Redress Archives - The Negotiator The essential site for residential agents Sat, 16 Mar 2024 09:31:45 +0000 en-GB hourly 1 https://wordpress.org/?v=6.4.3 When rent arrears are just the tip of the iceberg… https://thenegotiator.co.uk/when-rent-arrears-are-just-the-tip-of-the-iceberg/ https://thenegotiator.co.uk/when-rent-arrears-are-just-the-tip-of-the-iceberg/#respond Sat, 16 Mar 2024 09:30:56 +0000 https://thenegotiator.co.uk/?p=155240 A tenant falling into arrears was just the beginning of a dispute between a letting agent and a landlord, who sought redress through The Property Ombudsman, Rebecca Marsh.

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rent arrears form
The complaint
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Rebecca Marsh, The Property Ombudsman

A landlord complained to a letting agent that they failed to correctly vet the tenants, ensure the upkeep of the property and correctly submit a rental insurance claim.

In November, the letting agent found tenants for the property and conducted referencing through a third-party company, deeming them suitable for the tenancy. The property was leased under an Assured Shorthold Tenancy for an initial six-month term at £1,650 per month, with a £1,903 security deposit protected by a deposit scheme.

The landlord instructed the letting agent to manage the property, agreeing to pay a monthly fee of £245.33, comprising 10% for management and 2.39% for rent insurance. The agent took out a rent insurance policy in their name, allowing the landlord to benefit from rent payments and legal costs in case of tenant arrears, with terms detailed in the policy documents.

The letting agent then served a Section 21 notice in July to end the tenancy and made a claim on the insurance policy.”

Six months later, the tenants started falling into rent arrears. The letting agent then served a Section 21 notice in July to end the tenancy and made a claim on the insurance policy.

The letting agent advised the landlord that the insurance claim had been declined. However, they assisted the landlord to regain possession of the property via court proceedings, of which the agent met the expense.

A property visit took place, revealing the property in poor condition. A claim was made against the tenants’ deposit for rent arrears, which was successful. The landlord received the property back through court proceedings.

The landlord made a formal complaint against the agent, alleging failure to vet tenants, maintain the property, and correctly submit a rental insurance claim. The agent responded to the complaint, rejecting compensation claims but refunding rent insurance fees and deposit deductions, a total of £791.45. Dissatisfied with the agent’s response, the landlord sought an independent review from The Property Ombudsman.

The Ombudsman’s findings

The landlord raised significant concerns about the agent’s failure to properly vet the tenants and communicate crucial information. Specifically, the lead tenant was found not to be occupying the property, and another individual residing there was not listed on the tenancy agreement. There were issues concerning selective licensing conditions set by the local council, which the agent failed to adequately address.

Although the agent instructed a third-party referencing company, the Ombudsman would have expected the agent to carefully consider the findings and follow up any discrepancies.

Furthermore, it was discovered that the tenants were allowed to pay rent in advance to satisfy affordability criteria.  Despite being recorded on the tenancy agreement, the Ombudsman was not satisfied that this was adequately disclosed to the landlord before the tenancy commenced. This failure to communicate crucial information resulted in the agent not meeting their obligations under Paragraph 11g of the TPO Code.

The Ombudsman was not satisfied that this was adequately disclosed to the landlord before the tenancy commenced.”

The landlord said the agent failed to adequately maintain the property, resulting in its poor condition upon return. Concerns included a lack of regular property visits and delayed reporting of maintenance issues, such as a roof hole, which cost approximately £2,800 to repair, and the need for extensive cleaning and replacements totalling £7,166.

The Ombudsman found the agent’s records indicated periodic property checks, timely reporting to the landlord and maintenance issues dealt with.

Mishandled claim

 The landlord said the agent mishandled the rent insurance claim, seeking compensation for the payments he would have received if the claim had been successful. The agent admitted responsibility for the claim’s failure, citing an error they made, leading to the insurer’s decision to decline it. However, the agent argued that they were not liable to the landlord as the policy was between them and the insurer.

The Ombudsman said the policy was inextricably linked to the service the agent provided and had the agent wished to restrict, or place conditions upon their liability they should have clarified the extent of their liability in their terms of business and drawn the landlord’s attention to this so he could make an informed decision whether to proceed. This would have been in accordance with the Consumer Protection from Unfair Trading Regulations 2008.

It was deemed fair and reasonable to compensate the landlord as if the claim had been successful.”

Given their acknowledgment of their error and failure to clarify policy terms, it was deemed fair and reasonable to compensate the landlord as if the claim had been successful.

