Gazumping on a rented property?

Ruby1878 · 21 June 2011 at 2:28PM

I'm wondering if anyone can tell me if my situation is legal, or if there is anything I can do about it.

I viewed a property listed at £625PCM with my boyfriend on Saturday evening and we both absolutely loved it and decided we were going to put in an application for it.

We had already picked up the application forms and I took them in to the estate agents on Monday morning, with all our required documentation and £150 application fee.

I have received a call from them today saying that there's a bit of a spanner in the works...

After we had viewed the property, the current tenants also had some viewings on the Sunday. A lady viewed it who also loved it, and must have asked if anyone else was interested. She told them she would be willing to pay up to £700PCM for it. This then got back to the landlord of the property. Well, it's her father, she's away until the weekend.

We're the only ones to have put in an official application, but the landlord has called the letting agents to let them know that this is what happened.

It's not for definite that we AREN'T going to get it, but let's face it, it's not looking good. We've told them our absolutely maximum budget was £650PCM.

I don't know where this leaves us. We'd gone down all the right channels legally, took in our application forms, documentation and handed over our money, and now someone's put in a sneaky offer of up to £700PCM. Is it legal? Now that we've applied, can they just reject it outright and go with the better offer?

I know this happens in house-selling, but I'd never heard of it on the rental market, and I would be very grateful if someone could shed some light on the situation for us.

Thank you.

BitterAndTwisted · 21 June 2011 at 2:34PM

The landlord is at liberty to offer a tenancy agreement to anyone they like at whatever rent they like. If you've put your application in and you do not get offered the tenancy you should insist that all of the fees you have paid be refunded.

slyracoon · 21 June 2011 at 2:37PM

Yes it is legal and nothing you can do.

There is nothing legally binding between you and the landlord until you have signed a tenancy agreement. You've submitted an application which may have been agreed in principal but it can still be cancelled/rejected by either party until a tenancy agreement is signed. If the landlord rejects your offer you should get any money you paid as a holding deposit back.

Rental gazumping is becoming more common in areas of high demand and was recently featured in numerous newspapers and also BBC news - http://www.bbc.co.uk/news/business-13799477.

climbgirl · 21 June 2011 at 2:51PM

I'm afraid this kind of thing is becoming more common as slyracoon says and until you've signed a tenancy agreement, they are free to give the tenancy to whoever they like.

However, that may not always be the person who is paying the most - if it's relevant, stress things like good references, long-term tenants, things like that. We got our current flat ahead of somebody who offered a tiny bit more because we were looking for a longer lease, I had been in my previous place over 5 years, both professionals in stable jobs, etc.

So it's not always purely about money.

slyracoon · 21 June 2011 at 2:57PM

climbgirl wrote: »

I'm afraid this kind of thing is becoming more common as slyracoon says and until you've signed a tenancy agreement, they are free to give the tenancy to whoever they like.

However, that may not always be the person who is paying the most - if it's relevant, stress things like good references, long-term tenants, things like that. We got our current flat ahead of somebody who offered a tiny bit more because we were looking for a longer lease, I had been in my previous place over 5 years, both professionals in stable jobs, etc.

So it's not always purely about money.

I agree with climbgirl. We were in a similar situation, somebody offered slightly more than we were prepared to pay however we stressed that we were looking for long term tenancy. The landlord eventually chose us because we were willing to sign a 12 month contract whereas that other party would only sign 6 months.

Are you planning to be there longterm. Maybe suggest to the landlord that you sign a 12 month contract? It might swing it in your favour if they can see you are commited to the property longterm.

Ruby1878 · 21 June 2011 at 4:01PM

Thanks for your replies. I feared it would be legal, but you never know.

I've been discussing it with my boyfriend and we think that with a stretch and some careful budgeting, we'd be able to afford £700 if it came to it. I've called the letting agents back and told them that we're willing to negotiate on the price if need be, and that we'd like them to let us know if they hear anything. Obviously we really want the property, otherwise we'd have not been there before 9am yesterday with our application and fee to hand. I've stressed this to them, and said that we'd be happy to sign a 12 month contract.

It does seem a bit fishy though, I have to admit. The letting agents are now saying that apparently the landlord didn't want anyone with kids. We don't have children, but we have one on the way. It never said anything about this in the listing, and when we called up about it in the first place we were told of two strict conditions - no smoking and no pets. No mention of children.

It seems like they're arbitrarily picking conditions, but who knows, I may be premature in saying that.

I'll just have to cross my fingers that we at least get a chance rather than being dismissed because someone's piped up waving more cash around.

Ruby1878 · 22 June 2011 at 11:18AM

Update:

The lettings manager at the estate agents rang this morning to clarify our situation and ask how much we were willing to pay. I told him that if it came to it, we'd be prepared to pay £700, but we'd rather pay what the property was listed at. I also told him we'd be willing to sign a longer conract.

He said that our circumstances were better than the other interested party anyway so he hoped it would go in our favour. I told him that I wasn't happy if he was going to go back to them and hear that they'd pay £750 or more, but he said that wouldn't happen and he was just going to call the landlord and let him know what we've said.

He then came back to me and said that the landlord was happy for our application to go through if we were willing to sign an 18 month contract at £675. So we have. They've now closed viewings for anyone else and are putting our application through today.

I'm now really scared! We did have a long talk last night and agree that we'd be able to afford £700 if we were careful, and we've got it a bit less than that. It's just a big commitment, but then I'm having my boyfriend's baby so I guess we need to be prepared to be in it for the long haul

The only thing that may let us down is my credit rating. When I was younger I went a bit nuts with credit and store cards and I know my credit is horrendous, I'll never get any more credit etc. However, this hasn't affected my previous tenancies and I'm not applying for credit. I'm just hoping that given the way they've been so far, they aren't funny with me about that.

Surely in that situation, this is where a guarantor is required? I can provide one if need be, I did in the past when I was a student.

mark5 · 22 June 2011 at 11:24AM

Does the other party exist?

Joysmum · 22 June 2011 at 11:26AM

It may well be that they insist on you having a guarantor. Just a word of warning though, please be sure you can afford the rent and never have to call on the guarantor as they would be liable for the rent and any other permissible costs as per the tenancy agreement.

A) you don't want your relationship with you guarantor to be fractured if you hit financial difficulties.

they could be in a lot of financial difficulty if demands are placed on them.

As a landlord I've had to bring in the guarantor due to nonpayment of rent and his circumstances have changed too. There's huge friction as it was a family member.

Perhaps if things are that tight and you have a baby due it would be more prudent to find something more affordable? Babies are notoriously expensive little blighters but oh so worth it!

Whatever you decide, good luck on the housing and baby situation.

Ruby1878 · 22 June 2011 at 11:34AM

mark5:I've had thoughts like that myself.. but I guess it's just a risk I'm willing to take.

Joysmum: They may do, but like I said, we people willing to be guarantors. My dad would be mine and he has done in the past. I've lived away from home for 10 years and never had to call upon the guarantor when I've had one, it's just that extra bit of security.

We're both working full time, and know we can afford to pay the £675, that's less than the OH earns in a week on his own, so even when I go on maternity leave we'll be fine. Our maximum budget while looking was £650 without having really worked anything out - we just sort of picked that figure out of our head I suppose, but now we've sat down and looked at things, we could afford an extra £25 a month.

Joysmum · 22 June 2011 at 12:02PM

I'm glad. Having a baby is a dress in itself and this is a subject that's a bit raw to me at the moment as a landlord struggling get rent from my tenants and dealing with the guarantor who has just had a baby themselves

Best of luck for the exciting times you have ahead of you.

Gazumping on a rented property?

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