Landlord Wins Provisional Ombudsman Ruling in Unauthorised Rent-to-Rent Case
Rebecca Miles
A landlord has received a provisional ruling from The Property Ombudsman after his student HMO was allegedly transferred into a rent-to-rent agreement without his knowledge. The case highlights the critical importance of explicit consent and proper documentation in property management.
- The Property Ombudsman issued a provisional decision against a letting agency for transferring a landlord's property into a rent-to-rent scheme without consent.
- The arrangement potentially invalidated the property's insurance, exposing the landlord to significant risk.
- The Ombudsman also upheld complaints regarding repairs, pest control, incorrect utility charges, and an overcharged management fee.
- A provisional compensation award of £700 and a credit of £1,288.13 for incorrect utility deductions were proposed.
- The letting agency is disputing the provisional decision, stating it was reached without their full file and representations.
The Property Ombudsman has dealt a blow to a letting agency with a provisional decision that could leave it facing thousands of pounds in compensation after it was found to have secretly handed over control of a landlord's £200,000 student HMO. Kusal Ariyawansa, who owns the six-bedroom property in Liverpool, is set for a payout of £700 and a credit of over £1,200 if the ruling stands.
At the centre of the dispute is Student Haus, part of the Mistoria Group, which allegedly signed a contract on Mr Ariyawansa's behalf without his knowledge or consent. The Ombudsman's preliminary assessment concluded that this was "an incorrect signature" and that the agency had broken several rules by failing to get the landlord's explicit authorisation.
The Ombudsman also highlighted concerns about insurance, warning that the change from student occupancy to rent-to-rent could have invalidated the policy. This would have left Mr Ariyawansa with significant financial exposure in the event of damage or other issues.
But this case is not just about rent-to-rent – it's a broader exposé of property management failures. The Ombudsman found that Student Haus had also botched repairs, pest control, and utility charges, while charging an inflated 9% management fee instead of the agreed-upon 8%. These mistakes can have serious financial consequences for landlords.
Student Haus has disputed the provisional decision, claiming it was made without seeing their full file. But if upheld, this could be a wake-up call for the property industry, highlighting the importance of clear communication and robust documentation in preventing disputes like this one.
Why this matters: This case highlights significant risks for landlords who rely on letting agents and underscores the importance of clear contractual agreements and consent in property management. It serves as a warning about potential insurance voidance and financial implications when proper authorisation is not obtained.
What this means for you: What this means for you: If you are a landlord, this case stresses the importance of regularly reviewing your letting agent's practices and ensuring you provide explicit consent for any changes to your property's management or tenancy structure. For tenants, it's a reminder that the underlying management of your rental property can be complex, and understanding who is ultimately responsible is key.