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.
I use licences occasionally. For instance in one house that I own which my son occupies with two other people. Should I continue to do so? Where I can I obtain more details of this case? Which sections of the Housing Acts do the prosecution rely upon?
Section 3 Housing Act 1988 is the provision which provides even shared accommodation is an assured (shorthold) tenancy and cannot be a license.
An excluded license can generally only be used where the landlord shares accommodation with the occupier (a true lodger scenario). There are a number of other occasions when it may be a licence (for example if there is no rent payable) for which see section 3A Protection from Eviction Act 1977.
In the situation you describe, in our view they are in fact assured shorthold tenancies that you have given despite the label claiming them to be licenses. The problem is, because you have given what is claimed to be a licence, some of the terms may not be ideal and many won’t be enforceable.
The primary case which decided shared accommodation is nonetheless a tenancy despite the agreements claiming to be licenses is street v Mounford (1985) UKHL 4.
The case in this article is simply confirming all of the above legislation and case law into a single case.