Remember the exclusive TenantReferencingUK story that we covered back in January, where a referencing precedent was set by one of our landlord members? Ms Hale won the case against her letting agent for supplying unsuitable tenants even after they were accepted by another referencing company, by claiming breach of contract under The Sale of Goods and Services Act 1982. After losing £4,000+ in unpaid rent, property damages and legal costs, all matters were fully considered by the Judge who was satisfied that the landlord would not have agreed to take these tenants if she had been correctly informed about them from the outset.

Click here to read about the case in full and comments from our community.

Update

We now have an update on the case in question, after the landlord asked TPO (The Property Ombudsman) to reconsider their decision not to uphold her complaint. The following two paragraphs from their reply are particularly poignant:

You have now successfully pursued Blue Sky Property through the Court and obtained a judgment in your favour. I would add that I have read the court case with interest. You successfully brought the case under the Sale of Goods and Services Act. Only a court, not an Ombudsman, may determine if a defendant has breached legislation.

On further consideration, I acknowledge that the Ombudsman’s decision was not correct. There was information within the referencing report that I would have expected Blue Sky Property to have advised you of. I apologise for this. However, I note that on 1 July 2014 you obtained an order for possession which included a direction that the tenants pay you the sum of £4,086.13 rental arrears. Regardless of the subsequent judgment against Blue Sky Property, I would not have made a parallel judgment to the court and hence any award made by TPO would not have included rental arrears. Any award would, in all likelihood, have been intended to compensate you for the aggravation of not having being advised, in full, of the referencing results. Such awards tend to be modest, typically less than £500. To then pursue Blue Sky Property for rent arrears, as you did, you would have had to reject the Ombudsman’s decision, made in full and final settlement of all matters, before commencing court proceedings.

So what did the landlord think about this reply?…

‘I feel affronted!  It was a challenge in itself to submit the details of the case in the only way acceptable to TPO.  Then they had the file for ages.  In fact, it took them over seven months to reach the wrong decision!  What a waste of time!’

Now, the question is:  do we really need Ombudsmen?  What, actually, is their remit?

At TenantReferencingUK we whole-heartedly agree with this landlord and would like to ask the following:

• What is the point of an Ombudsman if they cannot arbitrate points of law?
• What is the ‘compensation’ for exactly?
• Is the Ombudsman compensating the landlord for the amount of losses incurred by damage brought about by the letting agents
  negligence or is the money awarded to the landlord not relevant to any fixed amount and simply offered as a ‘hush up’ sweetener?!

What we do know is that it is absolutely fantastic that both TPO and PRS support TenantReferencingUK.com in improved and proactive referencing procedures – and both follow our forum.

Sean Hooker, Head of Redress at Property Redress Scheme, said:

‘This case illustrates the dangers of not taking referencing seriously by some letting agents. Whilst using a reputable third party referencing service is prudent, it is not fool proof. Agents should undertake rigorous due diligence on tenants and bear in mind that with rental amounts being a significant amount of most people’s incomes, they have a duty to BOTH their landlords and the tenant to ensure that the commitment being entered into can be fulfilled.

Ultimately, referencing is not a tick box exercise and if the agent takes their eye off the ball then everyone suffers. The agent should be proactive and use that rare commodity, common sense. This effectively means, using their judgement and experience to assist the landlord and tenant to enter into a mutually beneficial relationship.’

What would be even better is if each redress scheme now introduced a criteria or a minimum standard of referencing within their guidelines and if their members breached such guidelines they would have to pay for the landlords losses. As we’re sure you’ll agree…. if a landlord loses over £4,000 and then the Ombudsman only offers a £500 ‘sweetener’, this is hardly justice, is it?!

So at TenantReferencingUK.com we urge both Ombudsmen to take a harsh line by insisting that each and every one of their letting agent members are held accountable, whereupon if their negligence is proven they will have to fully compensate the landlords’ losses.

Landlords, what do you think? Do we really need Ombudsmen? Please share your views with our community here.