Rent Fraud by Estate agent

neeraj89

Hi everyone, 

In desperate need of expert advice.

I have rented out a property through an estate agent and it has come to my attention that the tenant is paying more rent than what's on the tenancy agreement. After investigating I found out that the tenant is paying rent to another agency (not known to me) who deduct their fees and pass the rent to my agent who then deducts their charges (which is agreed) and transfer the rent to me.

What are my rights here? Is this legal? 

I am not comfortable that this structure wasn't disclosed to me and had to find through the tenant about the higher rent as they are frustrated with the poor management and no response from the agency.

Can I terminate the agreement with the agency on grounds of not disclosing the facts to me? 

TIA

EssexHebridean

Have you read through the contract you have with the agent on this? That will be key. If it allows for them to “subcontract” things in this way, then you can probably only wait until he current agreement terminates and then take your business elsewhere. 

ThisIsWeird

How clear was the rental amount when you took them on as your management agent?
"We will advertise it for £X pm. Our charges are 10%. We will transfer £X - 10% into your account each month..."?
What additional sum are we talking about?

neeraj89

Yes I have read the management contract I signed with the estate agency and there is no mention of "subcontract".

Even if it's allowed to subcontract then any fees to 3rd party agent should be paid from the 12% commission I pay them to manage the property. Not from the rental amount that is being paid by the tenant.

They have mis represented the rental amount to me which I believe should be enough to terminate the management agreement immediately.

anselld

You have presumably signed a tenancy agreement, as has the tenant.  Why did it not come to light at that time that either the rent figure or the named tenant did not match what was expected?

neeraj89

ThisIsWeird said:

How clear was the rental amount when you took them on as your management agent?
"We will advertise it for £X pm. Our charges are 1%. We will transfer £X - 1% into your account each month..."?
What additional sum are we talking about?

The agreement was that the agency will take 12% on monthly rent and tenants finding fees 

For me it's not about the amount but it's about not disclosing the facts.

For example they told me that the tenant will pay £100 pcm and they will take 12% on that so I will get £88.00.

But I found out that the tenant is paying £150 to a 3rd party agency who then takes £50 and transfers the £100 to my agent who then pays me £88.00

I am not comfortable that this wasn't disclosed to me and don't trust the agency anymore as they lack transparency.

neeraj89

anselld said:

You have presumably signed a tenancy agreement, as has the tenant.  Why did it not come to light at that time that either the rent figure or the named tenant did not match what was expected?

The tenancy agreement that was shared with me has the correct amount but the tenant is paying more money.

Also the tenant informed me that he has signed 2 agreements one with my agency which shows correct rent and other with the 3rd party agency showing higher rent.

I was not aware of the 3rd party agreement until yesterday. That too the tenant showed it to me..

ThisIsWeird

neeraj89 said:

ThisIsWeird said:

How clear was the rental amount when you took them on as your management agent?
"We will advertise it for £X pm. Our charges are 1%. We will transfer £X - 1% into your account each month..."?
What additional sum are we talking about?

The agreement was that the agency will take 12% on monthly rent and tenants finding fees 

For me it's not about the amount but it's about not disclosing the facts.

For example they told me that the tenant will pay £100 pcm and they will take 12% on that so I will get £88.00.

But I found out that the tenant is paying £150 to a 3rd party agency who then takes £50 and transfers the £100 to my agent who then pays me £88.00

I am not comfortable that this wasn't disclosed to me and don't trust the agency anymore as they lack transparency.

That is a staggering difference! 
On the surface, this would appear to be incredibly wrong, possibly fraudulent, but you'd need someone to judge this correctly.
What info do you have?
1) the contract that you signed with your agent?
2) the name of your agent?
3) the regulating body of your agent?
4) the name of the management co your agent is using?
5) the name of the ManCo's regulating body?
6) evidence of the payments being made by your tenant?
7) a copy of the contract(s) your tenant signed? Both of them?
I'd collate all that, and ask your agent's regulating body for advice. Who are they?
Are you certain that this additional £50 isn't covering additional valid charges such as, say, Council Tax? 
And, have you asked your agent about this yet? If so, what did they say?

