A letting agent has to pay £20,000 for handing shared house tenants licences instead of tenancy agreements in what is thought to be the first prosecution testing the issue ever.
Islington Council, London, took the case to court to test the theory that tenants in houses of multiple occupation do not have the same rights as tenants renting an entire home.
The prosecution was triggered by tenants complaining they could not recover deposits under the terms of their licences.
Letting agent Green Live Ltd issued the licences and told tenants they could not challenge eviction and did not come under statutory deposit protection laws.
At Highbury Magistrates Court, Green Live admitted two consumer protection offences relating to the issuing of licences to occupy rather than tenancy agreements.
The company also pleaded guilty to using a letting agency association logo when it was not a member.
The two tenants who made the complaint were awarded compensation of £3,000 and the company was ordered to pay £1,500 costs.
Councillor Diarmaid Ward, Islington’s executive member for housing and development, said:
“We want everyone in Islington to have a decent, secure home, and to be protected from illegal and precarious housing conditions.
“This case, which we believe is the first of its kind in the country, shows we will take action where letting agents break the law and issue sham licences. We will not tolerate illegal practices like sham licences in Islington and if we become aware of any similar cases we will investigate with a view to prosecution.”
A licence to occupy is a personal agreement between a property owner and an occupier which gives consent to non-exclusive occupation of a premises for a defined period.
A licence is normally only suitable for a true lodger situation where the landlord lives in and shares accommodation with the occupiers. Otherwise a licence is generally never suitable and will in fact be an assured shorthold tenancy despite what label may be on the document.