Financial Penalty Reduced for Landlord's Failure to Comply

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : MAN/00EJ/HNA/2024/0001 Property : 14 [ADDRESS], [POSTCODE] Applicant : [redacted] : In Person Respondent : [redacted] : Appeal against a financial penalty – Section 249A & Schedule 13A- Housing Act 2004 Tribunal Members : Tribunal Judge [NAME] Tribunal Member [NAME] of Determination : 18th March 2025 Date of Decision : 8th April 2025

DECISION

© CROWN COPYRIGHT 2025

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Decision

1. The Final Notice, dated 5th December 2023, being the subject of this appeal, is varied. 2. The penalty payable is reduced from £2805 to £1485, such penalty to be paid within 28 days of the receipt of this decision by the parties.

Background

3. This is an application by [APPELLANT] (“the Applicant”) to appeal a financial penalty of £2805 issued by Durham County Council (‘the Council”) pursuant to section 249A of the Housing Act 2004 (“the Act”) in respect of [ADDRESS], [ADDRESS], Bishop Auckland (‘the Property”).

4. The Property is owned by the Applicant and managed by [APPELLANT] (“PPS”).

5. The Property is in an area of Selective Licensing. A licence was granted on 13th October 2022.

6. The Council received a complaint from the tenant of the Property on 10th June 2022 regarding its condition. It carried out an inspection on 15th June 2022 and a list of defects was sent to PPS. When the Council re-inspected the Property on 2nd September 2022 it found the majority of the necessary work had not been completed. An Improvement Notice was subsequently issued on 28th September 2022 identifying both Category 1 and 2 hazards. The Notice specified remedial work was to commence no later than 26th October 2022 and for the works relating to the Category 1 and 2 hazards to be completed by 2nd November 2022 and 25th January 2023 respectively.

7. The Applicant did not appeal the Improvement Notice.

8. On 30th June 2023 the Council representatives visited the Property and found the work required under the Improvement Notice had been completed. On 14th August 2024 the Council issued a Revocation of an Improvement Notice pursuant to section 16 of the Housing Act 20024 (“the 2004 Act”).

9. On 24th July 2023 the Council served a Notice of Intent to Impose a Civil Penalty of £5000. The Applicant made representations regarding the Notice.

10. The Final Penalty Notice was issued on 5th December 2023 in the sum of £2805.

11. The Applicant filed an appeal in respect of the financial penalty and the matter was listed for determination on the papers on 18th March 2025.

The Law

12. Section 249A (1) of the 2004 Act provides that “a local authority may impose a financial penalty on a person if satisfied, beyond reasonable doubt, that the person’s conduct amounts to a relevant housing offence…” 13. Section 249 (2) sets out what amounts to a housing offence and includes at s.249(2)(a) an offence under s.30 of the 2004 Act, namely failing to comply with an improvement notice. Section 30 states that a person commits an offence if an improvement notice has become operative and the person upon whom it has been served fails to comply with it. Section 30(4) provides that a

3 person does not commit the offence if he has a reasonable excuse for failing to comply with this requirement.

14. It is for the Council to prove, beyond reasonable doubt, that an offence has been committed.

15. It is for the Applicant to prove, on the balance of probabilities, that he has a reasonable excuse for failing to comply with the Improvement Notice.

16. The maximum fine that can be imposed for each offence is £30,000.

17. Paragraph 10(3) of Schedule 13A of the Act provides that an appeal in respect of a financial penalty is by way of re-hearing.

Procedural requirements

18. Schedule 13A of the Act sets out the procedural requirements a local authority must follow when seeking to impose a financial penalty. Before imposing such a penalty, the local authority must give a person notice of their intention to do so, by means of a Notice of Intent.

19. A Notice of Intent must be given be given within 6 months of the local authority having sufficient evidence of the conduct to which the financial penalty relates. If the conduct continues beyond that date, then the Notice of Intent may be given at any time when the conduct is continuing or within 6 months of the day when the conduct last occurs.

20. The Notice of Intent must set out: • the amount of the proposed financial penalty • the reasons for imposing the penalty • information about the right to make representations regarding the penalty 21. If representations are to be made, they must be made within 28 days beginning with the day after that on which the Notice of Intent was given. At the end of this period the local authority must then decide whether to impose a financial penalty and, if so, the amount.

22. The Final Notice must set out: • the amount of the financial penalty • the reasons for imposing the penalty • information about how to pay the penalty • the period for the payment of the penalty • information about rights of appeal • the consequences of failure to comply with the notice

Guidance

23. A local authority must have regard to any guidance issued by the Secretary of State relating to the imposition of financial penalties. The Ministry of Housing issues such guidance (“the MHCLG Guidance) in April 2018: Civil penalties under the Housing and Planning Act 2016-Guidance for Local Authorities. This requires a local authority to develop their own policy regarding when or if to prosecute or issue a financial penalty.

