The landlord said that the Tenancy Agreement stated that the letting agent had collected a deposit of £800, but that they refused to transfer these monies to an onward letting agent. The landlord complained that the agent subsequently informed him that the deposit for the property was in the form of an Alternative Deposit Scheme, which he did not agree could be used for the tenancy. 

He felt that he was deceived into signing the Tenancy Agreement and believed the agent received commission from the insurance company providing the Alternative Deposit Scheme. The landlord said that he was unable to instruct another letting agent to take over management of the property, as none would accept the tenancy without being provided with the deposit monies. The landlord was seeking to recover the £800, plus compensation.

The agent responded, acknowledging that the landlord had not expressly authorised the use of the Alternative Deposit Scheme for the tenancy, as detailed in the Terms of Business. However, the agent said that the Tenancy Agreement was accurate regarding the use of the scheme, which the landlord and tenant both signed. 

The agent argued that the tenancy was still active and no claims had been made against the deposit. The agent felt the lanflord’s request for £800 was unjustified as he had not experienced any loss and the cover provided by the Alternative Deposit Scheme was of a higher monetary value than if a cash deposit had been in place for the tenancy.

Investigation

Under Paragraph 13a of the TPO Code of Practice, the letting agent was required to prepare an appropriate written Tenancy Agreement that included any agreed or specially negotiated clauses or terms particular to the property of the circumstances of the parties to the letting, including Prescribed Information. 

The Tenancy Agreement was required to be transparent in relation to the commitments of each party. In accordance with their obligations under Paragraph 13o of the Code, where a deposit replacement product, such as insurance, was proposed by the agent in place of a traditional deposit, the potential advantages and disadvantages of the product were required to be explained in clear terms to the landlord and tenant, and the agreement of both parties sought before proceeding.  The Ombudsman also considered the agent’s obligations under Paragraph 2d of the Code where, if they intended to offer or recommend to consumers any services, including insurance, where the service provider rewarded the agent for the referral, this arrangement was required to be disclosed in accordance with the Consumer Protections from Unfair Trading Regulations 2008. 

With regard to the landlord’s comment that the agent received commission from the Alternative Deposit Scheme, the agent was entitled to refer customers for such services, provided that it was appropriately disclosed. After reviewing the  Terms of Business, the Ombudsman was satisfied that the agent disclosed the potential for a referral commission from the Alternative Deposit Scheme, which the landlord signed to agree his understanding and acceptance of. 

However, with respect to the deposit replacement product, within the Terms of Business, the agent asked the landlord to confirm whether the property could be marketed with the option of such a product. The landlord did not tick the required box to confirm that this type of product could be used. Therefore, the Ombudsman would not have expected the agent to have marketed the property suggesting use of such a product was available, nor should tenants have been offered such a product when applying for the property.  As there was no evidence to show how the agent marketed the property, the Ombudsman could not deternine whether the agent had marketed accurately or not in this regard.  

However, the Ombudsman was provided with the tenant’s holding deposit paperwork where the agent asked the tenant if they wished to use a deposit replacement product for the tenancy, which had been ticked ‘yes’. This option should not have been offered to the tenant in the first instance.

There was also no evidence that the use of the deposit replacement product was communicated to the landlord appropriately, nor was there anything to demonstrate that the advantages and disadvantages of using the scheme had been explained to the landlord and tenant, allowing them to made an informed decision. 

With regard to the content of the Tenancy Agreement, it set out the obligations of the landlord and tenant in relation to the deposit and stated that the tenant would either provide a cash deposit of £800 or purchase the Deposit Replacement product, as a substitute for paying the cash deposit. The Agreement detailed both the terms relating to the Deposit Replacement product and the terms relating to a cash deposit. . As the agent included information about both the options for deposits, rather than only containing the information for the deposit option used for the tenancy, Ombudsman was not satisfied that the agent produced an appropriate written Tenancy Agreement that included specific clauses that related to the tenancy and concluded the existence of both deposit options had caused confusion. 

Outcome  

The Ombudsman supported the complaint, due to the agent’s confusing deposit information within the Tenancy Agreement, and for not acting upon the landlord’s instructions regarding the type of deposit he wished to have in place for the tenancy.

