This is a question to the blog clinic from Eliza (not her real name), who is a landlord in England.
I tried to put my flat for rental through an agency. They found someone who is self-employed but I voiced some concerns. I was reassured that the referencing company would do a thorough check, including checks with accountant, annual revenue over the last few years etc.
To my suprise, he passed the references but only the last three months bank statements were checked. I told the agency these were unsatisfactory because impossible to assess a self-employed finances on last three months so I don’t want to proceed with this applicant.
They are now saying I am withdrawing from the let and I have therefore need to pay £300 for the references. Are they allowed to do that? The contract clearly says I need to accept the references before they can draft tenancy.
Answer
You need to check your agency agreement again. Your agency agreement governs the specifics of your contract with the agency and should set out details of the fees you will be liable for and when you are liable to pay them.
You have found that your agency agreement provides that your agents cannot let to a tenant if you do not accept the referencing. But what does the agency agreement say about paying the referral fees for tenants who are not accepted?
I would be very surprised if the agency were willing to fund these fees themselves. The fees have obviously been incurred, and it looks as if you did not object to the applicant being referenced at the time. You are just unhappy with the results of the referencing.
So check what the agreement says, but my view is that the fees are payable. If the referencing helped prevent a let to a tenant you are unhappy with, they will have been worthwhile.
If you are unhappy with the actual referencing procedures used (and it sounds as if you are), then again, you need to check your agency agreement to see what it says about the actual referencing procedures and companies used.
You may want to set out some rules for your agents to follow in future. Such as taking a longer period of bank statements for self-employed applicants.
However, there are, inevitably, costs to being a landlord and paying for referencing for a tenant whom you ultimately decide not to accept is one of them.
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