Failure to provide the right to cancel

[Byrdewear]

Hi all,
Wanted to check my understanding of The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 with regards to failure of the letting agent to provide the right to cancel as part of the contract.

To provide you some background, the I appointed the agent for a period of 3months last year before sacking him as I was unhappy with the services (in finding the right tenant) and his transparency. Just before I sacked him, he found me a tenant whom I agreed to start the referencing procedures - the references came back OK but I had other suspicions about this prospective tenant so I declined the tenant and at the same time sacked the agent.
Agent is convinced that I am contractually obliged to pay him the whole year of letting and management fee despite the fact that neither party even signed the agreement so no tenancy - this is close to 3000GBP. There was no 'right to cancel' within the first 14days but there is a clause for termination. From reading the statute, it appears that if the right to cancel and the cancellation period (14 days) is not provided, then the cancellation period is 12months (or 14days from the day that information is provided) - Section 31 of the Act. It went onto say that,

The consumer bears no cost for supply of the service, in full or in part, in the cancellation period, if—

(a)the trader has failed to provide the consumer with the information on the right to cancel required by paragraph (l) of Schedule 2, or the information on payment of that cost required by paragraph (n) of that Schedule, in accordance with Part 2, or

(b)the service is not supplied in response to a request in accordance with paragraph (1).

I wonder if this can serve as a defence?

Secondly, I am using the unfair terms within the Consumer Act 2015 which might make this unenforceable:
A term which has the object or effect of requiring that, where the consumer decides not to conclude or perform the contract, the consumer must pay the trader a disproportionately high sum in compensation or for services which have not been supplied.'

The consumer laws apply to me; I am not a professional landlord; the property we are letting is our main home before we moved abroad.

I would appreciate your thoughts.
Thanks,
Eve

[AndrewDod]

Unless you have a remarkably bad contract with the agent you are not obliged to accept a tenant they offer just because they pass a credit check. So read your contract and tell them to get stuffed. BUT DO NOT ACCEPT THAT TENANT.

[Byrdewear]

Hi Andrew,
This happened last year, I never accepted the tenant but this agent has been pursuing me for commission for a property that I never let through them. Absolutely flabbergasted that this scum of earth is still pursuing me for this- totally unbelievable!
The contract says if they found a tenant who met the criteria agreed with me, I have to pay them the commission- the criteria wasn't agreed in writing but I have in writing from them before I signed the contract that the commission will only be payable if they're managing the property. I think that term can be interpreted in any way one wants but I'm hoping that the two grounds that I provided above might make it easier

[AndrewDod]

Well a warning to everyone reading never to sign an agency contract which says anything like "The contract says if they found a tenant who met the criteria agreed with me, I have to pay them the commission"

Frankly I'd refuse to pay and invite them to sue you. Don't enter into protracted correspondence -- just a one liner.

[Lawcruncher]

Frankly I'd refuse to pay and invite them to sue you. Don't enter into protracted correspondence -- just a one liner.

Very sound advice:

[Byrdewear]

They have sued me and I'm preparing my defence - based on the legislation alone, this could be an open and shut case but we'll see.
I'm counterclaiming against them- that's a different story.

Lawcruncher- what's your verdict based on the legislative instruments I've quoted?

Regards
Eve

[AndrewDod]

Well do they have the set of criteria you agreed and signed up to? Why exactly did the tenant they find not proceed?

[Byrdewear]

No, nothing was agreed in writing. I wanted a trustworthy and a transparent family. The tenant in question viewed the property twice before the holding deposit was taken. Then the reference checks were done and came back satisfactory. On the day/day before the tenancy agreement was due to be signed, the tenant wanted a 3rd viewing for a specific aspect (Iwe left some belongings in the attic which was made clear to him before he agreed to pay the deposit) and alluded that he may bargain for 50GBP less rent (as storing these items somewhere else might cost 50per month). At that point, having already wasted two weeks, I said NO in writing - I told the agent that I considered him to be non-transparent and therefore rejecting him.

[Byrdewear]

Also, the Property Ombudsman's code (which the agent has signed up to) has this clause:

Where an offer has been made to a landlord and the landlord declines the tenancy other than because the tenant has failed referencing, the landlord should be advised that the tenant’s holding deposit will be refunded in full to the tenant (see 9j below) and that the landlord may be liable for costs incurred by the agent in pursuing the references.

[AndrewDod]

Interested to know how the property ombudsman defines "has failed referencing" - it is a non-concept. It is a nonsense from the Ombusman -- holding deposit is refunded based on the criteria used for its collection (which can include a bunch of stuff like bank statements, immigration status, whatever other referencing L might do, and lies on application). And the converse is not true either - if "referencing" conforms exactly to what T filled in on application form it would be inappropriate not to refund the deposit even if that is deemed a "fail".

This is the Ombudsmans talking out of their bums.

But this is not 100% relevant to the matter at hand.

[Byrdewear]

It may not be 100% relevant; I was pointing out to the fact that in these circumstances (as happened in my case), they only say that the landlord maybe liable for the cost of pursuing the references. They don't of course say 'only' the cost of references.