From the evidence provided, it did not appear that the tenant paid the agent a cash deposit of £800 and, therefore, the Ombudsman could not fairly or reasonably direct the agent to transfer this amount to the landlord. The landlord was protected up to the value of £969.24 for any damages the tenant may cause, which he was able to make a claim to the Alternative Deposit Scheme at the end of the tenancy. Consequently, the Ombudsman could not conclude that the landlord experienced any financial loss as a result of the agent’s actions. The award was therefore limited to reflect the avoidable aggravation, distress and inconvenience caused to the landlord.

In respect of the landlord’s claim that the existence of the Deposit Replacement product prevented him from instructing another agent, the emails provided indicated that this was not the case, albeit the agents he had approached stated that they did not normally deal with tenancies with Deposit Replacement products.

The Ombudsman concluded that the agent’s failure to communicate regarding the Deposit Replacement product prior to the tenancy being entered into, and the ambiguity of the Tenancy Agreement with regard to the deposit arrangements, had caused the landlord significant aggravation, distress and inconvenience. An award of £500 compensation was made to the landlord.  

The issues the Ombudsman was asked to examine included: 

A. Redecoration of the property
B. Cleanliness of the property
C. Unwanted items left at the property 
D. Mould in the property 

The tenants considered that the agent failed in their service in connection with the letting of the property and were responsible for the unacceptable condition of the property.  They sought £600 to resolve the dispute. 

The agent stated that the property was let to the tenants in an acceptable condition, but acknowledged that they should have resolved the mould issue and removed the leftover items from the property prior to the tenants moving in. The agent made a goodwill offer of £200 to resolve the dispute but the tenants rejected this and requested a full and independent review of the dispute by TPO. 

Investigation
A.Redecoration of the property 

The tenants stated that when they viewed the property, they discussed the condition of the paintwork with the agent and it was agreed that it would be repainted before moving in.  The tenants were unhappy that this did not happen, but the agent argued that no such agreement had been made.  As the initial discussion relating to redecoration took place during the viewing and neither party could evidence precisely what was said, the Ombudsman was unable to determine exactly what was agreed. 

However, the Ombudsman noted that the tenants also raised the issue with the letting agent after moving in and that it was agreed that the agent would put the request to the landlord for the property to be redecorated. Having considered the evidence, the Ombudsman found that the request was not communicated to the landlord. The agent had made a goodwill gesture of £50 in relation to this shortcoming, which the Ombudsman considered to be reasonable in the circumstances.

B. Cleanliness of the property 

The tenants were unhappy with the condition of the property at the start of the tenancy as they felt it had not been cleaned prior to them moving in. The agent stated that their in-house cleaner had cleaned a few areas of the property and that the rest of the property had been in an acceptable condition.

Having looked at the photos from the inventory checklist, the Ombudsman concluded that aside from issues caused by mould, the property was presented to an acceptable level of cleanliness. The tenants mentioned the condition of the bathroom being unacceptable. However, upon inspection this was not a cleanliness issue, but rather was affected by mildew across the seals which could not be cleaned. The seals were later replaced by the agent. 

Overall, whilst acknowledging that individuals may have different standards of cleanliness, the Ombudsman concluded that the condition of the property at the start of the tenancy was acceptable. 

C. Unwanted items left at the property 

When the tenants moved into the property, they found many items which were of poor condition which had been left by the previous occupants, such as plates and cutlery. The tenants were unhappy that these items, which amounted to more than 20 black bin bags of waste which they had to collect, were left at the property.

The agent accepted that they should have cleared the items from the property before the tenants moved in as it was clear the items were not of use and had been poorly maintained. The agent offered the tenants £50 in compensation. 

The Ombudsman supported the complaint but considered that the agent’s offer of £50 did not reflect the level of inconvenience and aggravation caused to the tenants. As such, an award of £150 was deemed to be reasonable in the circumstances.

D. Mould in the property

The tenants were unhappy with areas of mould found in certain fixtures of the property and felt the agent had neglected their duty by not fully addressing the problem. 

The agent accepted that it was clear there was mould in certain fixtures, as highlighted in the Inventory checklist, and that the issue should have been resolved prior to the tenants moving in. 

Following the matter being raised, the mould issue was resolved by contractors on behalf of the agent within two weeks of the tenants moving in. The agent then offered £100 in compensation to the tenants for the trouble and upset caused. 

Looking at the photos of the mould, there was clearly  a problem in certain contained areas such as the utility cupboard, which should have been addressed prior to the tenancy starting.. 