Conclusion

Based on the outlined reasons, it was concluded that the landlord was entitled to compensation equivalent to what he would have received if the rental insurance claim had been successful. Additionally, compensation of £1,000 was awarded for undue aggravation, distress, and inconvenience caused by the agent’s failures. The proposed decision upheld two of the complaints and concluded the dispute with a compensation award of £10,264.50.

For more information on redress, go to The Property Ombudsman Scheme.

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The Ombudsman Files – ‘conditional selling’ exposed by TPO https://thenegotiator.co.uk/the-ombudsman-files-conditional-selling-exposed-by-tpo/ https://thenegotiator.co.uk/the-ombudsman-files-conditional-selling-exposed-by-tpo/#comments Mon, 12 Feb 2024 05:45:19 +0000 https://thenegotiator.co.uk/?p=153221 Rebecca Marsh of The Property Ombudsman reveals the conclusion of a case where buyers said their agent forced them to use in-house mortgage brokers.

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House locked up and Rebecca Marsh

A complaint brought to The Property Ombudsman (TPO) from buyers stated that their agent forced them to use their in-house mortgage broker to secure the sale of the property, as they said that the agent made it a condition of the sale.

The buyers believed that the agent should reimburse the £698 fee that they paid for the broker’s service.

Investigation

In their submission to The Property Ombudsman, the agent said that buyers are not mandated to use their in-house services for conveyancing or mortgages and are free to opt for external services. The agent clarified that in this instance, using their in-house mortgage broker was not a condition for the property sale, and they did not exert pressure on the buyers to do so.

They added that the buyers never raised concerns with them or the broker regarding the use of this service, maintaining that it was the buyers’ choice to engage the in-house broker for their property purchase.

In line with paragraphs 1e, 2f, and 9d of the TPO Code of Practice for Residential Estate Agents 2019, the agent could not, by law, make it a condition that the buyers must use services offered by them or another party for their offer to be passed onto the sellers. Additionally, the agent was expected to refrain from any actions that could be interpreted as aggressive behaviour, such as pressuring buyers to use their in-house mortgage broker.

Upon review, the Ombudsman noted that the buyers initially made an offer of £250,000, subsequently increasing it to £260,000 two days later when asked for their best and final offer. The agent provided written confirmation of both offers to the buyers and sellers on the respective days. Furthermore, on the day of the initial offer, the buyers met with the in-house broker but opted not to proceed after learning of the associated £698 fee, sticking with their original broker which they were satisfied provided a better service at no charge.

The buyers claimed that when they presented their best and final offer, the agent informed them that the sellers agreed to accept their offer solely because they were using the in-house broker. They alleged the agent also mentioned that the sellers rejected a higher offer from another party because the buyers agreed to use the in-house services, asserting it would make the sale of the property “easier” if financing was organised in-house.

The buyers said that based on what they were told by the agent, they felt they had no choice but to agree to use the in-house service and pay £698 to do so.

Evidence

They sent two emails to the in-house broker, one expressing excitement to move forward and another indicating they felt pressured into using the service.

The Ombudsman would have expected the agent to provide evidence of communication with the sellers regarding best and final offers being requested and received and any subsequent discussions regarding offer acceptance. The agent was also obliged to advise the sellers in writing if the buyers were using any of the in-house services being offered.

The agent was unable to provide any of the expected evidence making it difficult for the Ombudsman to consider the full context of the conversation the buyers said took place during which they were pressured into using the in-house service.

The agent maintained that the use of such a service was not made conditional, and relied on an email as proof that the buyers were happy to proceed with that service.

In the absence of contrary evidence and considering the sequence of events, the Ombudsman accepted that the agent provided information leading the buyers to believe they had to use the in-house broker for the purchase to proceed, which likely exerted some pressure on them.

The Ombudsman found it reasonable to assume that the buyers felt compelled to use the in-house broker, as indicated by their communications with the broker and their payment of £698, despite preferring their original broker’s services.

Outcome

The Ombudsman supported the complaint and considered that the circumstances merited an award of compensation. The award of £150 reflected the avoidable aggravation and inconvenience caused to the buyers as a result of the failure of the agent to fulfil their obligations under relevant sections of the Code.

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The Ombudsman Files – A high price for an early exit https://thenegotiator.co.uk/the-ombudsman-files-a-high-price-for-an-early-exit/ https://thenegotiator.co.uk/the-ombudsman-files-a-high-price-for-an-early-exit/#respond Sat, 09 Mar 2024 08:00:49 +0000 https://thenegotiator.co.uk/?p=153173 The Property Ombudsman, Rebecca Marsh, reviews a case where an agent gave the early termination fee to the landlord instead of the tenant.

