Insurers are reporting a huge rise in prospective tenants trying to win ‘compensation’ from letting agents.
In particular, they are reporting that tenants are increasingly using social media to try and shame letting agents into paying out for alleged ‘No DSS’ discrimination.
They say that they are seeing an increase in notifications being made by agents under their professional indemnity insurance, when the agents have had claims brought against them. As a result, premiums look set to rocket.
Typically, it is prospective renters who are making the complaints and seeking compensation, claiming that their benefit claimant status has prevented them from being allowed to rent a home.
Many of the cases, we have been been told, are aided by Shelter, and usually involve potential tenants who are perceived as vulnerable – for example they are single mothers or disabled.
One insurance expert told us: “We have also had some isolated cases where many agents have been targeted in local areas claiming disability discrimination and using social media to blackmail agents in trying to agree pay-outs.”
According to one insurer, DSS claims are now on their radar, with a 100% increase in claims of this nature compared with 12 months ago.
Insurers generally believe that this is a growth area, especially given the publicity.
As EYE has reported, two prospective tenants recently won out-of-court settlements against agents, in cases backed by Shelter.
Both the tenants were women who claimed indirect discrimination after allegedly being barred from renting due to their benefits status.
While PI cannot cover agents for fines levied against them, they may consider claims where the agents are being asked to compensate for rejected tenants’ emotional stress and inconvenience.
Oliver Wharmby, of Lonsdale Insurance Brokers, is also warning of a rise in PI premiums.
He said: “Rates are hardening and insurers are looking for premium increases.
“The introduction of new legislation and the prospect of regulation will only serve to further protect the consumer – also influencing premium increases.”
Wharmby said that insurers would try to defend themselves and agents against claims wherever possible, rather than simply cave in.
But he warned: “The importance of keeping up-to-date and accurate records to help defend a claim is paramount.
“If insurers cannot mount a robust defence with good written evidence, this may result in a pay-out regardless of whether the agent is at fault.”
He said that evidence to help defend a claim, particularly a spurious one, should include record keeping and written notes about telephone conversations.
He added that insurers are currently of the view that it should never be the agent’s sole decision to turn away DSS applicants.
However, the agent would need clearly documented evidence on their files that individual landlords would not accept such tenants.
The agent might also need to cover themselves by asking the landlord if they would be willing to consider DSS tenants if other checks were taken.
If the landlord still refuses, then insurers might take the view that the agent had a valid defence because their hands were tied.