Accordingly, the Ombudsman supported this complaint and concluded that the agent’s offer of £100 was suitable compensation, taking into account the limited and contained nature of the problem and the speed at which the agent had resolved the matter.  

Outcome  

Overall, the Ombudsman supported three aspects of the complaint and concluded that an award of £300 (including the £200 offered by the agent) represented a suitable and reasonable level of compensation in the circumstances, allowing the parties to draw a line under the matter and move on. The tenants agreed and the dispute was resolved. 

The buyer discovered that no EWS1 certificate was in place after her offer to purchase the property was accepted.  Her preferred mortgage lender valued the property at nil on the basis that the building did not have an EWS1 certificate. A second mortgage lender also valued the property at nil on the same basis. 

The buyer was seeking reimbursement of her abortive legal costs (conveyancing fees, mortgage valuation fee and searches) totalling £1,713.71 plus £200 financial compensation for the time and effort she expended in resolution of the dispute. 

Background to the External Wall System (EWS) survey and EWS1 certificate

The External Wall System (EWS) survey was introduced by RICS in response to the recommendations made in Advice Note 14 which was issued by the Ministry of Housing, Communities and Local Government (MHCLG) in December 2018 following 

the Grenfell Tower disaster. The initial purpose of the EWS survey was to check whether residential high-rise buildings over 18 metres or six storeys in height were safe and free from combustible materials, and to recommend remedial work where necessary. 

The EWS1 certificate is not a legal requirement. It provides verification that an EWS survey has determined that a building had been found to be free of combustible materials and thus provides assurance to mortgage lenders and insurers. 

In January 2020, MHCLG updated guidance on fire safety checks and cladding which expanded the application of external wall system assessments to buildings of all heights. As a result, the EWS survey process became applicable to all residential buildings which had or were likely to have combustible material on external walls, irrespective of height. However, in July 2021, after obtaining expert advice, the government declared that EWS1 certificates should not be requested for buildings under 18 metres and mortgage lenders agreed to review their practices in light of the new guidance. 

Investigation

When marketing the property for sale, the agent had an obligation to disclose any ‘material information’ of which they were aware in relation to the property in a clear, intelligible and timely fashion. Material information is information which an ‘average’ consumer needs to make an informed transactional decision.

The agent did not dispute that a previous sale failed to progress as the management company had not provided the prospective purchaser’s lender with sufficient evidence that an EWS1 certificate was not required for the building. 

The agent explained that, as a result, they had instructed their staff to disclose the nature of the previous sale falling through to all prospective buyers who viewed the property. 

It was the Ombudsman’s view that the previous failed transaction and reasons for the prospective buyer’s withdrawal from the purchase of the property constituted material information which was likely to influence the average purchaser’s transactional decision. 

The Ombudsman was also mindful of the National Trading Standards Estate and Letting Agency Team (NTSELAT) guidance for compliance with the CPRs, which states that cladding and fire safety is material information which should be provided to consumers (buyers) at the earliest possible opportunity.

The Ombudsman accepted the agent’s point that there had been ambiguity surrounding the EWS1 certificate and the requirements of different lenders, as the July 2021 government guidance indicated that an EWS survey would not be required for the building in question as it was under 18 metres.

However, the agent was on notice that a mortgage lender had previously requested an ESW1 certificate which could not and would not be provided by the management company.  Therefore, the agent was aware that there was a possibility that other buyers would also experience the same issue. 

Consequently, the Ombudsman expected the agent to have informed all prospective purchasers of the failed sale due to the lack of EWS1 certificate at the outset. 

The agent claimed that this information was provided to the buyer at the outset, but they provided no evidence to support their position. Furthermore, the agent explained that they emailed their recommended mortgage broker in January 2022 and asked that the buyer be given advice about EWS1 certificates, but again no evidence was provided to support the claim. In any event, the Ombudsman pointed out that it was the agent’s responsibility to provide this information directly to the buyer, aside from the fact that the buyer did not decide to use the services of this mortgage broker. 

Outcome

The Ombudsman concluded that the agent had failed to inform the buyer that a previous sale had fallen through because the mortgage lender required an EWS1 certificate. 

In considering an award, the buyer had explained that if she had been aware that a previous transaction had fallen through because of the lack of an EWS1 certificate, she would have applied to a lender who did not charge for a valuation survey (as she did when the first lender returned a nil valuation). As such, the Ombudsman was unable to conclude that the buyer would have made a different transactional decision had the information been provided from the outset.

