Letting Agent Pays £20,000 Over Shared House Licence Sham

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 the 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 in 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 premises for a defined period. 

A licence is usually only suitable for a genuine lodger arrangement where the landlord lives in the property and shares accommodation with the occupier. Outside that, calling the document a licence will not normally determine the occupier's status. A court will look at the substance of the arrangement rather than the label on it, and the occupier is likely to have full tenancy or occupation-contract rights, including statutory deposit protection where it applies.