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The Club Member Scam

August 8, 2017 by Ben Reeve-Lewis

Ben on a chair

A new scam appearing

So here’s an interesting new scam I’ve not come across before.

A letting agent pretending to run an exclusive membership club instead of a letting agency, whereby the signatories, referred to as ‘club members’, as opposed to tenants get given a membership certificate instead of a tenancy agreement.

Why do these scams abound?

Well if you create a tenancy then you are bound by a raft of legislation, including the Law of Property Act 1925, The Protection from Eviction Act 1977, The Landlord and Tenant Acts, both 1985 and 1987 to name but a few, not to mention deposit protection regulations and local authority licensing schemes.

If what you are setting up isn’t a tenancy agreement then you avoid these restrictions.

The trouble is….

What they fail to understand is that a landlord or agent cannot contract out of statutory legislation.  In short, calling something a licence, or in this case ‘Club Membership’ doesn’t make it so and doesn’t excuse you from the law.  Although it might work well in hoodwinking foreigners or the generally gullible into thinking they have no occupancy rights.

Which is the sole name of the game.

I love this passage from the contract that was shown to me:

“Membership fee £400 (so deposit or admin fee….hmmmm) “Additional monthly membership contribution £780”

…..er that would be the rent then.

And it comes with the usual clause, variations of which I have seen countless times:-

“The membership resulting in the approval of this application does not confer exclusive possession of any club property and it does not crate the relationship of landlord between the parties whatsoever. The member shall not be entitled to an assured shorthold tenancy, nor a statutory periodic tenancy under the Housing Act 1988, or to any other statutory security of tenure now, or upon determination of the agreement on any club properties or any claim arising out of the aforesaid claims. The member accepts that this does not confer any statutory protection and/or rights that would otherwise be applicable to an assured tenancy or statutory periodic tenancy”

Nice try lads but just another version of a ‘fingers in the ears’ and la-la-la approach.

All in a day’s work

You see this is the kind of rubbish that enforcement officer has to deal with every day.

Dodgy lettings agreements, drafted by dodgy people to evade laws and regulations in the hope that they won’t have to spend any time or money doing things the right way and meanwhile treading on the rights of ordinary renters and pushing them around.

Agents rule

To be honest I doubt I will get very far with these jokers.

I will provide advice on tenant’s rights, even contact the clowns issuing these agreements but when I get back to the client they will have been moved, either voluntary or involuntarily and will have been so brow-beaten by the people providing their homes that they will prefer the advice of the agents to mine.

After all, the agent has control over where they sleep tonight, whereas I just present them with a set of inconvenient truths. And the comedy rolls on

Rogue landlord database?

Don’t make me laugh. These guys will just dissolve the limited company and start up under a different name doing the same thing.

Many of them buy limited companies off the peg in advance of any action and when the heat gets too much they just fold and start again.

I recently had a meeting with HMRC where they told me they have the same problem.

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About Ben Reeve-Lewis

Ben is a founder Member of Safer Renting, an independent tenants rights advice and advocacy service working in partnership with the property licensing and enforcement teams from a number of London boroughs.

« Landlord Law Blog Roundup from 31st July
Tenancy Agreements 33 days of tips – Day 31 – Renewals »

Comments

  1. Tessa Shepperson says

    August 9, 2017 at 8:55 AM

    I did some advice for a company that operated on this basis a few years ago. They sourced training courses and provided accommodation for students, mostly from overseas.

    I did an advice telling them that their agreements should state that they were tenancies (which they were), that they must remove the clauses saying that they can go in and remove occupiers possessions if they don’t pay the rent, and that they should protect the deposits in a scheme.

    I didn’t hear much from them after that …

    Mind you they weren’t crooks, just misguided and ignorant of the law.

  2. Ben Reeve-Lewis says

    August 9, 2017 at 4:06 PM

    Not sure I agree on your estimation of their motivations there T haha

    I see too many of these people to cut any slack

    In the past 5 years I have moved from a give them the benefit of the doubt approach to zero tolerance, simply because of the misery I see day in day out.

    Learn your business or get out of the game. Everyone else has to. The epithet “Amateur landlord” doesnt cut it with me anymore

The Enforcement Officer's story

Ben Reeve Lewis

Ben Reeve LewisBen Reeve Lewis has worked for Local Authorities for over 20 years.

First as a Tenancy Relations Officer and now as a freelance Enforcement Officer.

He is a regular writer for the Landlord Law Blog and has also appeared on TV - for example in the first series of Channel Five's Nightmare Tenants, Slum Landlords.

In these posts, he talks about his work trying to help poor tenants in London and track down the criminal landlords who exploit them.

As well as giving his views - based on his experience as a practising enforcement officer - of government policy and practice.

The business models of criminal landlords explained

This is a short series explaining how criminal landlords operate.

  • How tenants are a crop for criminal landlords to harvest
  • Why the real rogue landlords are all about the money
  • Aliases and fake companies in the rogue landlord world
  • How Criminal landlords use dodgy contracts and misdirection
  • The Criminal business model of ‘Rent to Rent’
  • Accommodation models for Criminal Landlords
  • Tackling the problem

An interview with Ben Reeve Lewis (on 18/5/18)

Some recent Posts

(The most recent posts are at the top)
  • Court closures scandal
  • The Shocking truth about criminal letting agents today
  • Property Guardians Revisited
  • Common sense, law and the reality of renting
  • How Rent Repayment Orders work
  • Considering Housing MOTs
  • The New Rugg Report
  • Guardian lettings - is the end in sight>
  • Lessons to be learned from Nottingham Letting Agent Prosecution
  • Signatures and the Companies Act
  • Considering the New HMO Regulations
  • Select Committee Report
  • Tenant or renter
  • Police colluding with landlors in illegal evictions
  • European Renting
  • Fitness for Habitation bill
  • Tenants bins
  • Interim and Final Management Orders
  • Implied Surrender
  • Intentional Homelessness
  • The state of our County Courts
  • What homelessness units say to tenants and why
  • The emerging trend of Meter Tampering
  • Fire Safety in Micro Units
  • The Club Member Scam
  • How do we find slum properties?
  • The startling story of tenants who dare not ask for rent receipts
  • Does licensing landlords really do any good?
  • What do you really know about Rogue Landlords?
  • The Growing Problem of Cannabis Farms in Rented Properties
  • Protecting tenants whose Landlords face mortgage repossession proceedings
  • A warning to new landlords taking over existing tenancies


>> Click here for more posts by Ben.

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