Failure to carry out affordability check

RHemmings

user1977 said:

Jaytee said:

@RHemmings You’ve been so helpful. I will share this with him.

He is also a big enough boy to join a web forum and ask for advice himself...

I will reply in combination to the last two posts on this thread. Personally I would say that teenagers do not magically become sensible with everything on turning 18, and I would hope that the OP can have a talk. Recommending that he joins a forum such as this one may be part of that. 

ThisIsWeird

I think this lad's learning curve is going to be vertical.
Anyhoo, almost certainly the correct outcome will be achieved, and this will become a Christmas anecdote.
Ah, yoof

Jaytee, you are going to offer them your loft conversion rent free?!!!
That's very generous - even ignoring the rent-free status - especially if kitchen and living areas are shared. Are you sure about this?
And, if you do, I'd personally suggest some agreed contribution, as utility costs at least will increase significantly, but also as a 'token' of their appreciation.
Your call whether you secretly put it into savings for them...

RHemmings

Probably I shouldn't post this until we know the EA is a member of TPOS or not. But, I was curious and did a quick google. This case study is based on a complaint from a landlord concerning what appear to be very dodgy tenants (faked references, faked other information.) But, at the very end there is this paragraph:

https://www.tpos.co.uk/news-media-and-press-releases/case-studies/item/check-check-and-check-again-for-fraudulent-references

In addition, the Ombudsman would also have expected the agent to have assessed whether the tenancy was affordable for the tenants. Acting on the basis that the employment information was true (and it was not) the rent still accounted for 73% of the tenants’ joint income. The usual threshold for affordability is 40%. Had affordability checks been carried out, it was unlikely that the tenants would have passed those checks.

user1977

RHemmings said:

Probably I shouldn't post this until we know the EA is a member of TPOS or not. But, I was curious and did a quick google. This case study is based on a complaint from a landlord concerning what appear to be very dodgy tenants (faked references, faked other information.) But, at the very end there is this paragraph:

https://www.tpos.co.uk/news-media-and-press-releases/case-studies/item/check-check-and-check-again-for-fraudulent-references

In addition, the Ombudsman would also have expected the agent to have assessed whether the tenancy was affordable for the tenants. Acting on the basis that the employment information was true (and it was not) the rent still accounted for 73% of the tenants’ joint income. The usual threshold for affordability is 40%. Had affordability checks been carried out, it was unlikely that the tenants would have passed those checks.

Again, that's about the obligations which the agent might have to the landlord, not duties to the tenant. We don't know what the arrangements are between this landlord and the agent - perfectly possible that the landlord is fine with whatever the agent is doing here.

theartfullodger

It's entirely up to landlord/agent to run whatever checks they wish.  (EXACTLY as it is for prospective tenant to runs
 whatever checks they wish of the landlord and/or agent - shame this rarely happens).

My best ever tenants had basically no UK financial history: A neighbour of mine said "Artful, they very nice people" - and they were.

ENTIRELY up to landlord/agent to run such checks as they wish. Entirely legal.

But in your shoes I'd thank the landlord/agent for their kind offer to be a guarantor but decline.

Rents in london bonkers.  Wonder why?? 

RHemmings

user1977 said:

RHemmings said:

Probably I shouldn't post this until we know the EA is a member of TPOS or not. But, I was curious and did a quick google. This case study is based on a complaint from a landlord concerning what appear to be very dodgy tenants (faked references, faked other information.) But, at the very end there is this paragraph:

https://www.tpos.co.uk/news-media-and-press-releases/case-studies/item/check-check-and-check-again-for-fraudulent-references

In addition, the Ombudsman would also have expected the agent to have assessed whether the tenancy was affordable for the tenants. Acting on the basis that the employment information was true (and it was not) the rent still accounted for 73% of the tenants’ joint income. The usual threshold for affordability is 40%. Had affordability checks been carried out, it was unlikely that the tenants would have passed those checks.

Again, that's about the obligations which the agent might have to the landlord, not duties to the tenant. We don't know what the arrangements are between this landlord and the agent - perfectly possible that the landlord is fine with whatever the agent is doing here.

