Club or agent?

Islington Borough Council has successfully prosecuted a director of a company for trying to  pass a letting agency off as a membership club to avoid the relevant legislation.

The London based company is said to have pressured tenants to sign a contract without inspecting the terms or the accommodation, charged them a non-refundable ‘joining fee’ and ‘membership fee’ which equated to a month’s rent instead of a deposit. The company also directed dissatisfied “members” to a non-existent redress service.

It is understood that the marketing of the properties was carried out by a sister company, but tenants signed contracts with the prosecuted company. The terms and conditions of the contract reserved the right to evict tenants with 7 days’ notice as opposed to the more usual notices under s8 or s21 of the Housing Act 1988. We also understand that the company’s agents were given the right to enter properties without notice and that non-tenants were banned from even visiting those occupying the properties. Tenants were also contractually required to maintain and replace appliances at their own expense and leave any future furniture they purchased in the property when they vacated. Large fees for ‘breaches of membership’ were also applied.

The company was ordered by the court to pay £42,273 in fines, compensation and costs after pleading guilty to three charges of unfair commercial practices.

This whole charade was clearly designed to avoid the agent’s responsibilities in respect of for example, redress schemes and tenancy deposit protection. It is a little alarming that given the vast amount of legislation protecting not only tenants but also landlords that this agent thought that this was a viable option. Attempting to avoid your legal responsibilities is never a good idea and this is especially so in the current rental market. Councils take breaches like this very seriously and do not hesitate to prosecute once they become aware of avoidance schemes like this.

This is not the only such scheme around of this sort and this prosecution will doubtless serve as a warning to others. It should also flag up to all agents that local authorities are increasingly looking closely at consumer issues and they should look carefully at their procedures to ensure that they are in line with their legal obligations.

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