Letting Agent prosecuted for giving tenants “sham licences”

A letting agency has been successfully prosecuted under consumer protection legislation for granting “sham licences” to tenants.   

The letting agency in Islington had told two tenants that each had a licence rather than an assured shorthold tenancy and their deposits were not protected in a tenancy deposit scheme. 

When a sham licence is issued instead of a tenancy agreement, the occupier may be mislead into believing they have no right to challenge an eviction or be given legally defined notice periods or minimum occupancy periods. Further, if the agreement is not a tenancy, the occupier does not benefit from the statutory deposit protection schemes.   The tenants complained to the Council when they could not get their deposits back.  

The prosecution was brought by Trading Standards under the Consumer Protection from Unfair Trading Regulations 2008.  The letting agency pleaded guilty to two offences under the Regulations and to a further offence of using a letting agency association logo without authority.   As well as being fined, the agency was ordered to pay £3,000 in compensation to the tenants.

The case will be of interest both to residential tenants and landlords who employ agents to deal with letting their properties.  It is believed to be the first prosecution of its kind in the UK.