First-tier Tribunal Confirms £5000.00 Penalty for HMO Management Breaches

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FIRST-TIER TRIBUNAL [NAME] CHAMBER ([NAME]) Case reference

HMCTS code : : BIR/41UG/HNA/2020/0016

V:[NAME] :

4 [ADDRESS] [POSTCODE]

Applicant: [redacted]

Respondent : [redacted] Representative :

Type of application :

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

Tribunal :

Judge D. [NAME] P. [NAME] R. Bryant-Pearson Hearing : 16 N0vember 2020

DECISION

2 COVID 19 PANDEMIC: DESCRIPTION OF HEARING THIS HAS BEEN A REMOTE VIDEO HEARING WHICH HAS NOT BEEN OBJECTED TO BY THE PARTIES. THE FORM OF REMOTE HEARING WAS SKYPEREMOTE. A FACE-TO-FACE HEARING WAS NOT

HELD BECAUSE IT WAS NOT PRACTICABLE AND ALL ISSUES COULD BE DETERMINED IN A REMOTE HEARING. THE DOCUMENTS THAT THE TRIBUNAL REFER TO ARE WITHIN THE APPLICATION, THE APPLICANTS STATEMENT OF CASE AND A BUNDLE OF 210 PAGES FILED BY THE RESPONDENT, THE CONTENTS OF WHICH HAVE BEEN FULLY CONSIDERED BY THE TRIBUNAL. REFERENCES TO PAGE NUMBERS IN BRACKETS, ARE TO THE RELEVANT PAGE(S) WITHIN THE BUNDLE.

DECISION

(1) The decision of Stafford Borough Council (“the Council”) to impose a financial penalty of £5000.00 for offences under s234 of the Act against the Applicant is confirmed. (2) The decision of the Council to impose a financial penalty of £10,000.00 for an offence under s72 of the Act against the Applicant is not confirmed and the financial penalty is cancelled.

REASONS

BACKGROUND 1) This is an appeal against financial penalties issued by the Respondent Council to the Applicant in the amount of £5000.00 and £10,000.00 respectively, made under section 249A and Schedule 13A, of the Housing Act 2004 (“the Act”).

2) On 21 May 2020, following consideration of representations received from the Applicant on 25 September 2019, the Respondent served on the Applicant, two Final Notices of Issue of a Financial Penalty under Schedule 13A of the Act, totalling £15,000.00.

3) The Notices of Intent were served on 2 August 2019. The first, proposing a financial penalty of £5,000.00 stated that the Respondent was satisfied that the Applicant, as [NAME] having control of a [NAME] operating as a House in Multiple Occupation (an “HMO”), had committed offences under s234 of the Act in relation to The Management of Houses in Multiple Occupation (England) Regulations 2006 (“the Management Regulations”). The element of the penalty attributed to each briefly described offence, is shown alongside:

3 (i) Breach of Reg. 3 HMO Management Regulations £1,000.00 (The contact details for the manager were not clearly displayed. (ii) Breach of Reg. 4 HMO Management Regulations £1,000.00 (The manager failed to ensure that reasonable measures were taken to protect occupiers from injury.) (iii) Breach of Reg. 6 HMO Management Regulations £1,000.00. (The manager failed to ensure that the electrical installations had been inspected and tested every 5 years.)

(iv) Breach of Reg. 7 HMO Management Regulations £1,000.00 (The manager failed to ensure that the common parts of the [NAME] were maintained in good and clean decorative order.)

(v) Breach of Reg. 8 HMO Management Regulations £1,000.00 (The manager failed to maintain the living accommodation.)

(vi) Total £5,000.00 4) The second Notice of Intent, served on 2 August 2020, proposed a Financial Penalty of £10,000.00. The Notice stated that the Respondent was satisfied that the Applicant, had committed an offence under s72(1) of the Act, that of having control of or [NAME] an HMO which is required to be licensed under s61 of the Act and is not so licensed.

5) On 8 June 2020 the Applicant appealed to the Tribunal. THE [NAME] The Tribunal did not inspect the [NAME] due to corona virus restrictions in place at the time, but as seen on [ADDRESS] (May 2019 images) it is apparent that the [NAME] comprises an end of terrace, Edwardian style [NAME] probably constructed about 100 years ago. [NAME] [NAME] statement confirms however that the [NAME] is constructed on the ground and fist floors with an externally accessible cellar. The ground floor consists of a central hallway, with a bedroom and a living room to the right-hand side. There is a kitchen and bathroom to the rear of the ground floor. There is an external door to the rear leading from steps down into the garden which contains an outbuilding and access to the cellar. Stairs from the ground floor hall lead to a central landing with four bedrooms and a bathroom off. A sketch plan of the layout of the [NAME] was attached to [NAME] [NAME] witness statement (page 17 of the bundle).

