The business models of criminal landlords explained – Part 4

This short series is a guide to those landlords and professionals working in the PRS who might find it difficult to get their head around the vastly different way that the criminals view the market.

This is certainly the case in the four London boroughs that my outfit ‘Safer Renting’ operate in which is echoed by my experiences talking to officers in councils across Britain as a trainer.

Lesson #4: dodgy contracts and misdirection

Let’s be clear, the worst of the worst don’t even bother with contracts at all. Not a problem in terms of housing law because a principle called ‘Parol’ kicks in, where you don’t need a written Contract to create a tenancy if the period of the tenancy is for less than three years.

Street v. Mountford (1985) also helps by telling us that there are three hallmarks of a tenancy:-

• Rent or service
• For a clear term
• Exclusive possession

So if all three are in place there will generally be a tenancy in force (there are exceptions). But tenants aren’t lawyers, or even housing advisers. Stop anyone in the street and ask them the difference between a tenancy and a licence and you’ll get a blank stare.

Landlords and agents similarly aren’t lawyers but there is a big difference between issuing an occupier with a licence agreement, simply because you don’t know the legal niceties and the array of tactics used by some to expressly deceive the occupant into thinking they have less legal rights than they do.

More confusion

A task made even easier if that occupier is from abroad, with no knowledge of the UK renting law, or a young person in their first rental property, perhaps since leaving care. The gold standard cash crop for criminal landlords and agents that I explained in lesson 1.

Perhaps the most common thing we see in the rogue landlord advice and enforcement world is simply the fake ‘Licence agreement’ and fake Lodger agreement.

The general aim of such contracts is:-

• To avoid deposit protection (only required for assured shorthold tenancies)
• To make it appear that the landlord doesn’t have to get a court order to evict (another myth as many licensees still need a court order first)
• To avoid repairing issues

Fake license prosecution

In 2017 Islington Council successfully prosecuted Green Live Estates, who were ordered to pay around £11,000 for issuing just two licence agreements that should have been tenancies.  But these are far more routinely issued than that.

Trouble is, as I said in lesson 3, get too close to the perpetrator agent and they just shut down before you can recoup the money, only to open up again under a different name a few months later.

A person issued a lodger agreement might well google advice on lodgers and find out that they have little protection from eviction but would understandably not grasp the important points that actually create a lodger arrangement in the first place, which may not be the case for them.

I doubt the dodgy agent or landlord understands these points either but its enough to just issue a document that misleads.

Other areas of lettings are still affected

I have written elsewhere on this blog about the growing trend for fake holiday let agreements and commercial contracts issued to residential occupiers.

A holiday let must be being used for that purpose and a commercial let must be a place where an occupier is conducting a commercial concern and in many cases, a property can still be a residence even if it is being used as a business at the same time.

The deception involved in holiday lets is to Avoid Deposit Protection and possession orders and in commercial leases, to avoid residential property licensing schemes.

My experience

Working in rogue landlord/agent land I would say that the vast majority of contracts you are shown aren’t worth the paper they are written on and even if they are actually Assured Shorthold Tenancies the clauses added in are often completely unenforceable.

Spurious penalties being added for late rent payments or as I recently saw a £35 penalty should the agent visit the property to talk to the tenant. I’ve seen blanket fees of £20 per phone call, and strange demands that all housemates be present for a visit by a repairman.

It has to be said that they are ably assisted in this deceitful endeavour by the acceptance of occupants who don’t scrutinise the contract, even at a most basic level. The ‘Nil’ deposit entry I mentioned in lesson 2 being just one example, often there is the name of a different landlord or agent to one the one they know.

On a recent visit to a shared house where I was shown six different contracts, nobody had actually spotted that each contract detailed a different agent, even though they were all paying the same landlord (see lesson 3 on aliases and obfuscation).

It’s all in the contract…or maybe it isn’t

Sometimes a spurious contract is easy to spot, simply because there isn’t much to it. There is a commonly used AST that we see regularly consisting of one side of A4 but just as common is the dodgy agreement that runs to 12 pages and is full of legal jargon. It is only upon close scrutiny you can identify all kinds of weird nonsense.

Clauses such as:-

“Tenants must not allow entry to officers of the council”

or

“This contract in no way creates an assured shorthold tenancy”,

or my particular favourite

“Tenants must not hang around causing problems”

Let’s face it, contracts are quite boring things and a 12-page one will end up swiftly located in the back of the kitchen drawer without so much as a glance.

Back in the 1950s, Lord Denning proposed what he called the “Red Hand Rule”, which is where some seemingly innocuous clause should be written in red and have a big red hand pointing to it, its importance being more than many would spot.