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The Property Ombudsman (TPO) was asked to review a case from tenants in relation to the request for a refund of their early termination fee charged by the agent.

The tenants said that the agent had agreed that, depending upon when they moved out of the property, the sum paid would be refundable. The tenants said that the agent then informed them after they had moved out that they had made a mistake and that the cancellation fee was not refundable as it had been paid to the landlord for the re-letting fees he had incurred.

The tenants said the agent did not confirm the early termination date of the tenancy with them, and they found new tenants without informing the existing tenants (the complainants) in advance. The tenants sought a return of the cancellation charge (£1,993.68) and an unspecified sum of compensation to reflect the aggravation that the matter caused.

INVESTIGATION
Rebecca Marsh image

Rebecca Marsh, The Property Ombudsman

Both the PO Code of Practice (2019), as well as the principles set out in the Tenant Fees Act 2019 (TFA) provide that the agent could charge an early termination fee if a tenant requested to leave before the end of their tenancy. However, the fee claimed could not exceed the financial loss suffered by the landlord in permitting the termination, and the costs reasonably incurred by the agent in this regard. Moreover, an agent should be able to demonstrate (through evidence) that specific costs were incurred. The Ombudsman would also expect an agent to act in accordance with the tenancy agreement and to communicate clearly, accurately and effectively regarding any early termination charges.

The parties agreed that the tenants entered into a fixed-term tenancy for a period of 30 months. The tenancy agreement did not contain a break clause which would have allowed the tenants to bring the tenancy to an end sooner. Therefore, the only way the tenancy could end early was by mutual agreement with the landlord.

When reading the tenancy agreement, it was the Ombudsman’s view that the clause relating to the tenant’s liabilities placed an obligation on the tenant to refund the landlord the cost of any agency commission for the remaining part of the tenancy agreement. However, she was critical of the use of some words which appeared confusing and unclear in the context in which the clause had been used.  The use of the word ‘refund’ also gave the impression that the tenants were liable to refund any agency commission that the landlord had already paid for the duration of the tenancy.

TERMINATION FEE LIMITES

Where a landlord agrees to early termination, any early termination charge for agency commission can amount to the equivalent sum paid for the new tenancy where the terms of those tenancies overlap. For example, as the tenancy was for 30 months and the tenants left after 21 months with a new tenant moving in immediately upon their departure, there was a nine-month period in which the landlord would have in effect paid agency commission twice. As such, the landlord could seek to recover the pro-rata agency commission incurred for the second tenancy as an early termination fee. The Ombudsman would have expected the agent to be aware of this position and felt that the agreement did not reflect this position.

The parties agreed that the tenants sought an early release from the tenancy agreement and alluded to extensive correspondence on this point. However, the agent did not provide evidence of this, other than a summary email which, again, the Ombudsman felt left the impression that the sum calculated was based upon a sum that the landlord had already paid, rather than one he would pay for a new tenancy.

The Ombudsman was critical that the explanation of the fee in the email gave rise to the tenant’s reasonable expectation that, should a new tenant be found immediately, a refund of the early termination fee would become due to them. Such an explanation was neither in keeping with the Code requirements, the tenancy agreement or the TFA.  Even after further discussions with the tenants, at no point did the agent give any indication that the fee was not refundable.

The tenants confirmed their ability to vacate the property on a particular date, and the new tenants took possession of the property two days later.

AGENT ADMISSION?

This was confirmed to the (complainant) tenants 19 days later at which point they engaged in correspondence with the agent to obtain refunds of various sums of money, including an overpayment of rent, the deposit and the early termination fee. At this point the agent apologised for their error in detailing the early termination fee as refundable when it was not. This was the first reference of the tenants being informed that the fee that they had already paid, on the premise that it was refundable, was in fact, non-refundable.

The Ombudsman was further critical of the agent’s response to the tenants’ formal complaint, where they explained (incorrectly) that the landlord was charging the tenants agency commission for their tenancy and not for the period of the new tenancy.

The Ombudsman found that the tenancy agreement, the agent’s understanding of the matter and their communication with the tenants did not reflect the correct position on the matter and, moreover, the agent expressly indicated to the tenants that the early termination fee was in fact refundable were a tenant to move in straight after their tenancy ended.

