The Property Ombudsman has issued a provisional decision against a letting agency after finding it transferred a landlord’s student HMO into a rent-to-rent arrangement without his knowledge or consent.
According to the i Paper, Kusal Ariyawansa from Manchester filed a complaint after discovering 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 the agency had “incorrectly signed a contract” on the landlord’s behalf and allowed another company to take over management of the property without his prior authority.
Insurance implications
The arrangement exposed the landlord to risk because the property was insured for student occupation. The Ombudsman noted that the change in occupancy type invalidated the insurance, potentially leaving him without cover if damage occurred.
The case highlights operational risks in the lettings sector, where management failures can have significant financial and legal implications for property owners. While regulatory concerns continue to shape the property industry, disputes between landlords and agents remain a persistent issue.
The Ombudsman also upheld complaints about repairs and pest-control issues, finding utility charges had been applied during void periods and that the agency had charged a 9% management fee rather than the agreed 8%.
Compensation award
A provisional award of £700 compensation was proposed, comprising £250 for the rent-to-rent arrangement, £150 relating to 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.
Ariyawansa said: “Finding out a contract had been signed on my behalf without my permission was shocking and unbelievable.”
A proposed decision is a preliminary assessment by The Property Ombudsman and is subject to review before a final decision is made.
Mistoria Group said it is disputing the decision. Chief Executive Mish Liyanage stated: “This is not a decided case. The Ombudsman’s decision is proposed, not final, and the complaint remains open and under active review; on 19 June, the Ombudsman asked us for the management contract, with a 25 June deadline.”
“It was reached without our file or representations, which we have now provided, asking the Ombudsman to reconsider. We acted for this landlord and his property for around fourteen years on a concessionary fee, corrected a utility charge and credited him, and recovered his arrears without deducting our costs,” Liyanage added.
The company stated it takes standards seriously and has strengthened its controls, adding it will act on any constructive findings made.
The case underscores the importance of proper authorisation and documentation in property management arrangements, particularly as the property industry faces evolving regulatory requirements. Rent-to-rent arrangements, where an intermediary leases a property from a landlord and sublets it to tenants, require clear contractual agreements and landlord consent to avoid insurance and legal complications.
