A company specialising in sourced property deals for investors has been expelled from the Property Redress Scheme (PRS) and can no longer trade legally.
Sourced Properties Group (SPG) Ltd, which was until now a PRS member, had been told to repay a sourcing fee of £8,000 it charged a client for a deal to run a property as serviced accommodation. The Manchester-based managing agent maintained that it was only subsequently discovered that the property’s owner had not given permission for it to be used as serviced accommodation, accusing SPG Ltd of not acting with ‘professional care and diligence’, a point that the PRS upheld following an investigation.
SPG was instructed to return the fee but has failed to do so and has now been expelled from the Government-approved redress scheme.
Misleading omission A PRS spokesperson adds: “We found that there was a misleading omission by the agent, who had not acted with professional care and diligence. Our decision awarded the sourcing fee in full. We found that it would not have been that hard for SPG to find out that the property could not be used as serviced accommodation.”
But the PRS has told LandlordZONE that the case highlights a huge hole in the regulation of private rented market deals like this.
“It is not unusual for individual investors and firms to pay significant sums like this to access deals that are presented as promising or lucrative opportunities, but which can fall apart once the fee has been paid and, as in this case, the fees are non-returnable,” the PRS says.
Sourced deals Redress schemes like the PRS and TPO are the only line of defence for those who feel their ‘sourced deals’ have not delivered the outcome promised. But under redress legislation, their only sanction is to negotiate with their members to pay awards to clients under threat of expulsion.
The PRS spokesperson urged investors to take on these kinds of ‘sourced deals’ only with extreme caution in order to prevent this kind of dispute arising.
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