Failure to carry out affordability check

noitsnotme

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 
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)

The OP said they will not be a guarantor.

Jaytee said:

Thank you to everyone - @ThisIsWeird this is exactly the situation and it seems he is under the impression we will be guarantors which is a hard no. He has agreed to sit down and do a budget. I asked about Council Tax and he didn’t know what that is!!
I am much calmer and so grateful for everyone’s replies to a panicked mum. The contract I have seen doesn’t have a break clause for 24 months!

We have a loft conversion with a bathroom and have offered it to them rent free. That’s as far as we will go. 

I know he’s an adult but he’s totally naive about the cost of living.
Big big thanks to all!

FreeBear

Myci85 said: If it helps gain perspective, their brains are not fully developed until age 25, and the logical part is the last part to mature 😉

Some don't mature even at 50

user1977

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.

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? ???

Where are you getting this from? The OP has told us that they have not agreed to guarantee the tenancy.

Bookworm105

user1977 said:

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.

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? ???

Where are you getting this from? The OP has told us that they have not agreed to guarantee the tenancy.

OK, I didn't get that far

MikeJXE

FreeBear said:

Myci85 said: If it helps gain perspective, their brains are not fully developed until age 25, and the logical part is the last part to mature 😉

Some don't mature even at 50

Totally agree, I have 2 sons 55 and 48 and don’t believe they will ever act logically 

saajan_12

FreeBear said:

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

If the rent is £2300 per month then 1 week would be £507 max for a holding deposit, so the £450 is fine. 
If the LL is happy to proceed and the only reason that the tenancy doesn't go through is that the tenants decline to go ahead, then he would indeed lose the £450. That's the whole point of it being ALLOWED in the Tenancy Fees Act. 

DullGreyGuy

RHemmings said:

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. 

Is that UK wide or specifically London? Can't see the stat on their website. The average in London is 36% -v- the UK of 26% but the worst was in 2017 when the average was 50.3%

Seems a relatively low limit given how close the average is to it. 

Grumpy_chap

FreeBear said:

Some don't mature even at 50

I am trying to fend it off for a few years more yet


On a serious note, this might be the shock that the OP's son and the son's girlfriend need to suffer as part of their training in life skills.  If the rental contract is not yet formed, and the loss is the £450 deposit (subject to legality of that as others have mentioned), it might be quite a cheap way to gain a great deal of learning. 

The OP has refused to act as Guarantor (which seems wise) and has made a generous offer to provide secure and safe accommodation for the son and son's GF.  That seems like sound measures to me, the back-stop is there but the handouts are ceased now that a certain age has been reached.

Hope this all works out well.

FreeBear

saajan_12 said:

FreeBear said:

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

If the rent is £2300 per month then 1 week would be £507 max for a holding deposit, so the £450 is fine. 
If the LL is happy to proceed and the only reason that the tenancy doesn't go through is that the tenants decline to go ahead, then he would indeed lose the £450. That's the whole point of it being ALLOWED in the Tenancy Fees Act. 

From the above link.

• a refundable holding deposit (to reserve a property) capped at no more than 1 week’s rent

Unless I'm mistaken, the holding deposit should be refunded.

saajan_12

FreeBear said:

saajan_12 said:

FreeBear said:

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

If the rent is £2300 per month then 1 week would be £507 max for a holding deposit, so the £450 is fine. 
If the LL is happy to proceed and the only reason that the tenancy doesn't go through is that the tenants decline to go ahead, then he would indeed lose the £450. That's the whole point of it being ALLOWED in the Tenancy Fees Act. 

From the above link.

• a refundable holding deposit (to reserve a property) capped at no more than 1 week’s rent

Unless I'm mistaken, the holding deposit should be refunded.

You are mistaken. It is refundable under certain circumstances, but not all. 
The LL can't take the deposit and run away into the wind if the tenant does everything they were expected to do regarding references and signing contracts. In that case the holding deposit should be refunded (or applied to the first rent). 
The LL can keep the deposit if the LL does everything they were expected, offers a tenancy agreement in line with the terms previously discussed (eg same rent, same start date, same affordability requirements) and the tenant simply changes their mind or turns out to have lied about their income for example. In that case, the holding deposit should not be refunded.