Law News

Letting agents also at risk of prosecution for managing unlicensed properties

Em Morley - October 23, 2019

The licensing scheme for landlords can also hold letting agents accountable for failing to license properties on their books, according to David Kirwan, from Kirwans law firm.

David Kirwan said: “Councils such as Liverpool have made it clear that they will go after managing agents that they deem to be flouting the rules and will not hesitate to prosecute where they feel it is appropriate.”

A managing agent was fined £4,000 and handed a criminal record back in September 2018, after pleading guilty to renting out 12 properties without a licence from Liverpool City Council.

At the time of this case, the council was reported to have served 1,700 legal notices since the city’s landlord licensing scheme started in April 2015. At the time it was also considering almost 1,300 cases for prosecution.

Earlier this year, the National Landlords Association (NLA) made a Freedom of Information (FOI) request, revealing that Liverpool City Council was the frontrunner when it comes to prosecuting letting agents. It had made a total of 13 prosecutions in the four-year period between 2014/15 to 2017/18.

In comparison, 53% of the 20 councils questioned had yet to prosecute a single letting agent, with a further 32% having prosecuted three or less.

A landlord and their managing agent were also caught out in Canterbury during May this year. Magistrates ordered them to pay a fine of £1,000, in addition to costs of £120 and a victim surcharge of £100 for renting out flats without a selective licence from Thanet District Council.

Kirwan also commented: “Section 88 of the Housing Act 2004 states that the proposed licence holder is ‘out of all the persons reasonably available to be licence holder in respect of the house, the most appropriate person to be licence holder’. It also states that the proposed manager of the house is either ‘(i) the person having control of the house, or (ii) a person who is an agent or employee of the person having control of the house’.

“Clearly the legislation anticipates that someone who is managing property, the subject of licensing, can also apply for and be granted a licence instead of the owner.

“In my opinion, many of the managing agency agreements which are operated by estate agents etc all over the country come within this bracket.

“It is, of course, a matter for the owner of the property who can – and often does – obtain the registration in his own name, particularly in cases where there is only a small portfolio of properties.

“Alternatively, if the property is being managed in every sense of the word by a letting agent, there is nothing to prevent these owners delegating this function to the managing agent who then applies for the licence. This surely is what an owner/landlord is looking for when he pays his commission to the managing agent?”

According to Section 95, Kirwan highlights, a person commits an offence ‘if he is a person having control of or managing a house which is required to be licensed under this part but is so not licensed’.

He added: “Managing agents need to be on their guard and ensure that all properties on their books are covered by the relevant licences to safeguard themselves against legal action, while landlords should check the agreements and terms of business set out in the contracts with their agents.

“However, if the agent has agreed to apply on behalf of the owner of registration then it does not matter if that is not specifically referred to in the agreement.

“It would be better, though, to have such a provision that in the terms of the ‘management’ of the property, the application for and compliance of all the terms and conditions of any subsequent registration licence is included as an agent’s responsibility.”