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TPO Q2 Case Summary Newsletter

In order to help agents better understand how the Ombudsman comes to decisions over complaints, we now issue a quarterly case summary review, giving you the opportunity to see examples of real complaints, how they were reviewed, as well as the outcome. These are a collection of case summaries which have been published in the trade press over the last quarter.

Remember, if there are any specific topics you would like us to cover, please email and we will endeavour to cover these in future examples. 

Landlord complaint regarding referencing 

The landlords said that the agent did not complete the appropriate referencing checks, which resulted in the tenants accruing rent arrears and causing damage to the property. The landlords said that the referencing process did not highlight historic and current debts when considering affordability of the monthly rental commitment. They placed the responsibility of the losses they incurred with the agent.

The agent responded saying that they explained to the landlords the tenant’s circumstances and advised them that the tenants had passed the referencing procedures that were in place, and which were detailed in their terms of business.



Under Paragraph 11b of the TPO Code of Practice for Residential Letting Agents (the Code), the agent was required to take references on the tenants appropriate to the circumstances of the application. This included proof of identification, residence, income and a credit check. 

The agent’s referencing procedures should usually be by way of a referencing service provider and they were required to provide the landlords with all relevant facts relating to the application, to enable them to make an informed decision, regardless of whether the tenants had met, or failed to meet the referencing criteria. 
The Ombudsman could not hold the agent responsible for the actions of third parties, for example the tenants and the referencing provider, but considered the agent’s actions in relation to their obligations. 

The Ombudsman was provided with the reference report conducted on both tenants. This sought to consider the tenants’ financial ability to afford the property via residence check, credit check, employment check and, where relevant, a landlord reference. The report for the tenants stated that the overall decision was “Accept”. Therefore, in accordance with their obligations under Paragraph 11g of the Code, the agent was required to relay to the landlords the content of the report, and that the tenants had met the required referencing criteria. 
The Ombudsman was critical of the agent’s record keeping, as she was unable to conclude with certainty the information they relayed to the landlords in relation to the referencing reports obtained, to show that they communicated all relevant facts (including two young children also occupying the property) to enable the landlords to make an informed decision about the tenants’ application. 

The landlords stated that the referencing report did not highlight a mortgage which they say the tenants had at the time of their application. However, the referencing provider conducted a search against the applicants’ credit file and reported that no adverse information was identified – this included a search for County Court Judgements and the presence of a bankruptcy order.
The landlords also commented that no personal references were taken out on the tenants to show their character, but this is not a usual reference for an agent or referencing provider to obtain. Where a potential tenant is in rented accommodation at the time of referencing, a landlord reference should be obtained to check if the tenant has paid their rent on time and to ask the previous landlord how the property had been kept and if they would rent to the tenant again. In this case the application from the tenants indicated that they were living with friends or family which had been checked against the electoral roll. 




From the evidence provided, the Ombudsman was satisfied that the agent fully complied with their obligations under paragraphs 11b of the Code, in relation to the referencing they conducted. 

However, when considering their responsibilities under paragraph 11g of the Code, she was critical of their lack of record keeping to demonstrate that they informed the landlords of the content of the reference reports and that two young children would also be residing at the property. 

The Ombudsman supported the complaint on this basis and considered that the shortcomings in service caused the landlords some avoidable inconvenience. However, the Ombudsman did not consider it to be fair or reasonable to direct the agent to reimburse the landlords for the rent arrears accrued during the tenancy.  

An award of compensation of £50 was made, reflecting the shortcomings in record keeping that had caused a degree of inconvenience. 


Buyer complaint regarding search report

The buyers explained that they were not aware of the existence of the planning application for the estate when they purchased the property and said they would not have offered £11,000 over the asking price had they been aware.

The search provider said that the planning application and decision for the new build estate was not included in their report because the application was made twelve years prior, and their findings only included applications made during the seven year period up to the date of the search. They said that the search had a seven year cut-off point, since most planning decisions stipulate that work must begin within either three or five years of approval being given. They explained that the planning decision in this case was unusual in that it did not specify a date by which time the work must begin. 

The search provider felt this was an extreme example where the time lapse between the original application, appeal and subsequent works was much longer than expected, and that the lack of time limit to commence works meant that there was little chance of their report picking it up. 

The search provider explained that as no applications were identified within seven years prior to the report being generated, the report did not include a dynamic text field which would have advised the buyers that the search was limited to seven years. However, they acknowledged that this was not ideal and made a goodwill offer to refund the search fee of £137.16, in resolution of the complaint.
The buyers rejected the offer of compensation and sought compensation of £11,000, which is the amount they offered over the asking price of the property.




