Purchase of HMO leaves landlords regretful

Landlords who bought a property and took over an HMO (House in Multiple Occupation) arrangement with six tenants experienced several issues with the letting agent appointed following the purchase. After months of problems, the landlords brought their dispute to The Property Ombudsman.

Marketing and tenancy extension fees

A Confirmation of Marketing (COM) was signed by the landlords (complainants) that included an extension fee of £180 to cover negotiations to extend the tenancy and produce the extension agreement. The agreement also included a tenancy set-up fee of £200 per tenant. This fee was described as covering all steps relating to the arrangement of the original tenancy. .

Before signing the COM, discussions over email showed the complainants asked if it was possible to reduce the extension of the tenancy agreement fee, and in response, the agent agreed to decrease the fee from £180 to £100 + VAT.

The discussions around the fees appeared to blend into one another and became confusing for the complainants who subsequently believed that the only fees that would need to be paid were the £100 fee per tenant.

The COM was not amended to reflect the new agreed-upon fee, and when the complainants highlighted this, the agents stated the COM could not be amended but reassured them that the reduced fee of £100 still stood.

Later, the complainants were charged the full fees based on what was stated in the COM.

Adjudication determined the discussions regarding reduced fees superseded what was in the agreement and that the agent should have ensured they communicated with clarity to avoid any confusion.

Leaks and delayed repairs

A leak was reported when the new landlords took over the property, initial fixes were carried out by contractors arranged by the agent, but the repairs appear to have been below par. The complainants had emailed regularly, trying to understand the leak situation and to see if it had been fixed but didn’t hear back. They noted that they visited the property and discovered that the leak had been left for 14 days. Initially, the damage would have only affected the ceiling if it had been inspected and repaired as required. However, the leak had spread to the walls, floor, doors, and skirting boards.

The agent provided a timeline of their actions and communications to address the leak. While they generally took the appropriate steps, the work performed by the contractors they selected worsened the problem.

Adjudication noted that it would not be fair to hold the agent responsible for the shortcomings of the contractor or the repair costs incurred following further damage to the property. Since the contractor chosen was from a register of experienced, external contractors they held that met certain criteria, the agents wouldn’t have necessarily been aware of possible failings. It appears there had been internal miscommunications by the contractors, and although the agent could have chased them, they didn’t.

Consequently, the landlords decided to find their own contractor to carry out further related repairs to the home.

The agent recognised they should have been more proactive, which could have meant less damage to the home.

An award of £150 was made for related aggravation, which could have been avoided if the agents communications and dealings with the contractors and landlords had been better.

Rent arrears

The landlords had agreed to purchase Rent and Legal protection (RLP) through the agent for 3.98% of the monthly rent and had believed this gave them some protection in the event of tenants defaulting on rent.

Later, one of the tenants failed to pay rent, prompting the landlords to contact the agent about RLP cover. They discovered the agent had been unable to add RLP for this tenant as there was no rent schedule in place for them. The agent said they had made the landlords aware of the lack of rent schedule when the tenancy was taken over.

Adjudication concluded that although the agents did not directly cause the complainants’ losses for this tenant, they were not clear in their communications and dealings in relation to the tenancy arrangements and rent protection they offered. It was noted their communications in relation to this issue were confusing, unclear and unsatisfactory.

Delayed eviction

After one of the tenants failed to pay rent for a period, the agent served a Section 8 Notice for vacant possession and rent arrears. The agent apologised for failing to issue the Notice earlier and stated they believed the tenant had already left the property.

The complainants highlighted a 3-month delay when the agent could have done more to understand the tenant’s position, remarket the room or taken steps to gain vacant possession.

Although the complainants sought the loss of three months rent, adjudication determined that it was the tenant’s responsibility to pay rent therefore this was not awarded. Instead, as there was a significant period of time where the agent failed to take any responsibility for managing the tenancy, failed to respond to the landlords’ queries and concerns, and delayed taking further action, an award of £575 was determined.

Poor communication

The final aspect of the complaint was focused on poor communication. Evidence of exchanges between the agent and landlords showed deadlines being missed and several chaser emails sent. Adjudication noted it appeared the agent was stuck in a cycle of over-promising and under-delivering and queried whether the branch had the experience and skill to manage an HMO property. £75 was awarded for the aggravation and frustration experienced due to unsatisfactory communications.

Complaint supported and award made

Most elements of the complaint were upheld and in total, an award of £1,160 in compensation was made.