On the Naughty Step – ‘Accommodation Clubs’

To misquote Groucho Marx, you really don’t want to belong to any such club that would have you as a member.

I’ve been hearing about these set ups for a while. They seem to be the latest thing in bloody stupid ‘get rich quick from residential property that someone else owns’ ideas. Now one of them has featured (critically) in the Guardian, it is time to discuss this phenomenon. And by ‘discuss’, I mean, well, you can work that out.

Lets take a look at ‘Lifestyle Club London’ (actually Lifestyle Club LSC Ltd), the one featured in the Guardian piece, as they seem pretty typical from the others I’ve encountered.

The promise? Hey, young people wanting a place in London, you inexperienced and probably desperate prospects:

LSC is a leading housing community who provide affordable, flexible and convenient living arrangements in London. We go further than conventional accommodation arrangements, for which you have to decide on just one room in one flat – we offer our Members the chance to live and move between all of our properties! The club manages a range of different houseshares in Zones 1, 2 and 3 in London, at great locations with transport links.

Our community is made of young, sociable and like-minded people looking to enjoy London at its fullest. If you are such a person, then our club is the ideal place for you!

We ensure that all Members share similar lifestyles and goals. More than simple accommodation, our community provides you with a new home.

Sounds great! How does it work? Well, Lifestyle Club London charge you a lot upfront. There’s a joining fee, an ‘out of hours induction fee’, a fee on any cash, credit or debit card payment into their account, charges for out of hours contacts which aren’t emergencies (and of course, check out fees, maintenance fees and.. well, we will come on to the rest).

For this, an allegedly refundable ‘membership fee’ and a monthly ‘contribution’, you get a room in a shared house.

On what terms you have this room are deeply unclear, Lifestyle Club London’s own terms are frankly gobbledigook. They appear to believe they have the right to end your membership (and occupation) at any point without notice – though their terms don’t actually say this (see clause 30). Oh and they reserve the right to wander into your room at any point, and apparently (though no figures provided in the agreement) charge you £90 for not having done the washing up when they drop round. (Any penalty like that would almost certainly be unenforceable as an unfair consumer contract term, of course.)

There is a prohibition – which we’ll come back to – on admitting ‘any third parties at all’

stranger clause

In this LCL youtube video, this specifically includes not letting in ‘alleged council workers’.

Alleged council workers

I wonder why LCL would be so worried about ‘alleged council workers’. (I don’t really wonder. I’m just building dramatic tension.)

But if the ‘member’ agreement looked bad, you should see the ‘landlord agreement’, whereby the landlord agrees to take a pro rata part of LCL’s overall rental (sorry, member contribution) income across all properties, while having full repairing and insurance liability. Apparently the agreement is terminable on 30 days notice – not clear how that works in relation to the ‘members’.

Despite the guff in the preamble, it is clear that this is effectively a tenancy agreement for LCL (See the quiet enjoyment clause at 6.2, and the ‘no partial use’ clause at 4.4), but LCL put all responsibility for taking legal action against members on the landlord.

Let us be honest, these agreements are legally farcical, a catastrophe for anyone (including LCL) seeking to rely on them.  LCL simultaneously are a tenant and an agent, a sub-letter and a facilitator. And simultaneously a landlord and agent, with an interest in the property, or no interest at all.

I don’t know who drafted the agreements, but it was not a competent lawyer. Any competent lawyer would run away screaming after advising the client ‘you simply cannot lawfully do that’.

If these agreements were put to the test in court (and oh they should be, they really, really should be), the most likely, probably, teetering on definite finding would be that:

a) LCL had a company tenancy under their arrangement with the landlord, and

b) As far as the members go, there is a ‘member contribution’ (what we housing lawyers call rent), for a period (monthly) in return for which, there is what we difficult lawyers call a  demise – the particular room – with exclusive occupation. The clauses about inspecting at any time don’t really work when it is a specific room being granted. Street v Mountford [1985] AC 809 and Antoniades v Villiers; A-G Securities v Vaughan [1990] AC 417, HL. Thus, a tenancy, regardless of whatever name LCL give it.