4 24. The Council has developed its own guidance (“the Durham Guidance”) that follows the MHCLG Guidance in setting out the criteria to be considered when determining the penalty:

• Seriousness of the offence, including the circumstances of the tenant and the wider community.

Here, the Council considers whether the tenant may be a vulnerable person and the factors that should be considered to determine this, including issues with language, health, harassment due to ethnicity, age or gender, the seriousness of the risks presented by the hazards in the Property and whether the landlord is doing what could reasonably be expected of him in respect of antisocial behaviour attributable to the Property.

• Culpability of the landlord

Here, the considerations are whether the landlord has made any effort to comply with the works, prior to formal action being taken, any mitigating factors, previous convictions, a poor record of compliance, whether a financial penalty would be a sufficient deterrent, whether a Banning Order should be considered and whether the landlord is already registered as a Rogue Landlord.

25. The Council has a matrix to determine the level of the penalty and this takes into account the following factors:

• A baseline to establish the level of the penalty that includes 6 months’ rent and an assessment of the landlord’s assets • Severity of the offence • Culpability and track record of the offender • Harm caused to the tenant • The punishment of the offender • Deter the offender from repeating the offence • Whether it will deter others from committing similar offences • Whether it will remove any financial benefit the offender may have obtained as a result of committing the offence.

26. Once a penalty has been calculated, there is a further table of factors to enable it to be either increased or decreased. These are graded as either low (5%), medium (10%) or high (20%). The factors are

• Has the landlord any unspent convictions for fraud, violence, drugs, discrimination or sexual offences? • Has the landlord misled or obstructed the investigation? • Has the case investigation involved “verified actions” by the landlord concerning harassment, illegal conviction, violence or direct threats of the same to the tenant of the Council Officer? • Are there any mitigating factors that can be demonstrated to the investigating officer?

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27. The Durham Guidance gives examples of those offences which are to be taken into account when calculating the penalty.

Submissions

28. Both parties made written submissions to the Tribunal.

Council’s Evidence

29. The Council stated it has received a complaint from the tenant of the Property, regarding its condition, on 10th June 2022. An officer inspected the Property on 23rd June 2022 and the following issues were identified:

• Electrical Installation Condition Report: Tenant does not have a copy of EICR. • Two-way light switch at the top and bottom of the stairs does not work properly. • Insufficient socket provision. • Rising and penetrating damp to living room, kitchen and front bedroom. • Cracked render to front of property, which may be contributing to internal damp. • Gas safety certificate expired 15th June 2022. • Single glazed timber frame window to rear bedroom. • Boiler makes a banging noise after it has been switched on for an hour. • Front door does not close properly. • Boiler pipework not boxed in. • Window in front bedroom has no restrictor and sill height is 55 cm from the floor level. • Drain cover missing in yard. • Cupboard under kitchen sink does not have a shelf or back board due to previous leak.

30. On 1st July 2022 the tenant advised a gas engineer had been to the Property and a contractor had undertaken a survey for damp. The Council then attempted to contact PPS on several occasions to determine what progress had been made in dealing with the issues, without any significant success. The Council then proceeded with formal action.

31. On 25th August 2022 the Council served upon the Applicant a Notice Before Exercising Power of Entry, pursuant to section 239 of the 2004 Act. The date given for the inspection was 2nd September 2022.

32. On 30th August 2022 PPS advised a damp report had been received and had been forwarded to the Applicant. PPS advised the Applicant has arranged for a further quote and [NAME] contractor would attend the Property on 9th September 2022.

33. The Council attended the Property on 2nd September 2022 and undertook a HHSRS inspection that found both Category 1 and 2 hazards as follows:

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• Category 1: Damp and mould growth • Category 2: Carbon Monoxide and fuel combustion products, falling on level surfaces, falling between levels, position and operability of amenities etc.

34. The Council issued an Improvement Notice specifying the remedial works required and for the work to commence no later than 26th October 2022 and for the Category 1 and Category 2 works to be completed by 2nd November 2022 and 25th January 2023 respectively.

35. On 6th January 2023 the Council contacted the tenant to enquire whether the Category 2 works had been completed. This work included a CO detector in the lounge for the solid fuel fire, the kitchen CO detector repositioned to the correct location, a gulley cover provided to the rear yard and a window restrictor in the front bedroom. None of the work had been carried out.

36. On 27th January 2023 the Council re-visited the Property and found the only work to have been completed was that a CO detector had been provided for the solid fuel fire.

