The director of an Islington letting agency that tried to pass itself off as a membership club to dodge the law while leaving tenants in the lurch has been hit with a bill of more than £40,000 in the first prosecution of its kind in the UK.

Gian Paulo Aliatis, the director of Lifestyle Club Ltd, pleaded guilty to three charges after Islington Council’s Trading Standards investigated his firm’s bogus claim that it was a members’ club – and therefore not subject to the legal regulations for letting agents.

Snaresbrook Crown Court heard that the company, trading as Lifestyle Club from a premises in White Lion Street, Islington, advertised on popular property rental website, marketing itself as a membership club.

Instead of charging tenants a deposit, which is refundable and by law has to be paid into a tenancy deposit protection scheme, Aliatis admitted his firm demanded a non-refundable “joining fee”.

Lifestyle Club also admitted pressuring customers into signing a “membership agreement” without giving them time to read and understand the document, and denying potential tenants the chance to view a property in person before agreeing to live there. Rental payments were also passed off as a “monthly contribution fee” to stay part of the club.

Letting agents are also required by law to sign up as a Redress Scheme Member, but Lifestyle Club Ltd instead directed anyone who raised a complaint to a fake independent mediation company.

Following Islington Trading Standards’ prosecution, Aliatis has been left with a bill of £42,273 – the judge ordering him to pay a £2,000 fine for each of three offences, a £600 victim surcharge, £3,790 in compensation to the victims, and Islington’s full costs.

Cllr Diarmaid Ward, Islington Council’s executive member for housing and development, said: “This is a major victory for private tenants, not just in Islington but right across the country. Our determined Trading Standards team has led a landmark prosecution that sends a clear message to unscrupulous letting agents – simply changing a few words in your paperwork does not put you above the law.

“With this prosecution, the courts have shown they are more than willing to clamp down on membership club scams, and there is simply no legal loophole that allows dodgy agents to sidestep the legal regulations, which are there to protect the rights of both tenants and letting agents.

“Islington is at the forefront of the fight against rogue letting agents, and we are not afraid to tackle new scams.”

This latest UK first follows the prosecution in December by Islington Trading Standards of three fraudsters who ran a letting agency that deliberately failed to return tenants’ deposits or pass on rent payments to landlords.

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