On 11 September 2014 a comprehensive code of practice (“Code”) for the private rented sector was published.
The Code has been issued amidst much fanfare and with the support and endorsement of the great and good it’s as closest thing the industry has to a “how to” guide.
The industry commentary to date has focused on the requirements in the Code for letting agencies to publish their fees and to segregate client monies from their own.
However, one seemingly innocuous and uncontroversial requirement may result in steep costs, reputational damage and lost revenue for letting agencies across the UK.
Paragraph 4.3.4 of the Code states that:
“tenants must never be evicted for simply requesting repairs to a property”
The use of the word“must”in the Code indicates that this is a legal requirement*.
Surely this is uncontroversial.
As Eric Walker, Managing Director of Northwood highlights
“This is not a surprise and is not a new requirement. Aside from the legal and moral considerations I cannot seriously believe that any sensible lettings business would evict a tenant who was paying rent and complying with their tenancy agreement simply for requesting a repair the cost of which is also tax deductible.”
The Government considers that revenge evictions are carried out by “a small minority of rogue landlords”** so if you aren’t acting for them why should you care?
Why This Matters To Every Letting Agency
Rogue behaviour isn’t the sole preserve of landlords.
When reading the story think about your property management department. How far through do you get before alarm bells start ringing?
A tenant in one of your fully managed properties has been a nightmare and after yet another complaint from a neighbour your client instructs you to seek possession. You issue a s8 notice and let your client know that you think that they have strong grounds for possession.
After receiving notice, the tenant claims that the eviction is retaliation for requesting repairs. She sends you notes of conversations she has apparently had with an unnamed member of your team cataloguing the repairs she has requested.
Those alleged conversations conveniently fall just before the date of the s8 notice but no one in your office has any record of having spoken with the tenant. It seems unlikely (but not impossible) that someone spoke with her. Maybe it was a property manager who recently left.
What do you do? Perhaps you face up to the awkward conversation with your client about the reduced chance of success and they decide to withdraw the notice. They may not be happy but with only a couple of months left until the end of the tenancy it doesn’t seem like the end of the world.
At the end of the tenancy, the tenant has damaged the property and not only does your (soon to be former) client hold you responsible but the deposit doesn’t cover the costs.
Unfortunately, your lack of record keeping comes back to haunt you when you put your insurer on notice about the potential claim.
Zahid Naqvi, Director of Custodian Insurance observed:
“Keeping written records of communications is not just good practice. Many insurance providers will want to know that records are kept before offering professional indemnity to letting agencies. Failure to comply with this requirement could adversely affect both the cost of professional indemnity and potentially how the policy responds to a claim being made.”
What should you do?
Put simply, if you act correctly then written records are your best friend.
The Property Ombudsman, Christopher Hamer commented:
“TPO’s lettings code of practice requires member agents to keep full written records of all communications with tenants and landlords for at least six years and to be able to produce those records upon demand.
As a matter of best practice, I also consider it prudent for agents to ask for tenant repair requests to be submitted in writing so that there is a clear trail of exactly what was reported and when that report was received.”
A bill is currently going through the Houses of Parliament (with support across all three main parties) to bolster the protection of tenants against retaliatory evictions.
We hope that it is accompanied by a requirement for tenants to report repairs in writing.
Written records bring clarity and, with them, the scope is reduced for rogues to prosper on both sides of the lettings equation.
*At the date of writing that legal requirement looks set to be bolstered by the Tenancies (Reform) Bill, a Private Member’s Bill which has received “in principle” support from the Government