The Property Ombudsman (TPO) came into being on 1 May 2009. This is an organisation which sets standards through a code of practice and has a complaints procedure, which has implications for letting and managing agents.
Formerly, the Ombudsman for Estate Agents (OEA), the new name reflects a broader remit including: Property Sales, Lettings, Letting Agents, Managing Agents, Commercial and Overseas.
Lettings and Property Managing Agents who join the TPO also subscribe to the Code of Practice for Letting Agents.
All Letting Agents whether members of TPO or not are advised to deal prudently with tenant checks and referencing and to fully comply with this Code of Practice. TenantVERIFY® fully supports the TPO Code of Practice.
A landlord's property is a substantial asset and in some cases provides essential income to re-pay a mortgage.
Therefore agents are under an obligation to show due diligence when selecting tenants to occupy clients' (landlords') properties and should resist any pressure or temptation to rush the process or cut corners.
Reasonable care is needed to ensure that you let to responsible tenants who will take care of the property and be capable of paying the rent on time. The purpose of tenant checks and referencing is to satisfy the landlord that the prospective tenant:
In the event of a complaint, the Ombudsman will expect to see good evidence that agents have carried out prudent referencing themselves or that they have used a recognised tenant checking and referencing agency such as TenantVERIFY®
Where information appears dubious the agent should investigate further, giving the applicant the chance to explain or produce more evidence. There can sometimes be perfectly plausible explanations for adverse information.
It is the agent's responsibility to do Identity Checks (ID or Anti-Money Laundering Checks) as they have the applicant and documentary evidence before them. Copies of photo drivers' licences or passports, plus recent utility bills and/or bank statements to show residency will be appropriate - ID Certificate
All banks are now required to make these rather annoying checks before they are allowed to take money from you. The same law applies to anyone who takes money, including building societies, solicitors and accountants, estate and letting agents.
Money laundering checks include requiring applicants to produce a passport, driving licence, recent bank statements together with enquiries made to recognised credit reference agencies - TenantVERIFY® can carry out Money Laundering and ID checks.
These checks are undertaken on absolutely everyone, so applicants should be re-assured that this is not personal to them or that they are suspected of doing anything illegal. The money laundering checks made at credit reference agencies leave an ‘enquiry footprint’ – an indelible record so that you can later see who has been checked out. The enquiry footprint does not have any impact on the applicant's credit score or on your ability to get credit.
Agents act on behalf of their landlord clients, so this should be clearly explained to applicants. Where holding deposits are taken, or fees for checks and referencing, applicants (prospective tenants) should be informed in writing what happens if they fail to qualify, e.g., if the monies are not refundable.
Ultimately, the decision as to whether an applicant is accepted for an tenancy or not should be taken by the landlord, not the agent. Therefore, the agent should ensure that landlords are in a position to make an informed decision by making all relevant information available to them.
As an agent you should always draw to the landlord's attention any negative information you receive about the prospective tenant, ideally in writing, and advise accordingly.
There are inherent risks in letting property. By the use of prudent referencing and due diligence on the part of the letting agent, tenant risks can be minimised but never eliminated. Landlords should be made aware of this fact.
Complaints to the ombudsman sometimes arise against letting agents when tenants mis-behave during the tenancy. These complaints will not be up-held where the agent can show evidence of due diligence and prudent referencing. The key word here is evidence: you need to keep the paperwork on file or on your completer system to show exactly what was done.
Letting agents should resist pressure from landlords, prospective tenants or indeed internal constraints to to conclude a let prematurely. Be prepared to show evidence from the file that you discussed the decision with the landlord with all relevant facts to hand, and that the landlord made the final decision.
Landlords will sometimes request or even demand to see credit check reports on their tenants or prospective tenants. This can sometimes occur when disputes arise during or after the tenancy.
As agents act for their landlord clients, they are under an obligation to share all relevant information with their principal, though disclosing confidential information can have Data Protection implications. Providing the applicant tenant agreed to this at the time the information was provided, this will usually be acceptable. The landlord must however handle the information securely and in-line with Data Protection principles.
The TenantVERIFY® Application forms specifically inform the applicants that information supplied can be shared by relevant parties, and by signing the form the applicant agrees to this.
It is very important therefore that the agent (or landlord) retains the completed Tenancy Application Form for evidence.
Credit check reports and references should NOT be disclosed to applicants (prospective tenants) but instead applicants should be referred to the main credit reference agencies or their own referees. Applicants can obtain copies of their own credit files from the agencies on payment of a small fee.
References – Clients and Applicants
7a In all referencing processes or procedures, you should be conscious of the need to be reasonably diligent in identifying fraudulent applications.
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