Ben Reeve Lewis Tales from the trenches – Grappling with the frontline of housing law enforcement

I wrote recently of Nottingham council’s successful prosecution of an agent by combining consumer trading regulations with housing enforcement.

Another case from Nottingham

Hot off the back of that I saw they quickly did another one,  using the same tactic, where the landlord Shafaqat Ali Sadiq was fined for aggressive practices in assaulting his tenant, failing to protect a deposit and running an unlicensed HMO.

The article informs us that Mr Sadiq said in his defence in court that he believed that protecting the deposit was merely a matter of choice. Haha, nice try.

The fine of £1,750 could have been better but that’s down to the judge, not the council and at least now he can be given a banning order.  Oh and lets not forget the tenant can also claim back 12 month’s rent under a Rent Repayment Order, not to mention a civil claim for damages.

“It ain’t over till its over”, as Lenny Kravitz once sang.

Speaking of Lenny, Camden council have also been getting similarly funky of late with a very curious prosecution of a managing agent who argued that they weren’t.

Before I explain the gory details I should explain something.

The practice of confusion

In the past couple of years, people in my line of work have been seeing a massive increase in practices whereby dubious letting agents will create smoke and mirrors to throw housing enforcement off of their scent.
Put simply, if you want to take legal action against a person or company then you have to be sure who you are entitled to go after.

The confusion is achieved through simply having different companies and individuals involved performing different roles, who when approached all point the finger at each other saying “Not me guvnor”
This is the hot topic of conversation among everyone I know in the biz, simply because it is a widespread and endemic model these days.

The agents who denied

So, to the case of LB Camden v. Leycam Ltd and Citydeal Estates (London) Ltd (2018) The article on Local Government Lawyer will provide enough technical info for those of a legal bent but my aim is to summarise here.

Those old enough to remember a 1980s sitcom called “Soap”, will recall the weekly catchphrase “Confused? You will be”.

The owners were an offshore company called HPL who granted joint tenancies of three flats and the contracts stipulated that HPLs UK address was with management company Leycam Ltd.

Deposit and first month’s rent however were paid to City Estates Ltd but the rent after the first month was paid by the tenants to Citydeal, a company in the same trading group as CEL, who along with CPL formed one trading name of Citydeal estates.

You still with me?

The deposit was listed on the tenancy agreements as being held by Citydeal Estates but didn’t stipulate which bit of the trading group actually held it.

It’s not us, gov

Leycam pleaded guilty to failing to licence the HMO and nine of twelve other accommodation condition offences but CEL defended themselves using an argument that they were not the person managing the property, using as evidence the notion that in holding the tenants deposits they were only doing so as ‘Stakeholders’ for the landlord, not as agents.

CEL also argued that taking the first month’s rent only would cancel out it’s role as managing agents, rent for the subsequent ten months having been paid to Citydeal estates and therefore they should not be penalised when all they did was set the letting up.

Again the linked article gives you the nitty-gritty of Camden’s counter argument but here’s the kicker. The judge disagreed with CEL, stating that acceptance of the first month’s rent was indeed enough to qualify the agent as managing the property for the whole of the term of that tenancy.

The notion of holding deposits as a stakeholder does exist and would preclude that person from acting as an agent but in this case the acceptance of the first month’s rent persuaded the court that the arrangement was really one of managing agent.

An interesting csse

Its an interesting case for enforcement teams, agents and landlord’s alike. That the acceptance of rent when setting up a tenancy would still qualify the agent as a managing agent thereafter, has serious implications.

However, my main reason for writing this wasn’t so much to let you know about the legal arguments, which even I struggle to get my head around but to ask why, in the name of all things whacky, would a company create a system so complicated that it takes thousands of pounds and teams of lawyers just to figure out who is responsible for what?

In this case an offshore owner, a letting agent and two separate managing agents.

What possible reason could there be for creating a business model so arcane and confusing that it would make Einstein drop his pipe?

At the bottom of this are the tenants, not knowing who the hell they are dealing with and the enforcement teams trying to make properties safe, being thrown of the trail by a confusing morass of companies and aliases.

Even if there are sound business reasons for such an arrangement the way the trading company operate should be made clear under regulation 8 of the Consumer Protection from Unfair Trading Regulations 2008.

Which is yet another legal angle.

It happens all the time

This set up, utilising multiple identities is neither rare nor even unusual. In fact, it is pretty standard and in actual fact, these days I get more surprised when called in on a case where there is a clearly identified landlord, a clearly identified agent and a straightforward tenant.

I double check the paperwork to see if I’ve missed something.

I’m currently working on a case where neither owner, licence holder nor agent are stepping forward to claim responsibility or even rent. Not even to point the finger at each other. They are just completely off the radar.
In the unlikely event that they miraculously all died in the same plane crash I’m at a bit of a loss but its early days.

As I have written recently in my series on the changing profile of criminal landlords and agents, there is now so much money to be made from the private rented sector that just like the land grab of 19th Century America, it is attracting so many claim jumpers and carpet-baggers that the bottom end of the market is becoming completely skewed.

While the ordinary buy to let couple searching for an alternative to a pension simply go about their decent business all manner of snake oil salesmen and hucksters occupy the Badlands, ripping off the unwary, both tenant and owner alike.

The laws are in place, which really does help but for every law that gets created, an army of chancers will develop ever more devious methods to get around them.

People in my position try to police this bit of the sector but as someone recently said to me, of the difficulty of doing so in an austerity cuts environment, “Are we not all hat and no cattle”?

Lovin the metaphor.