The Ombudsman accepted that the search provider needed criteria to apply in order to determine the search parameters and considered that it was reasonable for the report to have a cut-off date before which planning applications would not be included. This would prevent out of date information from being routinely included in search reports and potentially obscuring more relevant information. The Ombudsman felt that seven years was a reasonable cut off point, given the search provider’s comment that most applications contain the criteria that building must begin within either three or five years of approval being given. 
The Ombudsman therefore did not conclude that the search provider failed to carry out the search accurately, within the parameters that were set. The application for the housing estate next to the property was made twelve years prior and approved ten years before the time period covered by the search. Although there was some activity in 2012, it was recorded under the existing record and did not generate a separate record. Therefore, the Ombudsman accepted why it was not picked up by the search. 
However, the Ombudsman explained that there was an expectation on the search provider to have put the buyers on notice of the fact the search only included applications during the last seven years. This expectation was in accordance with the requirement under the Search Code to state what sources of information had been searched, which reasonably included stating any limitations that were in place regarding the extent to which the sources had been interrogated. 

The Ombudsman also considered that the report should have warned the buyers that there might have been applications which were ‘live’, but which had not been included because they predated the time frame covered by the report.  The search provider should also have advised the buyers to make their own enquiries if they had concerns about this possibility. 

The search provider said that there was a dynamic field which would have explained that the search was limited to seven years, but that it was not included since no applications were found within the last seven years. This was clearly unsatisfactory, since the buyers needed to be made aware of the limitations of the search, regardless of whether any applications had been identified or not. Had such a statement been included, the buyers might have been able to instruct their solicitor to carry out further investigations. 




The Ombudsman was unable to speculate about the potential for the buyers to have made a different decision had they been made aware of the plans, although she recognised their strong feelings towards the reasoning behind their decision to offer the amount they did. Nonetheless, the discovery of the application for development of a new build estate, which they would have reasonably expected to be included in their search report, undoubtedly caused them distress. 
The Ombudsman therefore considered that there was a flaw in the way information was presented by the search provider, in particular the lack of warning that the search was limited to applications made within the last seven years, that there may have been applications that predated this time frame and that the buyers should have made their own enquiries to satisfy themselves on this point. 

The Ombudsman made an award for compensation of £1,000 for the aggravation, distress and inconvenience caused. 


Landlord complaint regarding alternative deposit option for a tenancy 

The landlord was seeking a refund of the solicitor and court costs that he incurred to remove the tenant from his property following the build-up of rent arrears. The landlord considered that the agent failed in their service by recommending a product that was not suitable for him, and as a result he felt they were responsible for his financial losses.
The agent had apologised for any frustration the landlord may have experienced and acknowledged that their communication did not meet their usual high standard. However, the agent did not offer the landlord a gesture of goodwill leading to the case being escalated to TPO. 



This dispute stemmed from the landlord stating that he was frustrated that he was sold the alternative deposit which he subsequently believed was not suitable. He also felt that communication from the agent about the product and the tenant’s rent arrears was poor. 

The Ombudsman noted that the landlord referred to incorrect information he was given about the alternative deposit by the agent during telephone calls. The agent denied this and as the Ombudsman was not party to these conversations, she was unable to determine exactly what was said and therefore could not use this information in her decision. 
However, a letter signed by the landlord stated: 

In the full understanding of the situation, the Landlord acknowledges and accepts that: 

The Proposed Tenant noted above is unable to satisfy the reference criteria of [agent] as detailed above: 

  1. Rent Guarantee Product will not be available for this Tenancy. 
  2. It has been approved for the alternative deposit option to go ahead on this Tenancy. 

In the full understanding of the situation the Landlord authorises [agent] to proceed with the letting of the Property to the proposed Tenant. 
Two days after signing, the landlord was sent an email from the agent which confirmed the Tenancy Agreement would include the alternative deposit option. The Ombudsman was therefore satisfied, based on the two events outlined above, that the landlord agreed to the alternative deposit option for the tenancy. 
Paragraph 13o of the TPO Lettings Code states, ‘Where a deposit replacement product (e.g. such as insurance) is proposed in place of a traditional deposit, the potential advantages and disadvantages of the product must be explained in clear terms to the Tenant and the landlord and both party’s agreement sought before proceeding
From the evidence provided, the Ombudsman was not satisfied that the agent had demonstrated that they fully explained the potential advantages and disadvantages of the alternative deposit product to the landlord before he agreed to allow the tenant to use this for the property deposit. This was because the agent had provided a document signed by the tenant that fully explained the alternative deposit product, but no corresponding document was provided to the landlord to enable him to understand the important Terms and Conditions. 

Whilst the Ombudsman concluded that this would have caused the landlord undue aggravation and inconvenience, she also took into consideration that the amount paid to the landlord from the alternative deposit product was higher than the standard deposit amount that could have been legally held in a traditional deposit arrangement. 
Concerning communication surrounding the rent arrears, Paragraph 14d of the Code states, ‘The agent must draw a landlord’s attention to a build-up of serious rental arrears and should seek appropriate instructions from the landlord or the landlord’s professional advisers.’ 

The landlord stated that once the tenant had stopped paying rent, he was always ringing the agent for an update, however they did not keep him informed of the situation. However, from the evidence provided, the Ombudsman was satisfied that the agent kept in touch with the landlord, the tenant and the guarantor during the period of the rent arrears. 

That noted, it was observed that there were instances where the tenant had contacted the agent with promises of payments which did not appear to have been relayed to the landlord. Therefore, the Ombudsman considered the agent’s communication regarding the arrears could have been more frequent at times which would have alleviated some of the landlord’s frustrations and the feeling that he was not being kept informed. 



