Property manager used life savings to settle tenants’ claim via ‘no win, no fee’ company
A property agent used his own life savings to settle a claim from tenants who applied for a Rent Repayment Order on the advice of a ‘no win, no fee’ claims company.
The honourable manager accepted responsibility for an administrative oversight that had resulted in a privately rented property temporarily being without the licence required by the local authority.
Before the claim, the tenants had left the property on friendly terms and had no problems with either the agent or the overseas landlord. However, that didn’t stop them from seeking a Rent Repayment Order of £31,500 when they retrospectively learned there had been a minor regulatory breach related to the property’s paperwork.
The issue arose when the council introduced a requirement for Selective Licensing in the area. Housing authorities can introduce discretionary licensing for privately rented properties in any area they choose, creating a liability that many landlords are unaware of.
However, ignorance is not a legal defence, so if the required licence is not in place within the required timeframe, the landlord is automatically in breach of strictly enforced housing laws. And, as well as receiving a penalty of up to £30,000 from the local authority, they can be issued with claims for rent repayments from tenants.
Although the owner of the property is legally liable for any breaches of housing regulations, in this case the managing agent accepted responsibility for the error and paid a massive penalty of £9,000 to the local authority for not licensing the property.
However, the former tenants then submitted a claim for a refund of a full year’s rent, amounting to a staggering £31,500.
Now looking at a further payment of £40,000 for this contentious oversight, the desperate agent turned to Landlord’s Licensing & Defence for help. Their experts were able to reduce the total by 35 percent – a saving of £11,000. While this is a significant saving, the agent still lost his life savings as a result of the claim.
A growing number of Rent Repayment Orders are being managed by ‘no win, no fee’ companies who look for areas that have introduced new licensing regulations, and then actively seek out tenants in those areas.
These companies know that any breaches of housing regulations are strict liability criminal offences, which means that as soon as the breach occurs an offence has been committed. If the cases reach the First Tier Tribunal, landlords won’t just have to repay the rent – the matter becomes a public record, shared all over the internet.
In this case, the agent accepted responsibility and paid the money himself. In over 90 percent of cases, Landlords Licensing & Defence avoids the case going to the Tribunal and a public hearing, keeping the landlords’ name out of public view and preventing the tenants from discussing the matter with a comprehensive legal agreement.
The real danger to landlords is that “12 months rent free” is too big a temptation when dangled in front of the tenant by the no win, no fee ‘ambulance chasers’. And, as a result, the tenants this agent was formerly on good terms with walked away with his life savings – to compensate them for an issue they hadn’t even been aware of.
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