Letting agent gone bust...what to do now?

[slicendice]

Hi everyone

My g/f lives in a rented flat and has done for about 19 months now. It was originally rented via a letting agent (franchise for a big, well known chain) and she recently noticed that her monthly rent payments (£525 made by standing order) were leaving her account but then coming right back again.

 

It turns out this has been happening for the last 8 months or so. Further digging has revealed that the franchised letting agent went out of business some 8 months ago...there is even some talk of prosecutions due to fraud, though nothing concrete on that front. Anyway, no-one told us anything and the office simply closed down and is now empty. We've contacted the parent company and found out that there's a new office just down the road which supposedly picked up all the clients from the previous franchise. However, this new office is saying that they have no record of my g/f's flat being one of their properties.

 

I can't quite believe that the landlord who owns the property hasn't noticed that he hasn't received any rent payments for the last 8 months but I believe he spends a lot of time out of the country so I suppose it's possible that he just hasn't reviewed his accounts in detail. Anyway, the thing I'm worried about is the landlord suddenly realising that he's not received any rent payments for the last 8 months and automatically assuming it's our fault and that we're trying to dodge out of paying, which is absolutely not the case at all.

 

The trouble is, we're having real trouble getting hold of him; the only contact we have is a postal address somewhere in the middle of Manchester but no phone number and no email. The new franchise operator has said he will write to the landlord at the address we have for him, but other than that it seems like there's not a fat lot we can do.

 

I'm also worried about what's happened to the deposit (£525) that my g/f paid when she originally rented the flat. The new franchise operator has said that there is something called DPS (Deposit Protection Scheme) that the original agent *should* have used...but in order to get anywhere with the DPS you apparently need a reference number/ID...and of course, we don't have such a thing (if there was one, then it would have disappeared with the now defunct letting agent). We have the original signed tennancy agreement that states the deposit amount and also mentions the fact that they use DPS - but due to the rather dubious nature of their demise and the rumours surrounding their practices, there is now some doubt as to whether they will actually have used DPS or not.

 

I'm hoping that we can get hold of the landlord before too long and try and resolve things, but can anyone tell me if there's anything else we can/should be doing in the mean time in order to resolve this and minimise the chance of things getting a bit smelly?

 

Is there any obligation at all on the new franchise that has opened up to take on the rental of this flat? My instinct tells me that there probably isn't, but that's not really based on anything other than gut feeling! They did say that they had taken over what they believe to be all the clients from the previous agent, but they obviously haven't as they say they have no record of my g/f's flat. We've even contacted the head office of the franchise and they've confirmed that they have absolutely no record of her flat being one of their properties.

 

I hope that all makes some kind of sense! Any help/guidance/advice will be very gratefully received.

Many thanks

Edited March 1, 2011 by slicendice

[MrShed]

What is the name and address listed under "landlord" on the tenancy agreement?

[slicendice]

The tenancy agreement states that the landlord is the property owner (the one we're trying to contact at the moment) but the address given for him is "c/o" the now defunct letting agent.

[MrShed]

OK - do you have something in writing (e.g. companies house paperwork) showing that the company is dead in the water?

 

The address on the tenancy is the ONLY address you should send rent to.

 

They now need to modify it by sending you a Section 20 notice with the new correct rent paying details.

 

I would sit it out, try and get in touch with the landlord if possible (although I wouldnt flog it to death). In the meantime (V important) - keep the rent that was due in a seperate account ready to be paid when the issue is resolved.

[raydetinu]

you can get the details of the property owner from the land registry on line, costs £2.

[slicendice]

Well, things have suddenly started happening! Got a letter yesterday from a local estate agent/property letting company stating that they were acting on behalf of the property owner and had taken over letting management for the entire building on 1st March 2011.

 

Then yesterday evening, we got a visit in person from the guy who'd sent the letter. He was a very nice guy and very helpful and told us that they were taking everything over and we could set up a new standing order arrangement with them for rent. We told him about some of the issues with the flat and he made a note and promised to get them sorted. We also told him about our concerns over the initial deposit that was paid (to the now defunct original letting agent) and he said he would look into that too and let us know.

 

Turns out the owner has a lot of property, in the UK and abroad (both residential and commercial), and hadn't actually got a record of who, if anyone, was living in which apartment; the most up to date record they had showed my g/f's flat as being unoccupied!

 

Anyway, things are moving now so hopefully it should all get sorted soon. Thanks very much for the help/info - I'll post again if/as/when there is a final outcome.

[MrShed]

Just be wary of paying any rent to anyone before you have received a formal Section 20 notice informing you of the legal new place to pay rent.

[slicendice]

OK, will do - thanks for the info

[slicendice]

Had an update from the guy at the new letting management company - it appears that the original deposit of £525 paid to the now defunct letting agent was stolen by them and never went into the DPS :-x:-x

 

He said that when my g/f moves out of the flat, she should lodge a claim with the NALS. What I'm wondering is just why she has to wait till she moves out before getting on to this? Wouldn't it be better to start the process ASAP?

[Steve__M]

If your gf has in good faith paid the deposit to the agent according to the landlord's instructions, then it is the landlord's responsibility to recover the deposit and to otherwise refund your gf.