OUTCOME

Critically, the agent took no steps to identify the shortcomings in their service until after the tenants had accepted the early termination fee on the premise that this sum would be refundable, and even when they did so, their explanation of the calculation of the sum paid was not reflective of the position that they had consistently explained to the tenants.

Whilst the Ombudsman took note of the agent’s comments and evidence to demonstrate that the fee was paid over to the landlord (and it was), the fact remained that the tenants’ confusion and aggravation stemmed entirely from the agent’s shortcomings. Therefore, the Ombudsman made a compensatory award of £1,993.68 to the tenants, this being akin to the sum that they paid to the agent.

The Ombudsman did not find that the circumstances merited a further compensatory award. This was because the tenants were released from the tenancy early, as per their request, and the award, akin to the fee that they reasonably believed was refundable, put them back in the position they believed they would have been in, but for the shortcomings in the agent’s service.

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The Ombudsman Files – who earned the commission? https://thenegotiator.co.uk/cause-for-commission/ https://thenegotiator.co.uk/cause-for-commission/#comments Fri, 15 Dec 2023 15:12:23 +0000 https://thenegotiator.co.uk/?p=152310 The Property Ombudsman, Rebecca Marsh, settles a case between two agents claiming commission on a sale.

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The Property Ombudsman was asked to review a dispute from sellers involving the commission fees charged by two sets of agents following the sale of a property. The sellers raised a dispute against Agent 2, who maintained they had an entitlement to payment of sales commission as they believed they were the effective cause of the sale, not Agent 1 with whom the buyers first viewed the property with.

Investigation

The buyers viewed the property through Agent 1, giving positive feedback following this viewing. The Ombudsman was satisfied that the buyers made the transactional decision in the month prior to the sellers dis-instructing Agent 1. Agent 2 was not instructed until two months after this.

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Rebecca Marsh

The asking price of the property was then set at £1,695,000 (after being marketed for £1,750,000 through Agent 1). Agent 2 was aware that the property had previously been marketed, as was communicated via the sellers in an email. With this knowledge, Agent 2 should have been alert to the risks of a dual fee situation developing; however, they did not ask to see the sellers’ contract with Agent 1, nor did they proactively seek a list of previously introduced parties. Instead of warning the sellers and looking to protect them from dual fee liability, it was the Ombudsman’s view that they ignored the risks.

The agent had not asked the buyers if they had viewed the property before…

The same buyers then viewed the property through Agent 2, some 3-4 weeks after they were instructed. They went on to offer through Agent 2. From Agent 2’s comments in correspondence with the sellers, the Ombudsman was satisfied that they did not ask the buyers if they had viewed the property previously, as expected under Code and Guidance.

Explicit interest

Prior to submitting an offer, the buyers explicitly indicated their interest in the property, suggesting it was likely generated through another agent. In an email to Agent 2 about making an offer, the buyers stated, “I understand that the property was on the market with Agent 1 before for some time, and the sellers have put the property on the market with you now.” If Agent 2 hadn’t considered it earlier, the buyers’ email should have prompted them to enquire about the buyers’ previous viewings through another agent.

Upon learning of the buyers’ offer through Agent 2, Agent 1 emailed the sellers. Agent 1 said that, as they had introduced the buyers earlier in the year, the sale should be referred back to them. To support their claim, Agent 1 attached a dis-instruction letter, explicitly mentioning the buyers’ name within a list of parties introduced by them.

The sellers forwarded Agent 1’s email to Agent 2 on the same day. In response, Agent 2 confirmed that the applicant had indeed viewed the property with Agent 1 but emphasised that the subsequent viewing occurred with them. Agent 2 expressed frustration, noting that the buyers showed no signs of having viewed the property before. They assured the sellers that they would discuss the matter with their manager and provide further updates shortly.

Key information failure

The Ombudsman was satisfied from the wording used that Agent 2 had not asked the buyers if they had viewed the property before, as expected as a matter of best practice and specifically paragraphs 5t and 8d of the Code. Furthermore, at the time of instruction, Agent 2 failed to ask for a list of previous viewers of the property. Given the buyers had subsequently offered this information, it is reasonable to conclude that the sellers would have provided information to Agent 2 about previous viewers.

The Ombudsman was critical that Agent 2 failed to obtain key information about previous prospective buyers at the beginning of their relationship with the sellers, exposing them to the risk of paying two commission fees.

Despite Agent 1’s effective introduction of the buyers, Agent 2 claimed they were the effective cause based on a previous court case covering a similar issue and due to the significant price reduction during their marketing period. However, Agent 1’s positive feedback and the buyers’ ongoing interest indicated an uninterrupted connection.

