Editor's note: This brief was summarised by The Property AI Newsroom from a report by PropertyWire. Read the original article for full details.
Ombudsman Sides with Landlord in Rent-to-Rent HMO Dispute
The Property Ombudsman has issued a provisional decision against a letting agency after it transferred a landlord’s student HMO into a rent-to-rent arrangement without his knowledge or consent. The case involved Kusal Ariyawansa from Manchester, who discovered his six-bedroom student property in Liverpool had been handed to a third-party company by Student Haus, part of the Mistoria Group.
The Ombudsman found that the agency had “incorrectly signed a contract” on the landlord’s behalf and allowed another company to take over management of the property without prior authority. This change exposed the landlord to risk, as the property was insured for student occupation, and the new occupancy type invalidated the insurance, potentially leaving him without cover if damage occurred.
The Ombudsman also upheld complaints about repairs and pest-control issues, found that utility charges had been applied during void periods, and noted that the agency had charged a 9% management fee instead of the agreed 8%. A provisional compensation award of £700 was proposed, including £250 for the rent-to-rent arrangement, £150 for utility charges, and £300 for management failures. The landlord also received a £1,288.13 credit after the agency accepted that some utility deductions had been applied incorrectly.
A proposed decision from The Property Ombudsman is a preliminary assessment and is subject to review before a final decision is made. Mistoria Group has stated it is disputing the decision, noting that the Ombudsman’s decision is not final and the complaint remains open and under review. The company said it has provided additional documentation and has strengthened its controls, stating it will act on any constructive findings made.
This case highlights the importance of proper authorisation and documentation in property management, especially regarding rent-to-rent arrangements. Letting agents and inventory clerks are reminded that clear contractual agreements and landlord consent are essential to avoid insurance and legal complications.
Source: PropertyWire