c) Housing Act 1988 (as amended) means that any private tenancy is an assured shorthold tenancy (unless for rent of over £100,000 per year – not applicable here). And everything follows from that. Minimum 6 month term, deposit (sorry ‘refundable membership fee’) protection, requirements for EPCs, gas safety certificates and how to rent guides etc. None of which LCL comply with. So, basically, LCL can’t lawfully evict without a HA 1988 schedule 2 ground.

d) If LCL are actually just an agent, then the landlord has a house full of assured shorthold tenants, contrary to the promises of LCL, but without being able to serve a s.21 notice.

e) Oh look, a house share of 8 people in the Guardian article. Very, very likely to be a registrable HMO. Was it registered? Were other similar LCL properties registered? Did the landlords know they were about to end up with an unlicensed HMO on their hands? No wonder they don’t want their ‘members’ letting in council workers under any circumstances.  Oh my, fines and potential prosecutions await, both for LCL and the landlord…

How much worse could it get?

Well, LCL would be liable for all those unprotected deposits, and 1 to 3 times penalty claims. And either LCL or the landlords (depending on ‘agent’ status) would be liable for all those unlawful eviction claims where the s.21 or Protection from Eviction Act requirements were not met (and they have not been met).

Even in the highly unlikely event that LCL were right that the occupation is under some kind of licence, rather than a tenancy, then the Protection from Eviction Act 1977 still applies, as it does to Property Guardians. 28 days notice and no eviction without court order. Unlawful evictions again.

In the Guardian article, LCL “claims that members share properties with a resident landlord”. This is transparently a lie. A company – LCL – cannot be a resident landlord, pretty much by definition. And remember that clause in the landlord agreement – the ‘no partial use’ clause at 4.4. The landlord can’t occupy part of the property either. So, no ‘resident landlord’, no ‘lodgers’, no exception from either assured shorthold tenancy or the Protection from Eviction Act.

If there were any lingering doubts about the shonkiness of Lifestyle Club London, their agreements refer all disputes to the ‘Shared Accommodation Providers Association’. This set up has been a dormant company since it started in 2016. LCL was set up in 2017.

There is, let us be honest, nothing more tedious than a set up promising to be ‘disruptive’. Inevitably LCL said to the Guardian “We simply came up with a new concept which some might call questionable but, likewise, so could the practices of Airbnb and Uber.”

It isn’t ‘questionable’, it is legally wrong. A disaster area for the occupiers/’members’, and landlords signing up. But LCL are a company with effectively zero assets, who can just fold and walk away. It is just rent to rent by an assetless company with added ‘disruptive’ guff.

LCL are not alone in pushing this model. It seems to be the fashionable thing de jour for the assetless, unscrupulous and ignorant. Others include Simply Stay, or TLS Group or Ohmyroom. I hope they all receive the close attention of councils’ TRO teams, HMO teams and Trading Standards, because even on the basis of their own ‘agreements’, these people have no place at all in residential letting.

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in Assured Shorthold tenancy, Housing law - All, Licences and occupiers, Possession.

4 Comments

  1. Great article as ever, thank you…
    It is shocking how some adults are willing and prepared to advertise their stupidness in exchange for a few bob. No doubt they present themselves as educated and cultured amongst their set. Desperate state of affairs indeed.

  2. Good to see this is getting some attention. A couple of years ago there was the London Fox Club doing the very same thing. The problem is that these people offer flexibility and inclusive rents and it’s all dressed up as “lifestyle”, and so people fall for it.

  3. Great Article, oh what fun and plenty of legal work to come.

    Not sure that I agree that all private lets are AST, they should have actually structured it so that there was a Landlord and that they resided, or you would have thought that they would have tried to structure it as a Holiday Let of some sort to avoid some of their liabilities, such as Deposit Protection.

    The HMO has to be the big one, anything above 2 households for most.

    I wonder how AirBnB stacks up legally, I know some Landlords rent out their whole property, but again I think as a Holiday Let.

    To be honest the idea of random people being able to crash rather than having proper tenants, I can’t see the appeal.

    • Shorthand on the tenancies – anywhere that is principal residence, (and not an excluded tenancy – I dealt with the residential landlord point. There isn’t one). So not holiday let, either.

      On airbnb, holiday lets, yes, but plenty of other issues re breach of lease, mortgage conditions, and insurance. Have a search on here for airbnb and see.

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