Don't do anything like trying to terminate your agreement until you have a definitive answer from the regulating body (or a solicitor, if you need to go that route). Don't you be the one to muddy the waters with a 'breach'. :-)
Almost certainly, if what the agent is doing is fraudulent, you/your tenant will be able to reclaim this excess sum.

ThisIsWeird

There are at least two 'pro' landlords on here who have yet to respond. I'd hope they'd have a good take on this, Neeraj. Hold tight!
Can you confirm - is this in England/Wales?

GDB2222

neeraj89 said:

anselld said:

You have presumably signed a tenancy agreement, as has the tenant.  Why did it not come to light at that time that either the rent figure or the named tenant did not match what was expected?

The tenancy agreement that was shared with me has the correct amount but the tenant is paying more money.

Also the tenant informed me that he has signed 2 agreements one with my agency which shows correct rent and other with the 3rd party agency showing higher rent.

I was not aware of the 3rd party agreement until yesterday. That too the tenant showed it to me..

The two tenancy agreements is evidence of deliberate fraud. There would be no reason for it unless the intention was to hoodwink you. Do you want to involve the police, or simply deal with this as a civil dispute? 

A reasonable compromise would be for the agency to account to you for all the rent the tenant paid.

neeraj89

ThisIsWeird said:

neeraj89 said:

ThisIsWeird said:

How clear was the rental amount when you took them on as your management agent?
"We will advertise it for £X pm. Our charges are 1%. We will transfer £X - 1% into your account each month..."?
What additional sum are we talking about?

The agreement was that the agency will take 12% on monthly rent and tenants finding fees 

For me it's not about the amount but it's about not disclosing the facts.

For example they told me that the tenant will pay £100 pcm and they will take 12% on that so I will get £88.00.

But I found out that the tenant is paying £150 to a 3rd party agency who then takes £50 and transfers the £100 to my agent who then pays me £88.00

I am not comfortable that this wasn't disclosed to me and don't trust the agency anymore as they lack transparency.

That is a staggering difference! 
On the surface, this would appear to be incredibly wrong, possibly fraudulent, but you'd need someone to judge this correctly.
What info do you have?
1) the contract that you signed with your agent?
2) the name of your agent?
3) the regulating body of your agent?
4) the name of the management co your agent is using?
5) the name of the ManCo's regulating body?
6) evidence of the payments being made by your tenant?
7) a copy of the contract(s) your tenant signed? Both of them?
I'd collate all that, and ask your agent's regulating body for advice. Who are they?
Are you certain that this additional £50 isn't covering additional valid charges such as, say, Council Tax? 
And, have you asked your agent about this yet? If so, what did they say?

Don't do anything like trying to terminate your agreement until you have a definitive answer from the regulating body (or a solicitor, if you need to go that route). Don't you be the one to muddy the waters with a 'breach'. :-)
Almost certainly, if what the agent is doing is fraudulent, you/your tenant will be able to reclaim this excess sum.

Yes I have already collected all the evidence 

Answering in order

1) Yes
2) Yes
3) Yes i know the regulation body
4) yes I have the copies of both agreements from the tenant so I know their name.
5) yes
6) yes i have statements from tenant showing rent paid to 3rd party agency
7) yes i have both of them


the extra £50 is not being utilised for any bills, tenant is paying bills separately.

I had a meeting with the agent and he agreed mis doing of having this structure and when I told him to part ways by terminating the agreement, he said that he will think about it and get back to me in a few days.

Can I ask the tenant to start paying the rent directly to me? (obv the lower amount). if not, then where do I start from?

reach out to property redress scheme? 
How do I contact the regulating body and how long does it take to get a response?