agent by the tenants, but there was no evidence that the agent had responded despite being chased by the tenants, who were understandingly very worried about the matter.



The Ombudsman supported this case and considered that the circumstances merited an award of compensation to reflect the avoidable aggravation, distress and inconvenience caused to the tenants.

The tenants were seeking a refund of the money paid to the agent, including all rent and fees. They were also seeking compensation for the cost of having to find a new property, having to move and for the stress and anguish the situation caused.

The tenants lived at the property for almost three months. The Ombudsman considered it reasonable that the tenants paid rent for that period of the tenancy. However, it was not deemed fair and reasonable for them to have paid for the final three months’ rent, totalling £4,200.

The Ombudsman was highly critical that the agents requested six months’ rent upfront in the knowledge that the landlord was bankrupt. Given the landlord’s circumstances, the tenants had an unrealistic chance of recovering the rent from them. The agent was therefore instructed to pay the £4,200.

The tenants did incur costs as a result of having to move. However, the Ombudsman could not hold the agent responsible for those costs as the tenants would have incurred them had the tenancy not been renewed.

Prior to the tenancy commencing, the agent charged the tenants for administration fees and references. Given that the tenancy should never have gone ahead, it was considered fair that the agent refunded the fees charged. These totalled £345.

The Ombudsman was also satisfied that the tenants suffered considerable undue aggravation and considered that a further award of £500 was made to compensate this.

An award of £5,045 in compensation was made. This was in full and final settlement of the dispute.