Yes, I said that this was a complaint by a landlord. What I think is relevant is that TPOS considers 40% of income to be the limit of affordability. And, the situation as described in this thread is way outside that. Hence, I think it likely that TPOS (if relevant) would not consider it proper that the EA in the OP progressed the application when it was patently unaffordable. 

FreeBear

ThisIsWeird said: I am no 'legal', but suspect strongly that the 'agreement' is just that - they've taken down the advert, and your son has paid £450 to 'secure' the property until the legal bits are done. Ie, almost certainly 'all' he'll lose at the mo' if he backs out is the £450.

Fortunately, many of the "fees" that agents & landlords used to get away with charging have now been banned. If the son has paid a £450 holding deposit, this needs to be refunded when the agreement falls through. For an overview of what fees can be charged, see - https://www.gov.uk/government/collections/tenant-fees-act

Bookworm105

Jaytee said:

@_Penny_Dreadful it’s a one bedroom flat in Islington. She doesn’t have a guarantor so potentially it’s in his name only. Maybe I’m clutching at straws but he is only 19 and totally naive. Not a legal defence but I thought sone due diligence on the part of the letting agency would weed out this sort of thing.

UK legal minimum age for entering into a contract is 18
unless he is legally mentally incapacitated then the contract he signed stands 
son probably does not understand that a tenancy agreement is a contract, so won't appreciate the significance of the name he is calling it 

affordability check has no meaning whatsoever, the LL may be labelled a fool for taking on someone who cannot pay if that means the LL ends up chasing a tenant through the courts who can't pay the award anyway/ However failure of "due diligence" has zero meaning for the validity of the contract.

but in your case, the LL has a guarantor (ooops).

so the real question is why did you sign the guarantee and, crucially, is it valid? ???
Now you will have to pay the shortfall - let's hope it is only a 6 month fixed term contract?
(count down the days to when son can terminate it at the end of the fixed period)

RHemmings

Bookworm105 said:

Jaytee said:

@_Penny_Dreadful it’s a one bedroom flat in Islington. She doesn’t have a guarantor so potentially it’s in his name only. Maybe I’m clutching at straws but he is only 19 and totally naive. Not a legal defence but I thought sone due diligence on the part of the letting agency would weed out this sort of thing.

UK legal minimum age for entering into a contract is 18
unless he is legally mentally incapacitated then the contract he signed stands 

affordability check has no meaning whatsoever, the LL may be labelled a fool for taking on someone who cannot pay if that means the LL ends up chasing a tenant through the courts who can't pay the award anyway/ However failure of "due diligence" has zero meaning for the validity of the contract.

but in your case, the LL has a guarantor (ooops).

so the real question is why did you sign the guarantee? 
Now you will have to pay the shortfall - let's hope it is only a 6 month fixed term contract????
(count down the days to when son can terminate it at the end of the fixed period)

There are situations where redress cannot be obtained through the law, but may be possible through an ombudsman scheme. This may or may not be one of those situations.

Myci85

As a mum of a 19yr old son, I sympathise! They certainly do not suddenly turn 18 and be able to navigate the complexities of adult life - we've had our own steep learning curve in relation to a minor bump in his car resulting in the other driver trying to sue him!

If it helps gain perspective, their brains are not fully developed until age 25, and the logical part is the last part to mature 😉 

Having worked in a letting agent in the past, I would be confident that all he's signed is a document to reserve the property, and paid a holding deposit. I highly doubt it will be able to go ahead without a guarantor or him paying 6/12 months in advance. And as someone above said, if they suggest he'll lose the full £450 if it fails to go through, do some reading as agents can no longer get away with charging excessive admin fees.

Hopefully this will all be easily sorted, he will bite your hand off at your very generous free room offer (though do consider charging a nominal fee to help him start to learn the art of budgeting, even if you put it in a pot for him to go towards a house deposit one day) and it will prompt a life lesson on the very high costs of renting/home ownership for the future!