The landlord felt that he should be compensated for the court and solicitor costs he incurred due to the tenant not paying rent and the damages to the property.  However, paying the rent and looking after the property are contractual obligations for the tenant, as outlined in the Tenancy Agreement. The agent could not fairly be held responsible for the failure of the tenant to comply with the Tenancy Agreement and therefore the Ombudsman did not conclude they were liable to cover the solicitor and courts costs claimed by the landlord. 
However, the agent’s failure to provide the landlord with the terms and conditions of the alternative deposit option and their shortcomings in not always keeping the landlord up to date regarding rental payments, led the Ombudsman to find that an award of £150 was suitable as compensatory redress.  




Buyer complaint about material omission



The prospective buyers pointed out that significant material information was missing from the agent’s online advertisement of the property – namely, an omission to disclose a basement at the property, which they later learnt about when viewing the property for the first time in person after they had already committed themselves to their purchase. 

The issue led to their withdrawal from the transaction, having already incurred significant costs, after satisfactory responses to their enquiries over the matter were not forthcoming from the seller. Following the agent’s responses which did not resolve the issue, the buyers referred the matter TPO seeking compensation for the costs they incurred.




The buyers explained that the property was marketed as a ‘readymade investment’ (as it was already tenanted and offered with a 3-year lease to a housing association set to yield £19,200 per annum in rental income). They also explained that they were required to pay the agent a non-refundable ‘Exclusivity Fee’ of 2% (inclusive of VAT) of the agreed sale price (of £240,000 – therefore, a fee of £4,800) in order to enter into the transaction and secure the property for the ‘Exclusivity Period’ of 56 days from receipt of draft contracts from the seller’s solicitor. Furthermore, they were required to complete their purchase of the property by the end of that period. 

The buyers said it was not possible for them to view the property in person until after they had paid the fee but decided to proceed regardless.  They arranged for a physical viewing the day after receipt of the draft contracts. However, upon viewing the buyers were not expecting to find a basement at the property and certainly not one that was waterlogged with a centimetre of water, watermarks on the wall, and exposed pipes and wires. The buyers provided photographs taken that day as evidence. 

The buyers said that they raised the issue that same day and the response they later received from the agent when issuing their final viewpoint letter was that ‘the vendor advised there is not a waterlogging issue he is aware of but simply just some water from works carried out recently’. They added that, after waiting three weeks, the seller’s response did not provide any explanation for the omission nor any assurances that the waterlogging issue would not recur. They also added that they took advice from ‘professionals’ at the time who advised that the most likely explanation was seepage from the basement walls and floor following the recent wet winter. 

The agent vehemently denied the buyers’ claims saying that they strongly advised them to view the property prior to entering into the Exclusivity Agreement; however, they say the buyers advised that they were happy to proceed regardless.  


The agent stated that they had strict processes in place and procedures for explaining the implications of entering into an exclusivity agreement through them and said that they advised the buyers: 

a) to carry out a viewing before entering into the agreement;

b) to carry out a survey before entering into the agreement; and 

c) that the agreement was unconditional, and the Exclusivity Fee was non-refundable. 

The agent said that they advertised all of the information that they were provided with and that was approved by the seller and emphasised that they were not informed about the basement, or any alleged issue with it. The agent added that the buyers were free to view the property and/or instruct a survey before offering for the property.
The agent said that the seller was so confident that there was no issue with the basement that he asked them to advise the buyers to arrange for a timber and damp report in order to demonstrate this, but the buyers chose not to do so. 



When marketing the property for sale, by law and under Paragraph 7i the TPO Code of Practice for Residential Estate Agents (the Code), the agent had an obligation to comply with the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs), by disclosing all material information that they were aware of or should have been aware of. 
All reasonable steps should have been taken to ensure that statements made about the property (whether oral, pictorial or written) were accurate and not misleading and to not omit any information that the buyers needed to make an informed decision.
Having considered the property’s advertisement, which also included a link to a virtual tour, the Ombudsman did not accept that the agent was unaware of the existence of the basement. In the video, each room and the outside area was depicted in full, but the basement was not filmed, despite the video reaching the open door from the kitchen area to the stairs leading down to the basement. 


The ‘Assured Advice’ relating to the production of video/virtual tours, which is published on the TPO website, states “A video viewing should include all the information that a physical one would.” Therefore, The Ombudsman determined that the basement was purposely omitted from the video tour leading to the buyers being misled into agreeing to purchase the property through their material omission.

The Ombudsman concluded that the buyers were entitled to withdraw from their purchase without penalty when the issue was later identified, irrespective of the non-refundable nature of the Exclusivity Fee.  

The Ombudsman made an award to compensate the buyers for the proven financial loss caused as a result of the agent’s non-disclosure of the basement. The agent was directed to cover the buyers’ transaction losses, which were broken down as: £459.50 for solicitor’s fees and £299 for the mortgage application fee, £758.50 in total, as well as the ‘Exclusivity Fee’ of £4,800. 
A total award of £5,558.50 was made in compensation to the buyers.