The Ombudsman made an award of £300 compensation to reflect the undue and avoidable aggravation and inconvenience which the agent’s failure to disclose material information caused. The agent was also directed to compensate the buyer the £275 fee she paid for the mortgage valuation. 

Investigation

The issues the Ombudsman was asked to examine included:

A. Service charge statement 

B. Cleaning
C. Communal area touch-up/upkeep
D. Window cleaning 

E. Communal greenery 

F. Communication 

The leaseholder was seeking a clear breakdown of service charge costs, better cleaning including the window cleaning, improvement of the condition of the communal areas and the communal greenery, and better communication from the managing agent. 

The managing agent did not believe that their service fell short in relation to any of the issues raised.

A. Service charge statement 

The leaseholder was unhappy with some of the service charges within the statement and the clarity of the service charge document. 

The Ombudsman explained issues regarding the reasonableness of the charges was a matter that fell within the remit of the First Tier Tribunal and explained their role. The Ombudsman also made the observation that the charges made were in line with the lease provisions.
 

In relation to the clarity of the service charge document, it was noted that it was accompanied with a copy of the approved budget which the Ombudsman considered was sufficiently clear to understand the service charges. The Ombudsman did not support this complaint. 

B. Cleaning 

The leaseholder was unhappy with cleanliness of the building, stating that there was constantly rubbish all over the development and specifically referring to dog faeces remaining outside of the entrance. However, no evidence was provided to show the uncleanliness was reported to the agent. 

The Ombudsman explained to the leaseholder that it was reasonable for the agent to be provided with an opportunity to address concerns before they were escalated to TPO. The Ombudsman also noted that the agent had contacted the cleaning company following the matter being raised with TPO. Given the lack of evidence presented and the requirement to first raise issues with the agent, the Ombudsman did not support the complaint. 

C. Communal area touch-up/upkeep 

The leaseholder complained that the internal communal areas were run down and dirty.  In response the agent had advised that the communal areas would be touched up once the freeholder had left the site. The managing agent further explained that, in line with the lease agreement, the internal communal areas could be considered for redecoration every five years but that they would look into areas that may require a few touch ups earlier with any costs being taken from the service charge. 

The Ombudsman noted that the agent had taken into account the requirements of the lease and had offered a reasonable resolution by way of assessing whether work was required at an earlier point. Accordingly, the Ombudsman did not support this complaint. 

D. Window cleaning 

The leaseholder was unhappy with the quality of the window cleaning services and the lack of action taken by the managing agent. 

The evidence showed that the window cleaning services were agreed by the freeholder as a bi-annual service and under a contract that was not due to be renewed for a period of time. 

As the freeholder was responsible for negotiating the contract, the Ombudsman explained that the managing agent was not directly responsible for the service agreed. The Ombudsman also noted that the agent had advised that they were looking into alternative providers and would look to change contractors when possible. 

The Ombudsman concluded that the agent’s response was reasonable in the circumstances and therefore did not support this complaint. 

E. Communal greenery 

The leaseholder was unhappy with the plants in the communal areas stating they had been dead for a year and not replaced. Again, no evidence was provided by the leaseholder to support the claim.

The agent had advised that they had instructed the gardener to remove dead plants but would not be able to plant any more until the appropriate season and this would be included in a future service charge. 

Given the agent’s response, the Ombudsman was satisfied that they had acted appropriately and did not support this complaint. 

F. Communication 

The leaseholder felt that communication between residents and the managing agent was very poor, and not enough was being done to share information with all the residents. 

The agent stated that they had introduced a live portal where residents could raise queries and concerns to communicate with them and that they issued quarterly newsletters with updates about the development. 

The Ombudsman noted that the introduction of the portal provided all leaseholders with the means to constructively communicate with the agent and visa-versa. Furthermore, there was no evidence provided that indicated that any leaseholder had experienced problems accessing and using the portal or receiving the quarterly newsletter. Given these developments, the Ombudsman was satisfied that the agent’s communication with the leaseholders was sufficient and therefore did not support the complaint. 

Outcome

For the reasons outlined, the Ombudsman did not support any of the complaints and therefore no award of compensation was made. Importantly, it was also explained to the leaseholder that if issues of concern occur the agent should always be given the opportunity to address those concerns and propose resolutions. In this case it was clear that the agent was willing and able to do so, had the leaseholder used the communication tools made available to her the by the agent.