Referencing Agencies – Letting Agents – Duty of Care

Hi Stephen

It seems like you've got caught by quite a sophisticated criminal gang. I know FCC Paragon very well and if they referenced the client and were prepared to underwrite the rental warranty and legal expenses insurance then they also accepted the risks. It's not often something like this get's past them. I think it's fair to say they've put their money where their mouths are in terms of underwriting many of the risks associated with bad payers and gaining possession of the property. How is your claim going with them?

Given the circumstances I think you'd also be hard pressed to claim that the letting agent has been negligent. They used a well respected tenant referencing company which went on to provide a rental warranty.

Does your landlords insurance cover the damage risks? The reason I ask is that I know a lot of policies exclude malicious damage caused by tenants and also cannabis farms.

I feel your pain and I really do wish you well but I think you have been VERY unlucky. I wish I had something positive to suggest and will be interested to read what others have to say. But for the grace of God ...... and all that.
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Tenant referencing standards need a big shake-up. I had a tenant moved into a property of mine just before Christmas in 2012. The agent, a large multi-county agency told me that the tenant had recently sold a property and needed somewhere to live while they found a property to buy. This was clearly not the case, as right from the start of the tenancy, the rent payments became erratic and then missed altogether. I finally got the tenant out via a Section 21 notice. Recovering outstanding rent has been more difficult. The tenant left with no forwarding address, and judging by the continuing letters from utilities and an open bailiff's notice re the council tax, the tenant had told no-one else of their new address. I did manage to find it, but the Small Claims Court action has had no direct effect.
My point is that when I asked the agent if they had verified the claim that the tenant had sold their previous property, hence no previous landlord's reference, the agent replied that they had not verified that. Surely that would have been easy to do, and the agent surely bears some responsibility for not having carried out that check?
My tenant clearly practices this art of deception regularly, and I would like to enter the tenant's details on some sort of bad tenant's register. Does such a register exist?

Of course a letting agent and/or a referencing company have a duty of care to the landlord to properly reference the tenant - not only a duty of care, but also a contractual obligation to be thorough between all parties.
This is why "Lifestyle Referencing" tenants at LandlordReferencing.co.uk is becoming so popular.
This case definitely highlights the fact that the traditional methods of tenant referencing e.g. credit referencing - are not the be-all and end all these days, what with landlords (more often than not) not bothering to go to court.
Furthermore, a Credit Report cannot tell you how that tenant has behaved in their previous tenancies - whereas a "Lifestyle Reference" can and does - as long as that tenant has been uploaded by their previous landlord onto our system.
It is important to remember that LRS is not a "blacklist", and can help good tenants who have experienced bad/poor or no credit in the past obtain decent homes via their landlord registering their exceptional payment history / behaviour onto our database as well - and the fact that they have a "high risk" credit score does not mean they will be turned away from housing that they deserve.

The whole issue here is whether or not the referencing company actually did what was demanded of them. They can only go by the data that is presented to them and verify that data. If they do that then they have no liability, or a very limited one if at all. If they do not i.e. they do not do all the checks they should or do not do them thoroughly enough, they they can be liable.

I dealt with a case several years ago where a very reputable and experienced referencing company was fooled byy a fraudster who has set a honey trap for her employer so he had given her a fals reference. She had also submitted very good forgeries of BT or utility bills as part of ID that would have fooled anyone.

When you deal with a well organised, experienced and clever fraudster it is very difficult to identify them before it is too late. In my case the lady bred dogs at the property and made a real mess of it and Landlord tried to pursue my client for £15K in the end they settled for £4K from the referencing company whoi at the end through their insurer had to carry the can.

Industry Observer, as you say “they can only go by the data that is presented to them” I agree, but the problem isr most of them choose to take in a little data as necessary to make it look like they have done their job.

Unfortunately many letting agents do not reference to get landlords the best tenant they reference to make sure they cannot be blamed if the tenant turns bad and that can be as little as emailing the references that are given by the tenant and those references can be anyone and a simple single address credit reference. If you do not lifestyle reference in this day and age and the previous landlord never took the tenant to court you will take on someone else’s bad tenant it is as simple as that.

@ Paul

I agree so I suggest you change your referencing company I'll give you the name of the one my old company used if you like - email me via Mark.

We even had input into the form used by our company. But good or bad it is one of the massive advantages of a LL using an agent - if it all goes wrong and it turns out the company was at fault then they compensate.

I had another case about 25 years ago where a major national referencer fell down on the job not checking previous addresses etc properly. Landlord was a policeman who used, illegally in my view, police data to do further searches on the delinquent tenant who was a bad 'un. LL went to Court sued us, referencing company paid £1500.

Judge sympathised, said LL shouldn't have used sources he did but evidence was evidence!!

What's the difference between "lifestyle referencing" and asking for reference from previous landlord(s)?

From the Agents perspective
I also feel your pain, as it has happened to me over a shop premises and after 2 years fighting the insurance company (based on if we had or had not done inspections and the manner in which we recorded them) I gave up!

The agent does of course have a duty of care and in your case, as Mark has highlighted, they seem to have fulfilled that duty by referencing the tenant and putting in place the guarantee. I have always and still do teach our teams that, as I see it, we are instructed by our LL clients to “get the place occupied” and not to keep it empty? But in doing this we must carry out our due diligence checks to make sure and this is the rub, “as best we can” that we are dealing with an honest application? Now of course we are not naive enough to believe that is always the case, but nor are we detectives, we can only carry out so much research into the backgrounds of applications and in your case it seems both the major players in this area of expertise have been used “Paragon and Equifax”.

When we are instructed to do “full management” we carry out quite a thorough hand over procedure, which includes photographs and written inventory, which is followed up by a property inspection 6 weeks after hand over. This appointment is made at the point of signing the agreements, now that may not have prevented this happening in your case, or in any case, because these people are criminals and convincing, but the tenant applicant may have thought twice about taking your property, or any property if they knew that the agent was calling in a few weeks?

Finally, this landlord and agent business is not one for the faint hearted, it is not just a case of buying a property, getting a tenant and collecting the rents. It is now much more complicated and challenging than that and as I say, none of us, when dealing with people can be absolutely sure in all we are told, but then the more professional involvement and experience employed for the sake of a small commission might make a huge difference. In the meantime make sure your visiting records are spot on.

Good Luck Don Holmes

Reply to the comment left by "Romain " at "26/02/2014 - 12:11":

=> What’s the difference between “lifestyle referencing” and asking for reference from previous landlord(s)?

None, if the person tells you about all past landlords, and does not try to create a fake landlord by giving out a friends phone number etc. However if someone is trying to hide their past actions, will they tell you the truth when you ask them for details of past landlords?

Also how often do agents check on the land register that the claim past landlords, does own the property that the credit check shows the tenant was living in at the time?

Don,

Do you visit the applicant in their current home as part of your checks?

How do you check that past landlords and employer details the applicant gives is not just a friend answering the phone?