Agent 2’s service fell short of the requirements of the Code by not taking appropriate steps to protect the sellers and attempting to claim an undeserved commission fee. They should have checked if the buyers had previously viewed the property through another agent, especially since it occurred within the 6-month period specified in the contracts. According to the Code, the sale should have been referred back to Agent 2, and Agent 2 should not receive any commission.

Outcome

The Ombudsman supported the complaint concluding that Agent 2 did not meet the relevant requirements of the Code at the crucial times in this case. In their failure to do so, they failed to protect the sellers from the risk of dual fee claims for their sale.

The Ombudsman directed that Agent 2 cease any pursuit of payment of sales commission from the sellers as doing so would have represented a financial loss to the sellers. The decision put the sellers back in the position they would have been in had Agent 2 met the requirements set out in the Code of Practice.

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No refunds https://thenegotiator.co.uk/no-refunds/ https://thenegotiator.co.uk/no-refunds/#respond Thu, 11 Jan 2024 12:56:26 +0000 https://thenegotiator.co.uk/?p=151444 The Property Ombudsman, Rebecca Marsh, adjudicates on a dispute over a reservation fee for a house at auction.

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A case that The Property Ombudsman (TPO) was asked to review came from a buyer against an agent following her request for the reservation fee of £13,650 to be refunded, which the agent denied. The buyer said she was under a great deal of pressure when she offered to purchase the property and that she subsequently realised that it was not suitable for her, with its proximity to a busy and noisy road, as she cared for a daughter with additional needs.

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Rebecca Marsh

Although she understood that the reservation fee was non-refundable, she had asked that her circumstances were taken into consideration, together with the fact that the property sold again for a greater amount than she had offered. The agent said that having considered the buyer’s request, they did not feel it warranted a refund of the reservation fee. The agent offered the buyer £100, which she declined.

Investigation

The buyer received the auction pack and had initial discussions with the agent prior to the first viewing, confirming she had read the details of the auction pack. She also advised that she was familiar with the process used by the agent as she had bid on a property the previous year, although she had been unsuccessful.

The buyer said she was under a great deal of pressure…

Following the viewing, further calls took place in which the buyer listed the issues she had found with the property, the extensive work required and the proximity to a busy and noisy road. She mentioned that she did not consider it was particularly good value for money but it was on a good road that she knew well. The buyer said she had been following the property all year. At this stage she was still considering bidding at the auction but had not yet decided.

The agent reminded the buyer that she should do her due diligence and that she had to be happy. An example of the total cost was given including the fees. The buyer confirmed that she was in a good position as she was on the verge of completion, had her own house and cash. On the final day of the auction, the agent called before the end of the auction and the buyer advised that she was watching and was aware there were no other bids, saying she “checked it all the time”. No bids were received by the end of the auction and the agent contacted the buyer to advise that the vendor, who was motivated to sell, would potentially be open to offers. The property had been marketed with a starting bid of £375,000 and the buyer said that the vendor’s proposal of £350,000 plus costs would still be too much.

The buyer said that she would not make a decision, but would speak to someone first. The buyer subsequently made an offer of £325,000 which, based on the fact she was a cash buyer, the vendor accepted in preference to a slightly higher bid from someone who was not able to move as quickly.

No refunds

At this point, the agent reminded the buyer in several of the calls that the reservation fee was non-refundable and this was clearly stated on their website, the auction pack and the reservation fee agreement. The buyer confirmed that she was about to exchange on her current property and wanted to get going.

The agent explained the process of signing the reservation agreement after which payment would be taken and the property would be reserved for her. The agent offered to stay on the phone while the buyer completed the reservation agreement but she declined as she wished to read through it first.

In the next phone call, the payment went through, and the agent explained the onward process which included obtaining ID and proof of funding and solicitor details. Conveyancing continued for two months, and then late in the process, the buyer instructed a survey.

Following this, she contacted the agent to enquire about renegotiating the price or withdrawing, saying there was too much work to be done and that it was not suitable for her needs. The agent requested a copy of the survey however the buyer did not provide this.

During this call, the buyer acknowledged that if she pulled out, she could lose her fees. The agent advised that she could request a return of the fees, which they would present to the management team, but it was unlikely this would be granted.

The buyer withdrew from the purchase and made a request for a refund the reservation fee, which was declined. The property sold for £330,000, £5,000 more than the buyer offered. The buyer said that the property sold the following day. However, the agent’s records showed that the offer was accepted over a month later.