37. On 30th March 2023 PPS confirmed a second CO detector had been installed and a window restrictor had been fitted. Damp work was to commence on 14th April 2023.

38. On 21st April 2023 PPS confirmed the damp work has been completed. The cooker had also been re-sited.

39. The Council determined enforcement action should be considered and decided a PACE interview under caution would allow the Applicant to explain why the Improvement Notice had not been complied with. Letters were sent to both the Applicant and PPS; PPS declined to attend for interview. The Applicant responded and said he believed all the work had been completed in April. He further stated that all the work was ready to proceed in September 2022 but the tenant would not allow access to the Property. Further, since the tenant had complained to the Council and not to him, he had been unaware of the issues and had had no opportunity to correct them. He also declined to attend for an interview.

40. On 30th [NAME] for the Council inspected the Property and found the work required by the Improvement Notice had been completed. She invited the tenant to provide a statement for enforcement action but he declined, fearing repercussions.

41. The Council then proceeded to issue a Notice of Intent to impose a Civil Penalty that was served on 24th July 2023. The Applicant responded with representations as follows:

• Unaware of any breach of the Housing Act 2004. • Correspondence with Durham County Council had been ignored in relation to attempts to comply with the Improvement Notice. • Completion deadlines of the Improvement Notice were unrealistic as finding contractors was difficult. • Extra time should have been allowed as the contractors were instructed and paid before the Improvement Notice was served. • The breach was rectified albeit not within the timescales specified in the Improvement Notice.

7 • Believed the matter is a personal vendetta against himself or [COMPANY] and a quest for financial targets. • The Improvement Notice information section did not detail the possibility of a Civil Penalty being imposed, it only refers to a fine imposed by a Magistrates Court or works in default. • The administration fee was paid. • He is a [NAME] and ensures compliance with all safety and habitability requirements.

42. On 5th December 2023 a Final Notice of Civil Penalty was served, the penalty having been reduced from £5000 to £2805 when the Applicant’s representations were considered.

Applicant’s Evidence

43. In his statement to the Tribunal the Applicant argued he had a reasonable defence to the offence of failing to comply with the Improvement Notice upon the basis the Council allowed insufficient time for the completion of the works. He had released funds to PPS one month prior to the Improvement Notice but the deadline of three months was inadequate because of matters outside his control. It was said the Applicant had acted as quickly as he could.

44. In the documents appended to the Applicant’s bundle, he produced dated invoices for works carried out at the Property, in response to the Improvement Notice as follows:

• 20.4.23 Re-siting of cooker

£236 • 22.9.23 Invoice for the installation of the DPC - £3300

45. The Applicant stated much of the delay had been caused by the tenant working away and contractors then being unable to access the Property. A copy of an e-mail sent by PPS to [NAME] on 25th October 2022 explained the problems in gaining access.

46. On 7th August 2023 PPS sent an e-mail to the Applicant advising they had instructed a damp contractor to obtain a quote after a call from the Council regarding the issue on 22nd June 2022. They did not receive a quote from the contractor until 30th August 2022, despite chasing him in the interim.

47. On 30th August PPS sent an e-mail to the to say a quote for the damp had been sent to the Applicant but he had requested a second quote. On 31st August 2022 PPS sent a further e-mail to the explaining a damp contractor would be visiting the Property on 9th September 2022. It was unreasonable of the Council to inspect the Property on 2nd September 2023 when it had been informed the damp contractor would be visiting on 9th September.

48. The Applicant supplied a copy of the second report, dated 21st September 2023.

49. The Applicant further raised issues regarding the calculations of the penalty and the differences between the first amount of £5000 and the second of £2805. The factors which caused the Council to reduce the penalty after consideration of the Applicant’s submissions were already within the Council’s knowledge when first assessing the penalty.

50. He maintained he was only made aware of the issues with the Property on 25th August 2022 when the Council served the Notice Before Exercising

8 Power of Entry. Prior to that date the Council were dealing with PPS. The Applicant suggested the Council should have been more robust in its dealings with PPS and “did they ascertain if PPS has informed the landlord (Applicant); and why did the tenant not directly ask PPS to fix the repair; why has the Respondent not revoked the agent’s licence thereby exposing a paying landlord (like the Applicant) to such risks as this case unfolded?” 51. The Applicant submitted the Council had been unreasonable in only giving one day’s notice of the PACE interview. The Applicant lives in London and travelling to Durham at such short notice was unrealistic.