6) Official copies of the register of title show that the [NAME] is jointly owned by [NAME] [APPELLANT] and [APPELLANT]. THE HEARING 7) The Applicant [NAME] [APPELLANT], represented himself at the hearing and gave evidence. The Respondent Council was represented by Ms [RESPONDENT]. [RESPONDENT]. [NAME]

4 [RESPONDENT]. Butcher and [NAME] [NAME] also attended for the Council and gave evidence. The Respondents submissions 8) [NAME] [NAME] statement confirms that in March 2019 a complaint was received about poor housing standards from [NAME] [APPELLANT], a tenant of the [NAME]. The complaint alleged that the [NAME], a shared house occupied by six people, was in a poor state of repair. It was also poorly managed. 9) [NAME] [NAME] confirmed that he was the lead officer in this case. On 11 March 2019 [NAME] [NAME] inspected the [NAME] with [NAME] [NAME], a housing standards officer at the Council. During the visit they met the occupants of four of the five bedrooms. The occupants were identified as: [NAME] (bedroom 2, occupied 4 to 5 years); [NAME] (bedroom 3, occupied two years); [NAME[NAME] ([NAME] [NAME] [NAME] also occupying bedroom 3 since October 2018); [NAME] (bedroom 4, occupied since February 2019); [NAME] (bedroom 5, occupied 2-3 years). In discussion, the occupants told the Council officers that bedroom 1 was occupied by “[NAME] who had been in occupation for approximately two years. 10) [NAME] [NAME] indicated that he had written tenancy agreement to enable him to claim benefits. The other occupants did not claim to have a written agreement. [NAME] [NAME] impression was that they probably didn’t have one. All occupants confirmed that they paid rent direct to [NAME] [APPELLANT] by bank transfer. The occupants raised concerns about the management of the [NAME]. [NAME] [APPELLANT] is generally approachable, he did not attend to specific concerns promptly, such as concerns about the electrical consumer unit tripping when the oven was used, water leaks from the bathroom and the overall cleanliness and condition of the [NAME]. 11) [NAME] [NAME] confirmed that the condition of the [NAME] was poor. Cracked plaster was seen in several locations. The fire detection system was not working at the time of the visit. The common parts of the [NAME] were dirty and contact details of the [NAME] manager were not displayed. He concluded that the [NAME] was being insufficiently managed and it was likely that there were breaches of the Management Regulations. [NAME] [NAME] was also concerned that there appeared to be at least five people occupying the [NAME] as their own or main residence and the [NAME] should therefore have been licensed under Part 2 of the Act.

12) During the visit [NAME] [NAME] took a number of photographs which are attached to his statement (pages 37 to 44 of the bundle). The photographs show the general condition of the [NAME] and more specific areas of concern including: the partially blocked rear escape route to the rear. A dilapidated outbuilding within the garden. Accumulated rubbish in the rear garden. The inside of the basement area left unlocked and accessible from an open access garden containing combustible items and the gas boiler. Access from the rear of the [NAME] into the garden with no handrail at a reasonable height. The electrical consumer unit with missing

5 blanking plates allowing access to the live mechanism within it. The fire detection control panel in the ground floor hallway which at the time of the visit indicated “general disablement”. Various examples of disrepair to the [NAME]. The escape route from the front of the first floor of the [NAME] impeded and containing flammable materials.

13) On 18 March 2019, the Council sent a letter to [NAME] [APPELLANT] enclosing a Schedule of Deficiencies (pages 18 to 28 of the bundle). The schedule provided details of material breaches of the Management Regulations. [NAME] [APPELLANT] was also invited to attend an interview under caution to investigate the alleged offences. [NAME] [APPELLANT] called the Council on 1 April 2019 to say he would not attend an interview, that he could not find the electrical safety certificate for the [NAME] and was arranging for electrical works to be completed.