Conclusion

The Ombudsman was satisfied that the buyer had adequate time to ensure that the property met her needs prior to making her offer and was fully aware of her obligations when placing the offer. The Ombudsman was also satisfied that the agent not only clearly stated the terms of the reservation fee, but also reiterated these on several occasions and the buyer was fully aware that it was non-refundable unless the vendor withdrew.

The Ombudsman also advised the buyer the fact that the property was resold in a little over a month did not negate the terms of the agreement. There was no evidence that the agent applied any pressure for her to make an offer. As such, the Ombudsman did not support the complaint and did not consider that the circumstances merited an award of financial compensation.

The buyer was reminded that she was free to reject the Ombudsman’s decision and pursue the matter through the court.

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Who pays the lawyers? https://thenegotiator.co.uk/who-pays-the-lawyers/ https://thenegotiator.co.uk/who-pays-the-lawyers/#respond Fri, 03 Nov 2023 07:31:32 +0000 https://thenegotiator.co.uk/?p=148171 Rebecca Marsh, The Property Ombudsman, deliberates on a case between leaseholders and an estate and management company over a dispute over residents’ voting rights.

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The leaseholders were seeking a refund of the £1,020 in legal fees to resolve the dispute, as they considered that the estate and management company had failed to correctly interpret the details of the residents’ voting rights, and as such were responsible for the disputed fees.

The estate and management company did not believe that their service fell short in this instance, stating that they did not agree to cover legal fees to resolve the dispute and no evidence had been provided to suggest otherwise, therefore the legal fees should be covered by the leaseholders.

Investigation

The Ombudsman noted that there was a disagreement with regards to the voting rights of the residents at the property between the directors of the resident management company (the leaseholders) and the estate and management company at the Annual General Meeting.

To resolve the dispute, the estate and management company opted to abort the meeting and seek legal advice regarding the voting rights of the residents costing £360. The leaseholders also opted to seek independent legal advice in an attempt to resolve the dispute in a swift manner resulting in a further charge of £660.

The leaseholders opted to seek legal advice…

The leaseholders felt that the estate and management company should be responsible for the entire legal costs as it was their misinterpretation of the details regarding the residents’ voting rights which caused the necessity for legal advice.

Contentious issue

Having considered the available evidence, the Ombudsman noted that the dispute at the AGM was a contentious issue. It was clear from the fact that both parties independently sought legal advice that the interpretation of the voting rights terms was not as clear as believed by the leaseholders. Therefore, the Ombudsman concluded that as both parties were clearly unable to come to an agreement on the interpretation of the voting rights, the act of seeking legal advice to resolve the dispute was fair and reasonable.

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Rebecca Marsh

The leaseholders said that the estate and management company verbally agreed to cover the legal costs, but the agent denied this. As there was no evidence of this conversation the Ombudsman was unable to verify the claim.

Having considered the management agreement, the Ombudsman noted that it stated “issues of legal proceedings or instructions to Solicitors for Breaches of Covenant or other matters will be charged at £50, plus associated costs and disbursements (such sums will be recharged to the respective Leaseholder or Freeholder account).”

Legal opinion required – or not?

Based on the above, the Ombudsman concluded that the management agreement indicated that where legal involvement was needed, the cost would not be paid for by the estate and management company. Overall, the Ombudsman found the actions taken by the estate and management company to be fair and reasonable and therefore was satisfied that they were not liable for the fees.

With regards to the legal costs incurred by the leaseholders, the Ombudsman noted that the leaseholders stated that this was sought as they were unaware the estate and management company had also opted to seek legal guidance.

The email from the leaseholders to the management company after the AGM stated that they disputed the claim that they had agreed for solicitors to be involved, so they should not have the expense of the legal fees. The leaseholders then emailed the management company advising that if they were “still in the process of obtaining advice from any other source this should cease immediately”. However, at this stage, legal advice had already been sought by the management company who received advice later that day.

Deliberation

Based on the evidence, the Ombudsman concluded that on the balance of probability, the leaseholders were aware or should have been reasonably aware that the management company was already seeking legal advice on this issue. Therefore, she did not agree that the additional legal costs incurred by the leaseholders were ultimately necessary or the responsibility of the management company.

The Ombudsman was satisfied that the management company were able to obtain legal advice within a reasonable timeframe and as such found that the management company’s actions were acceptable.

