Rent to rent

Key topic:

Guaranteed rent and cannabis

£1,474

Default decision

the agent was instructed to manage two properties on their behalf
the agent allowed both properties to be used to cultivate cannabis
the agent did not pass on the rent to be collected
both properties were substantially damaged
the agent was non-responsive to all his attempts of contact
he was looking for the outstanding rent and reimbursement of the loss of rent due to the work needed to put the property back in a suitable condition to relet, as well as compensation for the stress and inconvenience caused
he wanted a refund for all their admin costs

The agent provided no rebuttal statement or evidence to support their position.

Correspondence, photographs, management agreements, tenancy agreement, estimates and invoices

Cannabis cultivation and property damage

Criminal issues are outside our authority to investigate, and the landlord was already in contact with the police to look at the agent’s possible involvement with the tenants growing cannabis at both properties. We also recommended the landlord take independent legal advice to explore any other options of taking legal action
What we were able to consider was whether the agent was responsible to the landlord, in any way, for the tenants growing cannabis such as inadequate referencing or carry out regular inspections, in line with their management agreement
The evidence showed that the tenant referencing carried out was sufficient. In addition, the landlord discovered the cannabis was being cultivated only one month into the tenancy and it would be unreasonable to expect an agent to inspect the properties in this short time
The agent cannot be responsible for damage caused by the tenant during the tenancy, if the pre-tenancy checks were passed, and the landlord was advised to take legal advice on making a claim against the tenants the damage caused

Outstanding rent

While the agreement provided was called a ‘management agreement’, it included the following term: “The agent shall forward £800 from the rent amount every month for the tenancy starting 2 January with no void periods for the full 12 months.” This guaranteed the monthly rent payable to the landlord, with no conditions attached
The tenancy agreement provided named the owner landlord, as the landlord. However, the guaranteed rent clause in the management agreement made the agent responsible for paying the set rent for the properties to the landlord each month
The landlord confirmed they recovered possession of the properties with the help of the police on or around 23 February after the criminal activity was identified
The agent’s contractual responsibility ended once the agent no longer collected rent or had any control over the properties but was found responsible for was rent up to 23 February, when the properties were repossessed

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Always carry out thorough referencing on prospective tenants to protect all parties
Make sure there is a good inventory in place It is good practice to check a property soon after a tenant moves in
Landlords should be aware of the kind of agreement they are signing and what ‘guaranteed rent’ means:

where rent guarantee is in place, it is more common for the tenancy agreement to name the agent as ‘landlord’ and not the owner landlord
there are many implications for guaranteed rent arrangements, the main ones being that the owner landlord has no right to evict the tenant as they have no contractual arrangement with them
the owner landlord will have no void periods as the rent is guaranteed for the fixed period and must understand the agent’s tenant is likely to be paying a higher rent than the agent is paying the owner landlord

It’s important that an agent clearly and thoroughly explains what type of agreement is being proposed with a prospective owner landlord client before they enter any contract
A normal management agreement will not guarantee the rent to the landlord for a fixed amount of time

For more information on rent to rent, read our Property Redress dedicated guides for agents, landlords and tenants.

Contact us

0333 321 9418

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