Financial Penalty Upheld for Unlicensed Property in Selective Licensing Area

OUTCOME: Dismissed

FIRST-TIER TRIBUNAL

PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case Reference : LON/00AK/HNA/2022/0091

HMCTS code (paper, video, audio) : Face to face hearing

Property : 37 [ADDRESS] [POSTCODE]

Appellant/applicant: [redacted]

: In person

Respondents : [redacted]

[COUNSEL] of Application

Tribunal Members :

Appeal against a financial penalty - Section 249A & Schedule 13A to the Housing Act 2004

Judge Professor Robert Abbey

Tribunal Member Mr. [NAME]. MCIEH, CEnvH, (Professional Member)

Date of Hearing : By a face-to-face hearing on 24 May 2023

Date of Decision : 26 May 2023

DECISION

• This has been a face-to-face live hearing at [ADDRESS]. The documents that were referred to are in two bundles of many pages, the contents of which we have recorded, and which were accessible by all the parties. Therefore, the tribunal had before it a pair of non-paper-based digital trial bundles of documents prepared by the applicant and the respondent.

Decision

1. The decision by the respondent to impose a financial penalty is upheld. The total of the penalty originally amounted to a sum of £10,000. For the reasons set out below the Tribunal has determined that the financial penalty of £10,000 should be confirmed.

2. In the light of the above, the appeal made by the appellant against the imposition of a financial penalty imposed by the respondent under section 249A and schedule 13A of the Housing Act 2004 is therefore dismissed and not allowed.

Introduction

3. This is the hearing of the applicant’s application regarding 37 [ADDRESS] [POSTCODE] (“the Property”), pursuant to Schedule 13A of the Housing Act 2004 (“the 2004 Act”), to appeal against a financial penalty imposed by the respondent under s249A of the 2004 Act. The property is located in an area of [NAME] that is covered by a selective licensing scheme requiring properties/houses in occupation to be licenced by the local authority. Selective licensing is where the whole or part(s) of a borough are subject to a designation under the Housing Act 2004. The designation makes it compulsory for all private rented accommodation in that area to get a licence from the local authority.

4. The applicant was the managing agent for the [NAME] of the property and the respondent is the local authority responsible for the locality in which the property is situate. An inspection was undertaken of the property on the 2 December 2021, where the respondent says it was observed that the property was being occupied by a [NAME]. Disrepairs were also noted being defective front and rear doors. At the time of the local authority inspection, there was no valid licence in place.

5. The reason for imposing the financial penalty is because an offence has been committed by the person having control of the flat i.e., the applicant, in accordance with section 95(1) of the Housing Act 2004, in that the property was occupied by a [NAME] but was not so licensed.

6. In accordance with the Housing and Planning Act 2016, a Notice of Intent was served on the 24 May 2022 and Final Civil Penalty Notice served on the 5th of July 2022.

7. A financial penalty of £10,000 has been imposed on the applicant by the respondent in a Final Notice dated 5 July 2022. The applicant by section 263 of the Housing Act 2004 was said to be the person managing or having control of the property and as the person managing or having control, they were in receipt of rent payments from the occupying tenant of the house. Therefore, the respondent considered that the applicant was in breach of his duty under the Housing Act 2004 to obtain a licence for the property which was required to be licenced under the selective licence scheme. This amounted to an offence under section 95 of the Act.

Accordingly, the alleged offence concerns a breach or breaches of the requirement for a necessary Licence.

The Hearing

8. The appeal was set down for hearing on 24 May 2023 when the applicant was self-represented but assisted by his brother Mr [RESPONDENT]. Mr [RESPONDENT] an employee of the respondent working in their [NAME] appeared for the respondent but assisted by Ms [COUNSEL]. This hearing is a re-hearing of the local authority decision, see paragraph 10(3)(a) of Schedule 13A to the 2004 Act. The Tribunal is therefore to consider whether to impose a financial penalty afresh and is not limited to a review of the decision made by the respondent.

9. The imposition of the financial penalty was imposed on the basis that that the applicant committed an offence under s.95 of the 2004 Act by not being a licence holder in that it had failed to obtain a licence for this property as it was in a selective licence area and was a let property.

10. In September 2021, the London Borough of [NAME] introduced a Selective Licensing scheme, and landlords and or agents who let private rented properties to one or two people, a couple or a single family household in nominated wards within the borough are required to licence such properties. The property is located in the lower Edmonton ward and this falls within the selective licencing scheme. The respondent says this scheme was widely publicised to landlords managing and letting agents within the borough prior to the introduction of the scheme and information is publicised on the council's website. No licence was on record with the local authority for the property. The applicant confirmed that none had been obtained.

11. The applicant confirmed to the tribunal that there was a [NAME] in the property with a letting agreement. In the light of this evidence, it was clear to the Tribunal that this was a property subject to a residential tenancy, and as such required a licence.

12. The respondent asserted that the applicant was [NAME] having control of the Property because he received the rack rent of the premises (s.263(1) of the 2004 Act) and/or as owner of the premises it received (whether directly or through an agent or trustee) rent or other payments from persons who are in occupation as tenants or licensees of parts of the premises (s.263(3)(a) of the 2004 Act).