14) On 2 April 2019, [NAME] [NAME] took a telephone call from [NAME] [NAME]. He said that works were being completed at the [NAME] but he was being asked to sign a backdated tenancy agreement from 1 January 2017 without mentioning his partner. On 3 April 2019 [NAME] [NAME] met with [NAME] [NAME] who provided a statement (pages 126-128 of the bundle). [NAME] [NAME] took a photograph of a text message exchange between [NAME] and [NAME] [APPELLANT] on 13/14 December 2018 which appears at page 30 of the Bundle, and reads as follows: “Hi [NAME], this is [NAME] from [ADDRESS], just to let you know that I received your letter today, I am happy to pay at least £240 off of that on the 24. I would like my [NAME] to move into my room with me, is that okay and will you require any extra rent for this?” - 13th of December 2018 “No charge for girl but get the rent paid please” - 14 December 2018 15) Following a review of the information obtained during the visit, the statement of [NAME] [APPELLANT] and the information provided by [NAME] [APPELLANT], by letter dated 30 March 2019, [NAME] [APPELLANT] determined that offences had been committed. The evidence on site indicated there were six occupants. In his letter of 30 March 2019, [NAME] [APPELLANT] said there were only four tenants living in the [NAME], he acknowledged that they do have guests from time to time and that it was impossible for him to know how long the guests stay. However, the text message evidence provided by [NAME] [APPELLANT] indicated that [NAME] [APPELLANT] was aware of and allowed [NAME] [APPELLANT] [NAME] to move into the [NAME]. [NAME] [NAME] view was therefore that there were at least five, possibly six occupants, resident at the time of his visit. Either way a licence was required for the [NAME] or an application for a temporary exemption to allow for the numbers in the [NAME] to be reduced. Neither application had been made and therefore [NAME] [NAME] contended an offence had been committed under section 72 of the Act. 16) [NAME] [APPELLANT] acknowledges that following contact with [NAME] [APPELLANT] some remedial works were carried out to the [NAME] but this did not, in his view, excuse the conditions found at the [NAME] at the time of his inspection. [NAME] [NAME] considered that the [NAME] was poorly managed

6 and that it was not a reasonable excuse for a manager to wait until a statutory inspection revealed breaches of the management conditions before addressing poor housing standards. With regard to the specific breaches of the management regulations he submitted: (i) at the time of his visit the name and address and telephone number of the manager was not clearly and prominently displayed in the [NAME]. Furthermore, several tenants appeared not to have documented tenancy agreements and therefore did not have the managers address. Breach of regulation 3. (ii) at the time of the visit the escape route on the first-floor hallway and from the kitchen to the rear garden was blocked. The fire detection system had been disabled with the “general disablement” code illuminated. Fire extinguishers had not been serviced. Self- closing fire doors were propped open or missing. The cellar had open access from the garden and was filled with combustible materials. The electrical consumer unit was missing blanking plates that prevent access to the live parts within the unit. Breaches of regulations 4(1), (2) and (3). (iii) Regulation 6 requires the landlord to ensure that the fixed electrical installations are inspected every five years and to provide a copy of the compliance certificate to the local authority within seven days. This was requested by the Council on 18 March 2019. The response from [NAME] [APPELLANT] received on 8 April 2019 was after the seven-day requirement and enclosed a new certificate that did not cover the period up to and including inspection. The new certificate noted that “all code 1 and code 2 faults have been remedied” indicating that deficiencies were present at the time of the inspection. (iv) Overall the inspection noted a poor state of decorative repair with damaged wall plaster, poor decorative quality repairs, disrepair to kitchen cupboards and the electrical socket for the cooker. The first- floor bathroom was dirty, the garden was not maintained, the stairs from the kitchen into the garden did not have an appropriate handrail. As a whole, it was considered there were breaches of regulations 7 (1) (2) and (4). (v) The window frame in bedroom three did not shut properly and the door lock to bedroom four was missing. Breach of regulation 8 (2).

17) Following a Case Review, on 2 August 2019 two notices of intent to issue a financial penalty were sent to [NAME] [APPELLANT]. The value of the financial penalties were assessed using a matrix adopted by [NAME] and the wider West Midlands group of local authorities. The Council’s matrix is shown at appendix 1 (page 69 to 72 of the bundle). It is a charging table for determining the value of financial penalties imposed under the Act.

