One London worker’s room rented from Citiside turned out to be a health hazard, but he faces a battle to get out of his contract

When Alex Cannan moved to London to take up a new job, he found a room to rent for £145 a week on Spareroom.com. It was advertised by an individual called Sara, but when he applied he found himself dealing with a letting agent, Citiside, which confirmed the room was available to view.

On arrival at the agency, he was informed that the room had already been let, but was shown photos of a similar room that came with a regular cleaning service. “I was told it was not available for viewing and that if I asked them to reserve it before I made a decision I would have to pay a £500 holding deposit, which was non-refundable after three days,” Cannan says. “Foolishly, I was pressured into taking it based on the photos. When I moved in I found the room was filthy and covered in black mould, and the cleaning rota had not been updated for three weeks.”

Cannan’s new employer paid for him to transfer to a hotel as the accommodation was a health hazard. “Since then I’ve written to Citiside several times to cancel my contract, citing misleading advertising and hygiene violations, but the manager has told me to hire a lawyer if I want to rescind it,” he says. “I believe the majority of tenants attracted by Citiside’s cheap prices are on low incomes, so it gambles that they will not be able to afford to take it to court.”

Online forums tell a similar tale. Numerous prospective tenants claim to have been lured to Citiside’s offices by seductive ads of rooms that turned out not to be available, then pressured into accepting an alternative without viewing it. Reviewers make allegations of poorly maintained accommodation and Citiside’s refusal to return their deposit when they complain. Since many responded to ads on third-party websites in the names of individuals, they were not forewarned by the estate agent’s dismal online reputation.

Citiside has pledged to abide by The Property Ombudsman’s code of practice, which includes a commitment to fair and honest advertising, and an effective complaints procedure. TPO confirms it has received complaints about the agency and has helped to resolve disputes “amicably” on a case-by-case basis. Citiside, however, continues to be a member of the scheme, although its website, with misspellings and sections containing gobbledygook because no one has bothered to write them up, contains no official complaints procedure as required by the code of practice.

When the Observer rang Citiside for a comment, the agent hung up and two emails have been ignored.

The fact that such agencies can continue with impunity exposes the inadequacies of property regulation. Instead of a single body with regulatory powers, tenants and purchasers have to navigate four redress schemes that investigate unresolved complaints.

Estate and letting agents are not allowed to trade unless they sign up to TPO, the Property Redress Scheme, Ombudsman Services, or the Housing Ombudsman, all of which have differing codes of practice.

Lives are being ruined as people are stuck in properties unfit for habitation, with no option to leave

Large sectors of the housing sector such as new developments, landlords and home improvement have no redress schemes at all. It is left to overstretched trading standards authorities to intervene if an agent is suspected of abusing the market.

Tower Hamlets council fined Citiside £10,000 in December for not adequately displaying its fees. The agency is appealing against the charge. “The council’s environmental health and trading standards officers will investigate any further matters that are brought to their attention in relation to this or any other company operating in the borough,” said a spokesperson.

Last month, Ombudsman Services said it would withdraw from handling complaints about the property sector because the system offered a “broken solution to a broken market”.

“For an ombudsman to be effective it needs a regulator,” says the service’s chief ombudsman, Lewis Shand Smith. “There are rogue letting agencies out there but we can investigate only individual problems, with no powers to address the root of them, whereas a regulator can step in when systemic failures are identified.”

The service plans to wind up its redress scheme for surveyors and managing, estate and letting agents by the summer and focus on advising the government on regulatory reform.

The government is consulting on proposals that include a single housing ombudsman to handle complaints. Crucially, landlords and developers may be obliged to sign up and companies could be named and shamed to stamp out shoddy practice. The housing secretary, Sajid Javid, said last month: “The current choice of schemes risks leaving thousands without answers, with others having to manoeuvre between at least four different services just to work out where to register a complaint.”

According to the housing charity Shelter, increasing numbers of tenants like Cannan have been left at the mercy of unscrupulous letting agents and landlords. It is calling for new laws to enable them to challenge insanitary conditions.

“The dearth of affordable homes is forcing desperate people to rent from a minority of dodgy letting agents and landlords, who subject tenants to sub-standard properties, whether it’s a flat covered in mould or a house infested with vermin,” says Shelter’s chief executive, Polly Neate. “The proposed fitness for human habitation bill would give renters greater rights to legally challenge poor and unsafe conditions – meaning letting agents will have to ensure the landlords on their books keep their properties up to scratch. We strongly urge the government to help make that a reality.”

In the meantime, Cannan has moved back into his substandard room to spare his employer escalating hotel bills while he battles to terminate his tenancy agreement. Citiside removed the mould when he threatened legal action, but he says the place remains insanitary. “The law is being broken on a daily basis but the majority of tenants do not have the money for legal action,” he says. “Lives are being ruined as people are stuck in properties unfit for habitation, with no option to leave.”

New builds, new problems

There is no ombudsman scheme that covers new developments, except for warranty issues, which can be referred to the financial ombudsman. When things go wrong, purchasers have to rely on the warranty issued by the National House Building Council (NHBC) or another approved provider.

Although the warranty is for 10 years, developers only have to rectify problems that arise in the first two years following completion. After that, homebuyers have to claim on the warranty provider’s insurance, which only covers serious structural issues.

As a last resort, new homeowners can appeal to the Consumer Code for Home Builders adjudication scheme. But it costs £120 to lodge a complaint and its findings are not legally binding. Also, it only applies to developments that are registered with the three main warranty providers: NHBC, LABC Warranty and Premier Guarantee.

Moreover, a builder can invalidate the warranty, as Nadine Owen discovered when, a year after she moved in to an estate in Lincoln, the developer, Beal Homes, dug up the driveways and aligned them with the road to meet council adoption requirements. As the works, which were carried out against Owen’s wishes, were not authorised by the NHBC, the driveways are now exempt from the 10-year Buildmark warranty and the houses will not be covered if damage such as flooding arises from alterations to the gradient and drainage system. Beal told the Observer that no part of the warranty had been invalidated as it did not include drives. The NHBC insists it has and it does.

The financial ombudsman, meanwhile, has ruled that the NHBC should have rectified numerous other defects with the property after Beal failed to resolve them. Beal says it has complied with all requirements.

“The NHBC is still finding substandard aspects in the house,” says Owen. “It’s important to highlight how little an NHBC warranty is worth and how it can be taken away through no fault of your own.”

This is not an isolated incident, says Paula Higgins, chief executive of the HomeOwners Alliance. “Situations like this are one of the reasons we need an overhaul of the regulatory system in the housing market,” she says. “The redress system is disjointed and ineffective, and buyers of new homes are losing out as a result.”