Property Ombudsman expels agency that owed £181,000 in rent payments

Jan 12, 2018

Altavon Property Management chose not to provide a submission letter or their branch file to help with the case review and did not pay the substantial awards which, with outstanding rent payments on 31 properties as well as compensation for aggravation, distress and inconvenience awarded for each, together totalled £181,254.64.

The case was referred to TPO’s disciplinary and standards committee, which ruled the firm should be expelled from TPO. The Ombudsman is now warning consumers to be aware that APM is not registered with a redress scheme, which every sales and letting agent is required to in order to trade legally.

TPO chairman Gerry Fitzjohn said: “Although rare, this was a particularly extreme case of rogue behaviour which resulted in a significant amount of money being owed.”

Under the terms of APM’s agency agreement, the agent agreed to manage the 31 properties for a landlord. Unlike a typical full managed service, the two parties entered a two-tier tenancy whereby the complainant let the properties to APM in return for a specified rent for a period of time. In turn, APM could then sublet the properties to tenants of their choosing.

The obligations in relation to the properties were set out in the Let Agreements rather than Terms of Business. However, this alternative arrangement did not undermine APM’s obligations as a lettings managing agent under the TPO Code of Practice.

In December 2016, APM provided a written guarantee accepting that there were arrears of rent payment exceeding £57,000 owed to the complainant but there was no evidence to show that this had been paid. In each complaint, the Ombudsman made an award for the rent not paid over and £200 for aggravation and inconvenience.

Katrine Sporle, Property Ombudsman, said: “In the absence of any evidence to the contrary I accepted the complainant’s version of events and the amount of outstanding rent due to be paid over. In addition, I considered that APM failed to demonstrate that they kept rental money received in a separate client account and failed to forward on that rent.

“In view of the circumstances relating to these complaints, it is difficult to see how this was not a deliberate act on behalf of APM which, as well as leaving the complainant substantially out of pocket, seems highly likely to have involved taking significantly more from the sub-tenants in the form of rent and deposits.”

All members of TPO are obliged to comply with awards made by the Ombudsman and are also obliged to co-operate with investigations. Altavon Property Management had also voluntarily agreed to abide by the Code. The requirement to pay awards is so fundamental to a redress scheme that the DSC takes failure to do so very seriously.  Although membership had ceased, in view of this case, the DSC concluded that APM should be excluded for ten years.

Mr Fitzjohn said: “This firm will no longer be able to trade as a result of this expulsion and we urge any consumers that suspect the firm is trading to contact Trading Standards who have already been notified of these cases.”

TPO does not have the powers to force APM to make payment of the award but has warned the firm that the review may be used in support of any further legal advice sought or action taken to recover monies owed.  

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