Here is a question to the blog clinic fast track from David (not his real name) who is a landlord
My wife and I own a detached house in the country. I work abroad with my family and the house has been let via managing agency to a who have lived there for 2 years. They are not renewing and their tenancy finishes in a few weeks. We have had no problems with rental payment and management visits from our agent have passed without issue.
Today we learned from a friend in our village that our house is available as a B&B on a popular website. Further investigation of several B&B sites reveal that the house has been a fully functioning B&B with 100s of reviews, for a period spanning the entire two-year tenancy. It appears this was a deliberate business plan from the start of the Tenancy.
This, of course, contravenes the usual emphatic terms in their Agreement regarding paying guests. Their activities have voided our Insurances and breached our Mortgage Lender terms.
Clearly, if this discovery had been made within the last two years the Tenancy would have been terminated in the proper fashion. With only weeks to go there seems little point in starting such action.
A loose calculation of the number of reviews and nightly rate shows that the tenants have made considerable sums from this venture. Their customers specifically praise the house, its facilities, the modern refurbishment, its garden and the pet-friendly terms (we allowed them one dog, reviewers often brought theirs).
Our agent recently told us they lost a prospective new tenant because of the reluctance of our tenants to make viewing times available. The full details of this are being sought, particularly since the best chance of a new tenant comes only after a void period of two months. It can be guessed that the reason the tenants gave for refusing visits was because they had paying guests in the property at the times requested. This would be hard to prove.
We are extremely angry and feel we want some recourse in this matter. Is there any to be had or are they going to get away with this scam?
Answer
I can understand your anger at this. As the tenants are leaving however it is hard to know what you can do about it so far as they are concerned. The normal course of action would be to bring proceedings for eviction.
If you have suffered any actual financial losses – for example, if your mortgage company find out and decide to impose a penalty then you could claim this from them.
Generally, where there is a breach of contract, the object of any claim is to put the parties in the position that they would have been in had the contract been performed as it should. So far as you are concerned, if the property is returned in good condition and you do not suffer any penalties then you have not (fortunately) suffered any losses.
It is indeed possible (unlikely but possible) that the tenants didn’t actually realise that they were doing anything wrong. Many tenants are clueless about landlord and tenant rights and obligations and they may think they can treat a rented property as if it were their own.
Needless to say, should they require a reference in future you will make their behaviour known to any future landlord.
The agents
I think though that you have cause to complain about your agents. They should have spotted that this was happening. You trusted them to manage your property while you were away and they have let you down.
I think you should at the very least put in a complaint, and ask for compensation and an apology. If this is not forthcoming then you could bring a complaint to their Property Redress Scheme.
Sadly I don’t think there is much else you can do about this, although I do completely understand your feelings about it.
Maybe readers will have some suggestions?
While i can understand the frustration, i’m not sure what the agents could have done differently.
Without expecting them to trawl airbnb type sites for any wrong-doing, there may have been no visible signs it was being treated this way. No damage or loss of property, no complaints from neighbours or the local poilce. Every inspection may have completed with a big ‘tick’ of a house in good order.
Some signs may have been there (too tidy perhaps?) but its hard to think that a property with no arrears nor outward signs of disrespect would raise a red flag
Don’t use them again, sure. Don’t give a glowing reference to the tenants, sure. I’m not sure they owe you compensation for not spotting a situation that is hard to spot until something goes wrong. While i am not defending the tenants behaviours nor any omitted responsibilities of the agents, the basis of your complaint seems to be that you did not get a slice of any action. You have not actually suffered any loss. Be happy about that.
I think the questioner is more concerned that the tenant’s actions invalidated his insurance and put him in breach of the terms of his mortgage.
What about an action for unjust enrichment against the tenants? Before local authorities were able to bring statute-based claims for the recovery of profits against their tenants who unlawfully sublet (via the provisions of Prevention of Social Housing Fraud Act 2013) some of them used to base their claims to recover profits upon the common law concept of unjust enrichment.