Outcome

Given that the dispute centred around the need for a clear interpretation of voting rights, the Ombudsman considered that obtaining legal advice to resolve the issue was a reasonable approach. The evidence indicated that the leaseholders were aware of the management company’s intentions to obtain this advice and that, under the management agreement, the cost would be to them. As such, the Ombudsman did not support this complaint and did not make an award for compensation.

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F or G – it’s flipping cold! https://thenegotiator.co.uk/f-or-g-its-flipping-cold/ https://thenegotiator.co.uk/f-or-g-its-flipping-cold/#respond Fri, 06 Oct 2023 14:45:27 +0000 https://thenegotiator.co.uk/?p=147372 The Property Ombudsman, Rebecca Marsh investigates a tenant’s complaint against a letting agent, regarding EPC rating of a property.

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A case that The Property Ombudsman (TPO) was asked to review came from a tenant against a letting agent in relation to the Energy Performance Certificate (EPC) and the Electrical Installation Condition Report (EICR) for the property.

The property was let to the tenant under an Assured Shorthold Tenancy (AST) for a period of twelve months, for a monthly rent of £3,500. The tenant’s complaint form stated that the EPC gave the property an EPC rating of F, which she says was out of date and the property was actually G at the point it was let.

The tenant stated that an Environmental Health officer surveyed the property and found it to present a severe risk of cold, as there was no heating. She has also complained that she was not given a copy of the EPC or EICR until several months after the start of the tenancy, when she requested copies.

In resolution, the tenant requested an apology and compensation. In response, the letting agent said that they were aware that the property had an EPC rating of F, but believed at the time that it was exempt from energy efficiency requirements on account of being Grade II listed, and that it had been registered accordingly. However, they acknowledged that their understanding of these matters at the time was incorrect.

The tenant was aware that the property was inefficient to heat.

With regard to the provision of the EPC and EICR, the letting agent said that whilst they were instructed to market the property to let and find a tenant, the landlord took direct responsibility for issuing documents at the start of the tenancy. Therefore, the letting agent said it was the landlord who was responsible for matters such as issuing copies of the EPC and EICR. They said that the tenant confirmed that she had had sight of these documents when she signed the agreement.

Investigation

The Domestic Minimum Energy Efficiency Standard (MEES) Regulations set a minimum energy efficiency level for domestic private rented properties. From 1 April 2018, private landlords were prohibited from entering into new tenancies to let domestic properties with an EPC rating assessment of F or G, unless an exemption applied, and was registered. The legislation sets out specific exemptions which may apply when a property has an energy efficiency rating of F or G. If a property meets the criteria for an exemption, it is possible to legally let it once the exemption has been registered on the National Private Rented Sector (NPRS) Exemptions Register. The above is reflected in the TPO Codes (4f and 6a), which set out agent’s obligations when letting residential property.

Rebecca Marsh image

Rebecca Marsh

The Ombudsman would therefore have expected the letting agent to have established whether the property had a valid EPC, or one commissioned, before marketing the property to let. The Ombudsman checked the EPC register and have found that the most recent EPC certificate for the property was issued on 19 August 2019, and was valid for ten years until 18 August 2029. The letting agent advised that this was the certificate they had sight of when marketing the property to let. It was therefore clear that there was an EPC for the property at the time of the letting.

However, at the assessment in August 2019, the property was given an energy efficiency rating of F. As this was lower than the minimum permissible rating for the letting of a property under the MEES Regulations, the Ombudsman would have expected the letting agent to have checked first whether the property was registered as exempt. The Ombudsman did not consider that it was enough for the letting agent to take the word of the landlord, in-line with their obligations under the TPO Code.

The Ombudsman noted that property was registered for an exemption in October 2022. However, there was no indication that the property was registered as exempt at the point that it was marketed to let in 2021. The letting agent acknowledged that the property was not in fact registered for an exemption in 2021, contrary to their belief at th time.

Failure to verify

The Ombudsman was not satisfied that the letting agent carried out sufficient checks, as had these steps been taken they would have discovered that the property was not exempt. The letting agent should have declined to market the property until an EPC with an energy efficiency rating of E or higher had been obtained, or the property been exempted. This placed the landlord at risk of receiving a penalty notice from the local authority. This part of the complaint was supported.

Regarding the tenant, the agent had an obligation to bring all relevant material information relating to the property to the attention of the tenant, which the Ombudsman was satisfied that the agent did, including the fact that the property only had an EPC rating of F and had electric heating. Therefore, the tenant was aware that the property was inefficient to heat before making any transactional decision, so no compensation was awarded. The Code says:

“13c You must ensure that tenants are provided with relevant and appropriate documentation, statutory or otherwise, prior to their occupation of the property or commencement of the tenancy, whichever is the sooner.”