I agree with you on the point of TPO though - complete arses and out there to support their fellow criminals. The redress schemes are partly the reason why we have rogue agents. I believe there is a proposed overhaul to come up with a more stringent Code where any breaches will lead to penalties. Right now, there are no penalties for the agent for breaching the Code whether TPO or PRS. For example, TPO code says explicitly about 'right to cancel' being included in the contract - I complained to the TPO - no action on the agent. They even went onto say that this was not the first time that lack of cancellation clause in this particular agent's contract has been brought to their attention.
We need to under that TPO (and PRS) are private organizations and funded largely (perhaps solely) by the agents membership. When there are competing redress schemes, nothing stops the agent to go from one to the other in case of harsh treatment from one.
Oh well,.....

[DPT57]

(Iwe left some belongings in the attic which was made clear to him before he agreed to pay the deposit) and alluded that he may bargain for 50GBP less rent (as storing these items somewhere else might cost 50per month). At that point, having already wasted two weeks, I said NO in writing - I told the agent that I considered him to be non-transparent and therefore rejecting him.

I think the Agent has a point! Tenants can and do negotiate rent reductions all the time. This is a business! They were also quite right that storing your items in their loft was a detriment to their tenancy and has a cost. How much of a detriment and what the value would be is a negotiation, but it sounds like you took umbridge and cut them off before that could happen. Very foolish in my view if they were otherwise good tenants. The Agent has acted in good faith and whether they have a legal case or not, I can completely understand their frustration. They must think they have a good case or they wouldn't have let it go this far.

[Byrdewear]

I think the Agent has a point! Tenants can and do negotiate rent reductions all the time. This is a business! They were also quite right that storing your items in their loft was a detriment to their tenancy and has a cost. How much of a detriment and what the value would be is a negotiation, but it sounds like you took umbridge and cut them off before that could happen. Very foolish in my view if they were otherwise good tenants. The Agent has acted in good faith and whether they have a legal case or not, I can completely understand their frustration. They must think they have a good case or they wouldn't have let it go this far.

DPT57, I appreciate your thoughts but you don't know the full scale of what happened with regards to that tenant so don't jump to conclusions. My question as in the original post was regards to the specific point- not providing the right to cancel is an offence (probably civil but some say criminal) so that the cancellation period is extended to 12months with no liability (full or in part) for the consumer. This is what I've read in CCR 2013 (consumer contracts regulations 2013) and was hoping that some legally well versed folk here might offer some insight.
Of course, the agent thinks it they have a case. As it happens, I've applied for a strike-out and it's due to be heard in a couple of months. I'll update afterwards.
I must say that there are plenty of experienced folk this forum and I find it extremely valuable however I have also seen a tendency from people to assert authority when it's not really necessary. Yes, I'm an inexperienced LL but it doesn't mean I can't read and interpret legal instruments or how the tenancy negotiation works. Without going into too much detail, I don't see why a tenant suddenly would decide to view the property for the 3rd time on the day of signing the agreement having known all the details beforehand even prior to the second viewing- what does it say about transparency? Someone like him would've easily negotiated a reduction in rent with this pandemic regardless of whether he was affected or not. I have heard plenty of horror stories on this forum and elsewhere to be sceptical. I have maintained a mindset that an empty property is better than one with a wrong tenant.
We now have tenants who have always paid rent on time, I even slightly increased it recently on renewal and they look after the house well.

Thanks for your wisdom

[jpkeates]

Did you sign the agreement with the agent in their office or remotely?

Your defence should be more simple, though.
The agent is (presumably) suing you for a loss arising from your breach of contract.
They're entitled to recover their reasonable foreseeable losses, but I don't think the income that they didn't receive is such a loss.

It would help if you could quote the actual contractual text relating to what the fee is, how it is worked out and what triggers it.
For example, many agent's fee's are expressed as a percentage of rent due, and if there is no tenancy agreement, there is no rent due.

[Byrdewear]

Hi JPK- it was signed remotely. The contract says,
“The Initial Commission fee is payable on the commencement of the tenancy and charged as a percentage of the total annual rental amount of the agreed term as specified in the tenancy agreement”

The agent is relying on the termination clause that says, This Agreement will end immediately if the Landlord withdraws their instruction before the Agent finds a Tenant. Once the Agent finds a tenant who meets the criteria agreed which was agreed with the Landlord, the Landlord must pay the Agent the agreed commission.

They're not suing for breach of contract- that was never alleged; instead, they're suing in the belief that their services has been completed in line with that clause.

The contention is whether that clause is enforceable or not? Criteria wasn't agreed in writing.

Finally, the agent is asking to pay more than what the contractual amount is i.e. letting and management fee for the whole year is 10%+vat (a negotiated rate) but he's arguing that the standard rate 12% +vat is payable, which escapes me as to why. Nothing in the contract that says one has to pay a standard rate for a breach of contract or otherwise. So, if we had gone ahead with this tenant, they would've had to offer me 12months of service (and I would've paid less) than what they're claiming- ridiculous! In fact, the contract lists about 20different line items that they were meant to offer as part of the contract (appraisal, tenant find, drafting agreement etc) and they performed about 4 albeit unsatisfactorily.