18) Offences in relation to licensing of [NAME] under Part 2 of the Act (section 72) are listed. The starting point on the matrix for a 1st offence of failure to

7 obtain a licence is £10,000. The notes to the charging table show 8 factors which may have the effect of increasing or lowering the starting point. There were no aggravating factors to justify an increase from the starting point and [NAME] [APPELLANT] had not provided any evidence of income that would justify a reduction financial penalty. A financial penalty of £10,000 was therefore confirmed.

19) The starting point for a 1st offence of failure to comply with Management Regulations in respect of [NAME] (section 234) is £1000 per offence. There were no aggravating factors to justify an increase from the starting point and [NAME] [APPELLANT] had not provided any evidence of income that would justify a reduction financial penalty. A financial penalty of £1000 per offence, totalling £5000 was therefore confirmed.

20) On 25 September 2019 [NAME] [COUNSEL] received representations from [NAME] [APPELLANT]’s solicitor (having agreed an extension of time for this). [NAME] [APPELLANT]’s representations can be summarised as follows: There are 4 tenants in the [NAME] [NAME] [NAME], [NAME] [NAME]. [NAME], [NAME] [NAME]. [NAME] and [NAME], who each pay rent of £60 per week exclusive of utilities (including Council tax). All except [NAME] [NAME] were issued with an AST agreement. [NAME] [NAME] occupied under the same terms but refused to sign an agreement. [NAME] [APPELLANT] responds promptly to any issues. Clause 6 of the written tenancy agreements permits overnight guests provided they do not make the [NAME] their permanent home without the landlords written agreement. [NAME] [APPELLANT] was aware of the HMO legislation and had made a conscious decision not to bring the [NAME] within the scope of the legislation. He did not believe the [NAME] was an HMO and accordingly that the Management Regulations did not apply. [NAME] [APPELLANT] was alerted to [NAME] [APPELLANT] [NAME] staying at the [NAME] but assumed her to be visitor. He had not received rent from anyone other than the 4 tenants. On his visits to the [NAME] he saw no evidence that [NAME] [NAME] [NAME] was in residence or occupation on permanent basis. In short, he did not consider that 5 or more persons were in occupation. [NAME] [APPELLANT]’s other 3 tenants [NAME] [APPELLANT] [NAME] [APPELLANT] and [NAME] [APPELLANT], had provided written confirmation that [NAME] [NAME] [NAME] stayed in the [NAME] no more than 3 days per week (between one and 3 days) and on the days she was not at the [NAME] was living with her parents. [NAME] [APPELLANT] had no knowledge of the persons named [APPELLANT] or [NAME] who [NAME] [NAME] identified as being in occupation in his statement. [NAME] [APPELLANT] does not dispute the exchange of text messages on the 13/14 December 2018. At the time of the exchange he did not appreciate the content of the message as suggesting that [NAME] [NAME] [NAME] would become [NAME] whose only or main residence was the [NAME]. He construed the phrase “move in” as being within the permission envisaged by clause 6 of the written agreements. He accepts that he may unwittingly have allowed the premises to acquire HMO status because of this exchange. However, he had no intention of allowing [NAME] [NAME]

8 [NAME]’s occupation to be more than casual. Otherwise he would have not agreed that no charge or rent was payable. [NAME] [APPELLANT] commented on the Management Regulations offences. He enclosed copies of the written agreements with 3 of the 4 tenants. He has now fixed a notice with his contact details behind a Perspex cover screwed to the wall. The landing has been cleared of obstruction and the tenants’ instructed to keep it clear. He has told the tenants repeatedly not to wedge doors open and will visit the premises more often to ensure compliance. An inspection certificate for the fire extinguisher has been provided. The basement has been cleared of combustible materials and locks fitted. The fire detection system has been attended to. The electricity consumer box has been replaced with approved equipment. All bedroom windows are designed open for rescue in the event of fire. Gas appliance test certificate supplied. Electrical report covering fixed electrical installations supplied. All deficiencies under paragraph 1.4 of the schedule were attended to within 10 days of being notified of them. The 1st floor shower does not leak, it was repaired 12 months ago. The cooker has been inspected and is working satisfactorily.

21) [NAME] [APPELLANT] considered the submissions made by [NAME] [APPELLANT]. He believes that the exchange of text messages between [NAME] [APPELLANT] and [NAME] is clear. [NAME] [APPELLANT] had not made any attempt to qualify his consent to [NAME] [APPELLANT] [NAME] moving in and in his view [NAME] [APPELLANT]’s claim that Ms [APPELLANT] had another place to occupy was an unsupported sham.