However, these obligations cover the situation where the agent is responsible for the entire tenancy including set-up and move-in process. The letting agent in this case explained that the landlord wished to carry out the move-in process himself, which was corroborated by the evidence provided. Therefore, this aspect of the complaint was not supported.

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The stress test https://thenegotiator.co.uk/a-i-high-five-image/ https://thenegotiator.co.uk/a-i-high-five-image/#respond Wed, 20 Sep 2023 09:29:44 +0000 https://thenegotiator.co.uk/?p=147060 The Property Ombudsman, Rebecca Marsh decides whether a quick-sale agent was behaving as fairly as the code requires.

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Stressed purchaser image

The Property Ombudsman (TPO) was asked to investigate a vendor’s complaint against a quick-sale agent and related to their communication and approach to the purchase of her property. The seller said that the agent had confirmed that they were the buyer but she believed this was false. She also said that they advised they would offer 80 per cent of the market value, which she was willing to accept as she required a quick sale. However, there were delays in the agent presenting their market valuations and when they eventually did it was £30,000 below her expectations, which meant their offer would be significantly below her requirements.

Rebecca Marsh - TPO - image

Rebecca Marsh

No contract was entered into between the agent and the seller and as such, the agent said the seller was not obliged to accept their offer. The seller felt that the agent’s approach was, in her view, dishonest and took advantage of her requirement to achieve a quick sale.

Investigation

Following an investigation, which involved listening to telephone conversations, the Ombudsman noted that the seller made the agent aware that a sale had fallen through, and she was looking to sell the property swiftly as she had an onward purchase to complete.

The agent’s approach, in her view, was dishonest and took advantage…”

The agent confirmed they would be ‘the buyer’ and would offer 80 per cent of the market value. The seller confirmed the property had been valued by a surveyor at around £265,000 and in response, the agent advised that they would be looking at £200,000 to £210,000 as an offer.

It was confirmed that the agent would be seeking two independent estate agents to value the property and that they were independent to the agent. A follow up email was sent to confirm the facts discussed in the telephone conversation the same day.

One valuation took place but the second was delayed and then cancelled. The agent was informed by the third party responsible for sourcing and arranging valuations, that they were having difficulty getting a second agent to agree to provide a valuation.

The agent confirmed by text that they were organising a desktop valuation and the seller replied to ask whether the other report had been received. The agent confirmed that it had been received but the valuation was quite low at £220,000. The seller expressed her disappointment and the agent confirmed that as they could not help, they would close her file. A total of nine days elapsed between interest being submitted by the seller and the withdrawal of the agent’s willingness to purchase the property.

The seller expressed her concern that the agent identified themselves as cash buyers but believed they were acting as ‘middlemen’. As the process did not proceed beyond initial valuations and no contract was signed, there was no basis on which to dispute that the agent was intending on purchasing the property with cash themselves.

The valuation report provided three figures; a market value, an achievable value and a quick turnaround value. Given the valuation of a property relies on many factors in order to determine, the Ombudsman did not consider this practice to reflect an unethical or unfair approach. The agent’s approach to also use two independent agents to provide a value was also considered fair.

Quick turnaround

However, given the seller’s disclosure of the need for a swift sale in order to complete on her onward purchase, the Ombudsman would have expected the agent to make the seller aware that given the need for such a swift sale, their offer would not be based on the ‘open market’ value, but rather that of the ‘quick turnaround’ figure which was significantly less.

Accordingly, there was an expectation on the agent to inform the seller from the outset that their offer would be based on the lower ‘quick turnaround’ figure and the reason for this – that being that they would have to negate certain checks to achieve the quick sale the seller was seeking and thus meant increased risk for them.

By not informing the seller of this, the Ombudsman understood that the seller’s subsequent awareness of the three figures and, specifically the ‘quick turnaround’ figure, had led to the seller’s perception of the agent’s actions being dishonest and unfair.

Outcome

The Ombudsman noted that the agent’s shortcomings were not in keeping with 1d of the Code – to act with fairness, integrity, and best practice. Although it was noted that the stress experienced by the seller was inherent to her circumstances at that time – needing a quick sale to continue her onward purchase. This inherent stress also amplified the necessity for more transparency by the agent on the ‘quick turnaround’ figure from the outset. The Ombudsman supported the complaint on this basis and made an award of £200 in compensation.

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