Finding Fee - Bad Tenants

PeppasMum

Hi all,

I'm new to MSE, but am looking for some advice...

My partner and I rent out his old flat and we used an estate agent to find us a tenant who signed for a 12 month contract starting in Jan 2010. We paid 10% of the rent as a Finders Fee - about £1000 to the Estate Agent upfront.

The tenant has paid rent late every month and has just given us 4 weeks notice of intention to leave despite the contract being for 12 months with no break clause.

We have offered her to surrender her contract if the rent remains paid in full until the end of her suggested 4 weeks, but have informed her that she is liable for bills, and reletting fees (this is mentioned in her contract). We have also informed her that in the event that she doesnt pay we are entitled to the full remaining term of rent via her and the guarantor on the flat.

We have not been offered any refund of the Finders Fee which is what I have a question about. We have checked the references on the tenant and she is earning £12000 per year and the rent on the flat is £700 excluding all council tax and bills. I can not understand why this individual would therefore be considered as credit worthy by the estate agent. As a rent : income ratio, this is topping 80%! They have stated that she passed credit checks and that she has a guarantor so that is why she was accepted. I do find this incredible as I am sure that any reasonable person would immediately conclude that this person can not simply afford the rent. To be honest I think it is entirely negligent on behalf of the estate agent.

The estate agent are of course extremely keen to help us relet the property, but will not do it for free - they have suggested a reduced fee of £800!!! I simply can not believe this.

Does anyone think I have a case launch a complaints procedure against the estate agent via them or a relevant property body ?

Any advice greatly appreciated...

sequence

The bills aren't your problem the remain in her name.

PeppasMum

Hi
Thanks for the reply.

We realise that she is liable for bills, we are trying to remind her of her obligations to pay these off herself. We don't think she will settle any of the bills or pay us the last months rent (already a couple of days late).

clutton_2

i think you have been taken advantage of by a sharp agent, and that your naiviety in the business shows through.... i suspect if you read the terms and conditions of the contract you have with the agent there will be no grounds for a refund....

I have NEVER heard of any agent charging more than a months rent to find a tenant

As a long established landlord i NEVER give more than 6 months for the first let.. for the reasons you have discovered...

Did the agent put the tenants deposit into a Scheme ? if so you may be able to reclaim lost rent from that when they leave. You can also claim lost rent or damage from the guaranaot but that will involve a court case ... which you will have to initiate....

If the tenant reguses to leave - you will have to take her court to get her out

sorry - but this is a difficult business and unscrupulouos agents abound....

Jowo_2

Were you expecting the tenant to be screened by the agent - credit check, previous landlord references, ID check, electoral registration check, employer reference, etc? If so, did you see the report? If not, ask to see it, plus a copy of their tenancy application form.Was the guarantor credit checked - can be pointless having one if they have no income, either...

See the landlordzone website for info on how to choose an agent - namely one that belongs to a professional body such as ARLA.

PeppasMum

Thanks for your replies.

I'm afraid it does look like we have been taken on a ride by the letting agents. Having checked the contract, there is nothing in there that will allow us a refund. I'm furious though that in reality it is beneficial for them to recommend bad tenants for us as they can charge us to replace them again!

We have copies of the tenants references and they have come back 'clean'. However, I just can not get over the fact that the tenant was recommended on such a low income Vs the rent. There is no way she could have afforded it without financial assistance from the guarantor. I just think this is very poor business conduct regardless of the contract.

The tenant is also very young (well 21) so I imagine, it is more difficult to run up a poor credit check if you have only been financially active for a few years!

We are feeling very dupped by this - we don't even make any money on the renting the flat - we only do so as it is in negative equity so we cant sell it for now - it is actually losing us a small amount each month. Plus, I am having a baby in 7 weeks!

We do have the deposit in a tenancy scheme, but if she doesn't pay the final rent which looks likely, we will not cover our Finders Fee plus the missed rent :-(

I have contacted Arla to see if they can advise anymore as the Letting Agent is a member....

clutton_2

ARLA is there to protect its members interests... dont waste your time

i think it despicable to take commission up front for rent which has not even been received - i doubt this is lawful.. but thats a whole different story

princeofpounds

You paid them to find a tenant. They did that. Almost certainly you have no legal case for getting it back. You might have a moral case but most EAs are short on morals to some degree ;-)

When you say the EA 'approved' the tenant, approved the credit check and so on, that's not true. YOU approved the tenant, approved the credit check and so on. The agent was acting as your agent... i.e. from a legal point of view they were acting as you. You cannot delegate responsibility as a LL, only tasks.

The only way you may have a case is if they were somehow in breach of contract or negligent. For example, if they provided you with a fake credit check. Or told you the tenant passed a credit check when it was never done.

DVardysShadow

Consider adding part of the finders fee to the claim against the guarantor.

PeppasMum

Yes, it does look like we will have a have a court case with the tenant / guarantor - I will see if we can include the finders fee as reletting expenses.

Although we did not see the tenants references / checks prior to them moving in, I suppose we did approve them verbally without seeing them. Believe me this will not be happening again! We feel like idiots for trusting the Letting agent on this one but we did. We are hoping to relet privately or via a better agents with much lower fees.

clutton_2

if a tenant leaves before the end of the fixed term and you do not agree.. you are entitled to claim fees to find a new tenant

has the deposit been protected - if so you can claim from this