27th November 2018
My work involves valuing numerous tenanted properties each month for landlords who are thinking of selling. Around one in ten of the properties I visit have more people living in the property than the tenancy agreement states. In the majority of these properties, the tenants are students, and the additional occupiers are girlfriends or boyfriends, who perhaps stay two or three nights each week. Technically, the houses are over-occupied and where the houses have an HMO Licence the occupancy has put the landlord in breach of the licence.
Situations like this are hard to ‘police’. In practice there is usually little to worry about, other than additional wear and tear on the fixtures and fittings. But occasionally, I come across non-student occupied properties where overcrowding is evident, and the additional residents appear to be permanent. I also come across properties where illegal subletting is taking place. This can be especially worrying where the letting agent (or one of their members of staff) has actively encouraged, or engineered, the over- occupancy simply to achieve a letting and secure their commission.
The Property Ombudsman recently reported a case where one of the professional tenants applying for a property didn’t meet the rental criteria for the rent. The negotiator at the agency informed the owner that the particular tenant’s girlfriend would act as his guarantor. The landlord agreed to the letting. Some months later, rent arrears having accrued, the agent served a Section 8 Notice on the two tenants who had applied for the property.
The tenant’s refused to move out on the basis the Section 8 Notice was invalid. The Notice had been served on the two tenants who had applied for the tenancy, but the tenancy agreement had three signatures (one being the girlfriend’s as guarantor) AND there were three occupiers in the property, all of whom should have been included on the Section 8 Notice. Despite the tenancy agreement only having two names on the front i.e. the original applicants for the tenancy, the three signatures and apparently three occupiers, resulted in the rejection of the application for possession when the matter arrived in court.
Long story short, solicitors were instructed and possession was finally obtained, at a cost of some £15,500!
The Property Ombudsman was brought in, and after very detailed analysis of evidence it was determined that the agent had not suitably informed the landlord of the tenancy arrangements. Getting three signatures on the agreement put the agent on notice that there were going to be three tenants. The agent had failed to communicate this possibility to the landlord. The agent had not completed the paperwork correctly (only two names on the front of the agreement despite the three signatures) and the agents had not double checked the occupancy before serving the Section 8 Notice. The Ombudsman found in favour of the landlord and awarded the landlord £15,500 in damages.
It’s all well and good being able to refer poor service to The Property Ombudsman, but this doesn’t compensate the landlord for the anxiety and stress, nor the landlord’s lack of cashflow with no rental income.
Why did this situation occur? Was it down to poorly trained staff? Perhaps. Was it due to incompetence? Possibly. Or was it simply that the agent wanted to get the property let, the letting fee banked and the negotiator securing their monthly target or commission payment? Small agencies with cashflow problems can resort to ‘quick lets’, taking a chance on the fact there will be no consequences further down the road. Larger agencies can be the ‘victim’ of their own staff, particularly those who pay staff on their personal performance – when an individual is imminently due to leave the agents employment, the focus turns to banking their last bonus cheque knowing they have no liability after they have left.
Long established agencies that have a good reputation to uphold should be the first choice for the letting and management of your property. Check out an agent’s Google Reviews, or better still ask the agent for some references. Do they have clients who you can speak with or email, who the agent had acted for over a long period of time, where they have had multiple changes of tenant. This will give you a good idea of how the agent performs.
Don’t take a chance with your choice of letting agent, even if they are backed by The Property Ombudsman. Even if you do get your money back following an issue, it is still very costly in terms of time and stress.