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Letting Agent Ordered to Repay Incentive

A letting agent who received and kept an undisclosed local authority incentive of £2,500, has been ordered by the Property Ombudsman to pay this to its landlord client.

The case study was included as an example in the Property Ombudsman’s annual report for 2019, just published. The name of the letting agent has not been disclosed.

It had received the incentive payment from the local borough council after proposing that the landlord seek to let the property to the council – it has become common in some areas for local councils to offer such incentives to landlords, said the Ombudsman. But the agent did not disclose the incentive to the landlord nor pay it to him.

When the landlord found out about this, the Ombudsman was asked to step in.

It was not appropriate for the agent to retain a substantial payment clearly intended as an incentive to persuade landlords to rent their properties to tenants in receipt of housing benefit, said the Ombudsman after reviewing the case. The agent should have disclosed the existence and the amount of the incentive offered by the borough council. Further, its retention of the money had been contrary to its obligations under the Consumer Protection from Unfair Trading Regulations.

Payment of £2,500 to the landlord was ordered in full and final settlement of the dispute.

The Ombudsman’s annual report recorded a 20 per cent increase in the number of complaints received – 5,106 in total, of which 2,518 related to letting issues. As a result, £2.2m in awards had been made. A total of 22 agents were expelled from The Property Ombudsman scheme for non-compliance.

Of the letting related complaints, half were made by landlords, and two thirds were found justified by the Ombudsman.