15 March 2019
When a problem arises between a landlord and a tenant we normally look to the law of Landlord and Tenant. But many landlords operate as businesses. A recent case shows why landlords must be clear with letting agents about how they are operating; and letting agents must deal with landlords and tenants accordingly.
Our client* moved house and decided to let his old house as a source of income. He engaged a letting agent and gave instructions that he wanted the property restricted to 3 non-smoking tenants. He subsequently found out the agent had let his property to a business for use as staff accommodation and there were regularly 5 or more individuals living there.
He was concerned but despite complaints and requests that the agent do something, the tenant continued to ignore the stipulations in the agreement. He now needed advice on how to deal with the agent and endure that his requirements would be met.
The problem had likely been caused by the agent, perhaps by mistake, sending the landlord (and the landlord signing) a ‘company let tenancy agreement’ rather than a normal residential landlord agreement, which would usually be an ‘assured shorthold tenancy’.
The difference of course is crucial. The company agreement is for letting to ‘companies or other non-natural persons’. In many ways it is treated like any other contract. It gives the agent wide permission to act on the landlord’s behalf without asking for specific agreement.
The agreement provided for the tenants would be acceptable in arrangements between an agent and a landlord when the landlord is in the business of letting properties for rent; it would, for example, be normal and correct for the agent to sign the tenancy agreement on the landlord’s behalf.
In this case, it was necessary to establish how the agreement had come about. Whether for instance, there had been a mistake or poor service on the agent’s part. Or lack of clarity by the landlord about his situation. Had the agent provided a written record of the landlord’s instructions? If not, it might be possible for the landlord to show the agent had wrongly decided not to treat him ‘a normal residential landlord’ and this would be a good basis for a complaint.
For more general consideration, the case highlights a basic pitfall for new or inexperienced landlords.
If you’re using an agent, be quite sure they understand your purpose as a landlord and confirm arrangements in writing. Letting agents have to comply with the law and strict codes of practice. But if a landlord is unhappy with his/her agent the routes to redress are very different dependent on whether s/he is a business person or a normal residential landlord.
* To protect client confidentiality the details of this case have been changed.
The Competition and Markets Authority has a booklet CMA31 advising Letting Agencies what they must do to comply with with consumer law. "Consumer protection law for lettings professionals". It includes guidance on how the letting agent must decide whether to treat you as a customer with protection under consumer law, or as a trader on a business-to-business contract basis. If a letting agent breaches consumer law you can report it and make a complaint through the Citizens' Advice Consumer Service Telephone 03454 04 05 06. The Property Ombudsman (TPO) offers a free, impartial and independent service, resolving disputes between consumers and those property agents who subscribe to the TPO service as members. Members are bound to follow the TPO Code of Practice TPO can handle complaints if they have not been resolved by the agent's complaints procedure within 8 weeks. They can recommend remedial action and make compensation awards to a maximum of £25,000.