13. The respondent says that as a result of the above an offence was committed under s.95 of the 2004 Act. The offence is one of strict liability: [NAME]. [NAME]) v Waltham Forest LBC [2020] EWHC 1083 (Admin).

14. At the hearing the applicant maintained that he was not in control of the property and the level of the financial penalty was too high given the circumstances of the tenancy, and the willingness of the applicant to comply with the requirements of the Council. On the other hand, the respondent considers that the financial penalty should remain as imposed. As the respondent has an enforcement policy in place the Tribunal must take that as its starting point and implement that policy, (see [NAME] v [NAME] [2020] UKUT 35 (LC) at §52 and §74.)

Decision and Reasons

15. From the evidence before it the Tribunal was satisfied that the applicant was in breach of the requirements of the selective licencing scheme. The applicant did say he had not received several items of correspondence from the respondent and those items he did receive he either referred them to the [NAME] or responded directly to them. In reply the respondent asserted that the notice of intent was posted to the applicant, with proof of posting obtained. The Tribunal therefore accepted the evidence from the respondent and could find no merit in the assertions made by the applicant in this regard.

16. The applicant said that he was not in control of the property as all he did was take in the rents and then pass them onto the [NAME]. He made an annual charge for this. Consequently, he asserted that he was not in control of the tenancy as he merely passed on the monies paid to him by the tenant. The Tribunal was not persuaded by this argument. It was clear to the Tribunal that the applicant was [NAME] having control of the Property because he received the rack rent of the premises (s.263(1) of the 2004 Act). He received the rent and as such by statute was in control and therefore liable. This section of the Act also makes it possible for two parties to be liable for an offence on the same facts.

17. Finally, the Tribunal considered the level of the penalty. The applicant says the level of the penalty is excessive as he tried at all times to co-operate with the respondent. The respondent says it has a policy and a fee matrix that dictates how and why a financial penalty might be imposed and at what level. As has been noted previously as the respondent has an enforcement policy in place the Tribunal must take that as its starting point and implement that policy, (see [NAME] v [NAME] [2020] UKUT 35 (LC) at §52 and §74.).

18. The Council produced to the Tribunal a copy of the respondent’s detailed enforcement policy. The Tribunal noted that this was based upon a scoring system that was at the core of the policy. The Tribunal found it straight forward to follow and to apply the matrix calculation table supplied by the respondent so that in many ways it seemed to the Tribunal that the scores would have been set depending on the view taken of the helpful guidance set out in the matrix.

19. In assessing the most appropriate level of fine, the Council’s policy matrix was applied, where several factors were taken into consideration. This included Factor One, Culpability. The respondent asserts that the applicant failed to licence the property despite requests from officers in the Council. Given the circumstances of the case it is reasonable to expect the applicant to be fully aware of his legal obligations. This was considered a deliberate breach and a score of 20 was therefore applied.

20. The next factor was concerned with the harm to the tenant. The Council said that they were not aware of any harm caused to the tenants by the offence. The risk of harm was considered low compared to say harm that might arise in a house in multiple occupation. A score of 5 was given because the harm level was therefore seen to be low.

21. The next Factor is offence history and offence severity. A score of 10 was given because the applicant did not have any other known offences. The score was set at 10 because although there was no record of offences, severity increased the overall score to the level of 10. The licensing scheme came into being in September 2021 and yet there was no licence at the time of the offence.

22. There then followed the next factor, deterrence and prevention. Here a score of 12.5 arose because the Council considered a high score for deterrence was appropriate with a lower score for prevention.

23. Finally, the last factor about the removal of any financial benefit that might have been obtained as a result of committing the offence. The sum of these factors resulted in a total score of 15.

24. Accordingly, the overall financial penalty charge matrix score was assessed at 62.5. This equates to a penalty of £10,000.

25. We consider that the amount set by the respondent in the sum of £10,000 to be a reasonable amount for an offence of this type, since the local authority scored the matrix with care and took into consideration the requirements of their explicit scheme. Of course, the failure of the applicant to submit any evidence of compliance with the licensing scheme clearly hindered his case.

26. Finally, mitigating circumstances usually result in a percentage reduction but the Tribunal really could not find any convincing mitigating circumstances that might allow it to make changes to the fine imposed by the local authority. Therefore, the Tribunal thought that the penalty set by the respondent was appropriate and proportionate.

27. In conclusion, an offence has been committed under section 95(1) of the Housing Act 2004. The property was a licensable HMO in accordance with the [NAME]. At the time of the inspection on the 2 December 2021, there was no valid licence. The property was occupied by a [NAME].

28. Consequently, in the light of the above, the appeal by the appellant/applicant against the imposition of the financial penalty levied by the respondent under section 249A and schedule 13A of the Housing Act 2004 is not allowed and is dismissed.

29. Rights of appeal are set out in the annex to this decision.

Name: Judge Professor Robert Abbey Date: 26 May 2023

Annex

Rights of appeal

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have.

If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case.

The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application.

If the application is not made within the 28-day time limit, such application must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit.

The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e., give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking.

If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).