 

This happened in Exeter a few years ago.

 

I think the agent knows this and is trying to fob you off. Suggest a polite letter to the new agent to state this, perhaps opening "We paid 525 to X according to LLs instructions. As you now acknowledge that X has disappeared with the money my understanding is that LL is responsible".

 

If you don't get satisfaction you have the option either of pushing the issue, or simply letting it lie but not paying the last month's rent when you eventually decide to leave. Keep copies of your correspondence safe.

 

According to the (England and Wales) law, a Section 21 notice is invalid if it is issued when the deposit is not protected, so your gf should be protected from being kicked out until the deposit is properly protected.

[mariner51]

Unless g/f can prove that a deposit was paid to previous LA (receipt, witness if cash; bank statement if cheque; AST) difficult to show a deposit was paid and not protected. Best get statement in writing from new LA chap asap confirming deposit was received by defunct LA and not protected (ie stolen).

[slicendice]

Thanks for the info everyone.

 

Re this Steve:

If your gf has in good faith paid the deposit to the agent according to the landlord's instructions, then it is the landlord's responsibility to recover the deposit and to otherwise refund your gf

 

...is there any legal precedent that states this? Just wondering in case the landlord tries to claim otherwise and we need something "official" to back us up.

 

I'm actually in contact with the parent company of the original franchise and have put the situation to them to see what, if anything, they can do about it. They've said they will re-check the DPS just to make absolutely sure the deposit didn't go into it. So it'll be interesting to hear what they say if (or probably "when" in reality!) there's nothing there to be found.

 

Unless g/f can prove that a deposit was paid to previous LA (receipt, witness if cash; bank statement if cheque; AST) difficult to show a deposit was paid and not protected. Best get statement in writing from new LA chap asap confirming deposit was received by defunct LA and not protected (ie stolen).

 

We have bank statements showing the deposit leaving her account so hopefully that should be enough proof. I'm going to wait and see what the original franchise parent company comes back with and take it from there.

 

If it comes to a straight two-horse race, who would ultimately be responsible for the loss? The franchise parent company or the landlord?

 

Thanks again

[MrShed]

...is there any legal precedent that states this? Just wondering in case the landlord tries to claim otherwise and we need something "official" to back us up.

 

The agent is just that - a legal agent working on behalf of the landlord.

 

Legally, you may as well have paid the deposit directly to the landlord.

 

The landlord is legally responsible.

[slicendice]

OK, thanks for that - good to know. If I don't get anywhere with the parent company I'll move on to the new letting agent

[slicendice]

Had a response from the parent company saying that there is no record of the previous agent handling the deposit and that they believe the office was therefore covered by the NALS, which apparently provides insurance to protect clients money.

 

I did email NALS last week but I've not had any response so I'll give them a call tomorrow and see what they have to say.

[mariner51]

If there is no evidence of the agent 'handling' (receiving) money why do they think it is covered by NALS insurance?

 

Insert sounds of washing hands.

[raydetinu]

that is irelevant, the LL is responsable for the deposit. You should have a receipt or it is stated in your contract what had to be paid.

You need to write to LL or c/o the new agent to confirm that your deposit is protected or he is in breach of contract.

[mariner51]

I did not mean to imply the LL is not ultimately resp in Law for protecting the T's deposit, but he can only protect what is received.

The LL/LA Agreement may authorise LA to collect deposit and protect in approved scheme & inform the T of DPS info. Also authorising LA to issue property recovery notices as per extant legislation. If the LA fails to protect or forward deposit to LL then LA is in breach of contract.

The OP can provide a bank statement to show a withdrawal equiv to deposit around the time of alleged payment. If this was a cash withdrawal, and without a signed receipt for deposit payment around that date, I suggest it would be for Court to decide.

 

I am uncertain what the NALS insurance covers.

 

The moral of this story should be that LLs & Ts should fully appreciate their contracts wiith LA/LL/T and obtain receipts/proof of payment for any monies recieved/paid.

[MrShed]

I did not mean to imply the LL is not ultimately resp in Law for protecting the T's deposit, but he can only protect what is received.

The LL/LA Agreement may authorise LA to collect deposit and protect in approved scheme & inform the T of DPS info. Also authorising LA to issue property recovery notices as per extant legislation. If the LA fails to protect or forward deposit to LL then LA is in breach of contract.

 

The LA is indeed in breach of contract, but this does not lessen the ultimate responsibility of the landlord to protect the deposit. He can only protect what is received, but it is classed as being received by the landlord if received by the LA.

 

The arrangements/agreements between LL and LA are of no interest to T.

[Steve__M]

So let me see. The agent has gone bust, run away with the money *and yet* has paid his insurance premiums to NALS. I don't think so.

 

Even if they have, NALS agents commit to holding client money in a separate account.

 

http://www.nalscheme.co.uk/membership.htm

 

As they have failed to protect your deposit clearly

they have failed in their commitment. And if NALS registered agents commit to holding client money in a separate account then clearly NALS

are not going to offer insurance to protect client money because it shouldn't need protecting!

 

Tell the new agent that if they want the money then *they* should make a claim on this fictional NALS insurance. I think they are lying in the hope you'll cough up.