52. It was said the Council should have taken action against PPS rather than the Applicant. The Applicant referred the Tribunal to the wording on the Selective Licence when describing the “most appropriate person” who would ordinarily be the owner of the Property. However, it goes on to say “If however, a managing agent has financial control of the house they may be the more appropriate person to hold the licence”. It was said PPS are the paid agent who have control of the Property and have done so since 2016.

53. The Applicant argues the calculation of the penalty was not transparent, so it was unclear how the Council had arrived at the reduction if the penalty from £5000 to £2805.

54. The Applicant advised the Tribunal of costs expended on the Property since 2021 including the remedial work required by the Improvement Notice. The amounts advised totalled £5172. This comprises of:

Chimney Stack - £264 New electrics- £622 New carpet- £750 DPC - £3300 Re-siting of cooker-£236

Determination

55. The Applicant did not challenge the Council’s compliance with the procedural requirements of Schedule 13A of the Act and, from the documents provided, the Tribunal accepted those requirements were met.

56. The imposition of a financial penalty can only be upheld by the Tribunal if it is found, beyond reasonable doubt, the Applicant’s conduct amounts to an offence under section 95 of the Act. In Opara v Olasemo [2020] UKUT 0096([NAME]) it was said:

“For a matter to be proved to the criminal standard it must be proved “beyond reasonable doubt”; it does not mean “beyond any doubt at all”. At the start of a criminal trial the judge warns the jury not to speculate about evidence they have not heard, but also tells them it is permissible for them to draw inferences from the evidence they accept”

57. The Tribunal finds the Applicant has committed the offence of failing to comply with the Improvement Notice dated 28th September 2022. The Applicant did not comply with the deadlines imposed by the Improvement Notice of 2nd November 22 for the carbon monoxide alarms and to remedy the hazard of the risk of falling. The Applicant provided evidence of the

9 difficulties encountered in remedying the risk of damp and mould, but that was not the only hazard specified. When the Council visited the Property on 27th January 2023 it found only a CO detector had been provided; the other work had not been carried out. The Applicant did not address the reasons why this work, rather than the damp work, was not completed by the deadline.

58. The Applicant submitted the Category 1 work, in particular the work to remedy the damp in the Property, was delayed because the tenant did not provide access. This was highlighted to the Council in the e-mail sent by PPS on 25th October 2022. The Applicant also added he had provided the funds to enable this work to be done in August 2022.

59. The Tribunal noted the suggestion from the Applicant the Council should have pursued PPS rather than him for the financial penalty, since they were managing the Property. He referred to the wording on the Selective Licence to maintain they were in financial control. The 2004 Act enables the local authority to serve an improvement notice upon either the landlord or a property manager. There was no evidence to show why the Council should have served PPS rather than the Applicant. The Council were entitled to issue the improvement notice upon the Applicant as the owner of the Property.

60. The Tribunal noted the apparent issues with accessibility to the Property to carry out remedial work but, irrespective of this, found the Applicant has committed the offence of failing to comply with the Improvement Notice. There is no explanation for the failure to comply with the deadline of 2nd November 2022 for the relatively minor works required by then. In respect of the second deadline of 25th January 2023, it is not a case where the work was completed shortly thereafter. It was not until 21st April 2023 the works were finally completed. The Tribunal noted the complaints regarding accessibility to the Property but noted those were said to have been in the previous year. Similarly, the quotes for the damp work were the previous September. There was no evidence to show the damp contractor had no availability until March/April 2023.

61. There is a defence of reasonable excuse, for which the standard of proof is the balance of probabilities. In IR Management [COMPANY] v Salford [2020] UKUT 0081 ([NAME]) the [NAME] observed:

“The issue of reasonable excuse is one which may arise on the facts of a particular case without an appellant articulating it as a defence (especially where an appellant is unrepresented). Tribunals should consider whether any explanation given by a person … amounts to a reasonable excuse whether or not the appellant refers to the statutory defence.”

62. The Tribunal does not find there is a successful defence of reasonable excuse for the reasons stated above.

63. The Applicant has asserted he was unaware of any issues with the Property until 25th August 2022. The Tenant had complained directly to the Council and not to his managing agents, PPS. PPS had then not informed him of the problems. Upon the basis PPS were acting as managing agents for the Applicant, as specified on the Selective Licence, it was not unreasonable for the Council to contact PPS. It was reasonable for the Council to assume that, as managing agents, they would inform the Applicant of any issues relating to the Property. The Tribunal considers the failure by PPS to notify the

10 Applicant is a matter between those parties but is not a reasonable defence to the offence committed.

64. The application before the Tribunal is by way of a rehearing and it should make its own decision as to the appropriate amount of any financial penalty and apply the Durham Guidance as referred to in paragraphs 24-28 above.