Appendix

249A Financial penalties for certain housing offences in England

(1)The local housing authority may impose a financial penalty on [NAME] if satisfied, beyond reasonable doubt, that the person's conduct amounts to a relevant housing offence in respect of premises in England.

(2)In this section “relevant housing offence” means an offence under—

(a)section 30 (failure to comply with improvement notice),

(b)section 72 (licensing of HMOs),

(c)section 95 (licensing of houses under Part 3),

(d)section 139(7) (failure to comply with overcrowding notice), or

(e)section 234 (management regulations in respect of HMOs).

(3)Only one financial penalty under this section may be imposed on [NAME] in respect of the same conduct.

(4)The amount of a financial penalty imposed under this section is to be determined by the local housing authority, but must not be more than £30,000.

(5)The local housing authority may not impose a financial penalty in respect of any conduct amounting to a relevant housing offence if—

(a)the person has been convicted of the offence in respect of that conduct, or

(b)criminal proceedings for the offence have been instituted against the person in respect of the conduct and the proceedings have not been concluded.

(6)Schedule 13A deals with—

(a)the procedure for imposing financial penalties,

(b)appeals against financial penalties,

(c)enforcement of financial penalties, and

(d)guidance in respect of financial penalties.

(7)The Secretary of State may by regulations make provision about how local housing authorities are to deal with financial penalties recovered.

(8)The Secretary of State may by regulations amend the amount specified in subsection (4) to reflect changes in the value of money.

(9)For the purposes of this section [NAME]'s conduct includes a failure to act.

Schedule 13A

Notice of intent

1Before imposing a financial penalty on [NAME] under section 249A the local housing authority must give the person notice of the authority's proposal to do so (a “notice of intent”).

2(1)The notice of intent must be given before the end of the period of 6 months beginning with the first day on which the authority has sufficient evidence of the conduct to which the financial penalty relates.

(2)But if the person is continuing to engage in the conduct on that day, and the conduct continues beyond the end of that day, the notice of intent may be given—

(a)at any time when the conduct is continuing, or

(b)within the period of 6 months beginning with the last day on which the conduct occurs.

(3)For the purposes of this paragraph [NAME]'s conduct includes a failure to act.

3The notice of intent must set out—

(a)the amount of the proposed financial penalty,

(b)the reasons for proposing to impose the financial penalty, and

(c)information about the right to make representations under paragraph 4.

Right to make representations

4(1)[NAME] who is given a notice of intent may make written representations to the local housing authority about the proposal to impose a financial penalty.

(2)Any representations must be made within the period of 28 days beginning with the day after that on which the notice was given (“the period for representations”).

Final notice

5After the end of the period for representations the local housing authority must—

(a)decide whether to impose a financial penalty on the person, and

(b)if it decides to impose a financial penalty, decide the amount of the penalty.

6If the authority decides to impose a financial penalty on the person, it must give the person a notice (a “final notice”) imposing that penalty.

7The final notice must require the penalty to be paid within the period of 28 days beginning with the day after that on which the notice was given.

8The final notice must set out—

(a)the amount of the financial penalty,

(b)the reasons for imposing the penalty,

(c)information about how to pay the penalty,

(d)the period for payment of the penalty,

(e)information about rights of appeal, and

(f)the consequences of failure to comply with the notice.

Withdrawal or amendment of notice

9(1)A local housing authority may at any time—

(a)withdraw a notice of intent or final notice, or

(b)reduce the amount specified in a notice of intent or final notice.

(2)The power in sub-paragraph (1) is to be exercised by giving notice in writing to the person to whom the notice was given.

Appeals

10(1)[NAME] to whom a final notice is given may appeal to the First-tier Tribunal against—

(a)the decision to impose the penalty, or

(b)the amount of the penalty.

(2)If [NAME] appeals under this paragraph, the final notice is suspended until the appeal is finally determined or withdrawn.

(3)An appeal under this paragraph—

(a)is to be a re-hearing of the local housing authority's decision, but

(b)may be determined having regard to matters of which the authority was unaware.

(4)On an appeal under this paragraph the First-tier Tribunal may confirm, vary or cancel the final notice.

(5)The final notice may not be varied under sub-paragraph (4) so as to make it impose a financial penalty of more than the local housing authority could have imposed.

Recovery of financial penalty

11(1)This paragraph applies if [NAME] fails to pay the whole or any part of a financial penalty which, in accordance with this Schedule, the person is liable to pay.

(2)The local housing authority which imposed the financial penalty may recover the penalty or part on the order of the county court as if it were payable under an order of that court.

(3)In proceedings before the county court for the recovery of a financial penalty or part of a financial penalty, a certificate which is—

(a)signed by the chief [NAME] officer of the local housing authority which imposed the penalty, and

(b)states that the amount due has not been received by a date specified in the certificate,

is conclusive evidence of that fact.

(4)A certificate to that effect and purporting to be so signed is to be treated as being so signed unless the contrary is proved.

(5)In this paragraph “chief [NAME] officer” has the same meaning as in section 5 of the Local Government and Housing Act 1989.

Guidance

12A local housing authority must have regard to any guidance given by the Secretary of State about the exercise of its functions under this Schedule or section 249A