65. In Sutton & [NAME] v Norwich City Council [2021] UKUT 0090 ([NAME]):

“It is an important feature of the system of civil penalties that they are imposed in the first instance by local housing authorities, and not by courts and tribunals. The local authority will be aware of housing conditions in its locality and will know if particular practices or behaviours are prevalent and ought to be deterred”.

The Upper Tribunal continued to state that the starting point should be to apply the local authority’s policy. It stated:

“If a local authority has adopted a policy, a tribunal should consider for itself what penalty is merited by the offence under the terms of the policy. If the authority has applied its own policy, the tribunal should give weight to the assessment it has made of the seriousness of the offence and the culpability of the appellant in reaching its own decision”.

66. This view was endorsed by the Upper Tribunal in London Borough of [NAME] v [NAME] & [NAME] [2020] UKUT oo35([NAME]). This decision stated the Tribunal could depart from the Council’s policy but only in certain circumstances, for example, where it had been applied too rigidly. It should also afford great respect to the decision and a Tribunal should be slow to disagree with any decision that is made in accordance with the local policy. Despite this, the Tribunal is conducting a rehearing and not a review and can vary any decision where it disagrees with it.

67. The Tribunal then considered the amount specified in the Final Notice of £2805.

68. The Tribunal noted the starting point for the calculation of the penalty is the rent paid for the Property for a period of 6 months. It was confirmed in the papers the tenant had succeeded to the tenancy and there was no tenancy agreement in place. The monthly rent was £325 per calendar month and the Tribunal therefore agreed with the starting point of £1950.

69. The calculation then continues to allocate additional amounts for the landlord’s assets, based upon the banding of his main residence and a further amount for the landlord’s portfolio. The first was quantified at £500 and nothing was added for the second. The Tribunal had no evidence before it to suggest this was incorrect since it was in accordance with the Council’s matrix.

70. When considering the severity of the offence, the presence of the Category 2 hazards was put at low, adding an additional £100 to the penalty. The Category 1 hazards were assessed as medium and added £500 to the penalty. This is in accordance with the Durham policy and the Tribunal made no amendment to it.

11 71. A further £250 was added to the penalty for the offence having breached the terms of the selective licence. Again, the Tribunal agreed with this assessment.

72. These items totalled £3300 to which there are then applied adjustments for both aggravating and mitigating factors.

73. The Tribunal considered the factors adopted by the Council. In respect of the aggravating factors the Tribunal accepted none of those specified within the Durham policy were applicable and this accorded with the Council.

74. The Tribunal then considered the mitigating factors and here found it did not consider some of those awarded by the Council to be reasonable. It was noted the Durham policy did not specify what constitutes a mitigating factor, simply “Are there any mitigating factors that the landlord can demonstrate to the satisfaction of the investigating officer? If yes, reduce the total civil penalty charge between a minimum of 5% and maximum of 75% depending upon the nature and extent of the mitigating factor”.

75. The mitigating factors are:-

1. No previous convictions for housing or landlord/tenant law. The allowance for this was limited to 5% which the Council had given and with which the Tribunal agreed.

2. Landlord couldn’t have reasonable expected the conditions present. The Council made no award for this. The Tribunal considered here was some issues regarding the tenant’s failure to report the problems with the Property to neither the landlord or PPS. The Tribunal awarded 5% being the maximum amount.

3. Voluntary steps taken to remedy problem. The Council made no award for this. The Tribunal noted the Applicant had made some attempts to remedy the problem by paying the cost of work in advance. The Tribunal awarded 10% being the higher of 5/10% for this.

4. Otherwise, good track record of compliance with property standards. The Council awarded 5% for this with which the Tribunal agreed.

5. High levels of co-operation with the investigation. The Council made no award here with which the Tribunal agrees. The Applicant’s co-operation was as normally expected and not fall into the category of “high” co-operation.

6. Verified issues gaining access/obtaining c-operation from the tenant. The Council awarded 5% for this, this being the lower of the possible award of 5/10%. The Tribunal considered the higher amount of 10% was appropriate in the light of the evidence provided.

7. Tenant wholly/partially caused the problems being investigated. The Council made no award for this with which the Tribunal agreed. There was no evidence to support such an award.

8. Other reasons. The Council made no award here. The Tribunal considered a further award should be given to reflect the costs of the work carried out in relation to the income derived from the rental income. The award for this is 20%.

76. The Mitigating factors total 55% which, in relation to the penalty of £3330, gives a reduction to it of £1815.

12 77. The Final Notice, dated 5th December 2023, is therefore varied to replace the penalty of £2805 with a penalty of £1485, such sum to be paid within 28 days of the receipt of this decision by the parties.