22) In relation to the management regulations offences, the submissions do not amount to a denial that there were failings, only that they were addressed quickly following inspection. Whilst admirable this does not justify the fundamental failings noted on the initial inspection. [NAME] require routine and regular visits and ongoing management and maintenance to prevent deteriorating conditions. In [NAME] [NAME] opinion the failings were not the result of a rapid decline due to damage by tenants’ but consistent with ongoing poor management. The issues were not trivial. At the time of the visit there was no working fire detection in the [NAME] and fire doors were propped open. There was evidence of accumulated materials and disrepair to the electrical installation. No reasonable landlord engaged in proper management of their [NAME] would consider the conditions found on the initial inspection to be acceptable.

23) [NAME] [APPELLANT] also noted that prior to his visit [NAME] [APPELLANT] had not considered the [NAME] to be an [NAME] and therefore, that he did not have to comply with the Management Regulations. [NAME] [NAME] exhibited 2 letters from 2005 and 2008 from the Council to [NAME] [APPELLANT] making him aware that the [NAME] would be an HMO with any more than 2 occupiers; and that he was therefore responsible for meeting the additional statutory requirements associated with such properties (pages 31 and 32 of the bundle).

24) [NAME] [NAME] housing standard officer at Stafford Borough Council filed a witness statement and also gave evidence at the hearing. He jointly

9 attended the inspection on 11 March 2009 with [NAME] [NAME]. He confirmed the inspection was conducted using the Housing Health and Safety Rating System (“HHSRS”) and the Management Regulations. [NAME] [NAME] confirmed that [NAME] [NAME] and his [NAME] were present. She was pregnant at the time. The [NAME] had 5 bedrooms all of which appeared to be occupied with one bedroom having 2 occupants. The [NAME] was in a poor state of repair. [NAME] [NAME] statement broadly confirms the evidence of [NAME] [NAME] in this regard. He confirmed that the common parts of the [NAME] were poorly maintained, not managed and that living conditions were below standard. When asked about landlord engagement, the general consensus of the tenants was that he was a decent and friendly landlord but somewhat absent with regard to repair and [NAME] management issues. The condition of the [NAME] appeared to corroborate this view.

25) When asked about the HHSRS inspection [NAME] [NAME] said that the risks around fire safety really stood out. The fire alarm system had been disabled and there was open access externally to a cellar area that was full of combustible material. This increased the risk of spread of fire, which combined with a disabled alarm system and compromised means of escape led to a high overall risk to the tenants in the event of fire. This, he put down to poor management of the HMO

26) A witness statement made by [NAME] [NAME] on 3rd of April 2019 was included with the Council’s bundle (pages 126-128). [NAME] [NAME] did not however attend the hearing for cross-examination. [NAME] [NAME] confirmed that [NAME] [NAME] and the other tenants had been made aware of their right to seek a rent repayment order, should their landlord receive a financial penalty for a relevant offence under the Act. [NAME] [NAME] statement confirmed that he had been in occupation since early 2018 paying £60 a week rent. He states that he was never given a written tenancy agreement or any other paperwork. [NAME] [NAME] statement goes on to confirm the content of the exchange of text messages with [NAME] [APPELLANT]. He considered [NAME] [APPELLANT]’s response to be clear permission for his [NAME] to move in. [NAME] [NAME] statement confirms that during his occupation there had been a number of other occupants of the house. Of the 5 bedrooms four had been in continual occupation and the 5th had on and off occupation. [NAME] [NAME] states that the 5th bedroom was occupied for a time by “[NAME]” who left end of December or beginning of January. The room was vacant 2 to 3 weeks and was then occupied by “[APPELLANT]. He confirmed that on 1st of April 2019 [NAME] [APPELLANT] had asked him to sign a tenancy agreement dated 1st of January 2017. He refused to sign because his name was incorrectly recorded and the agreement did not include his [NAME].

27) When asked why he hadn’t obtained a witness statement from [NAME] [NAME] [NAME], [NAME] [APPELLANT] said it was because she hadn’t spoken to [NAME] [APPELLANT], the only exchange had been between [NAME] and [NAME] [APPELLANT]. However, she had told [NAME] [APPELLANT] she was living there all the time, her clothes with there and both [NAME] [NAME] and his [NAME] had expressed concerns that there would be insufficient space for the baby.

10 28) [NAME] [NAME] re-inspected the [NAME] on 4 November and noted that most of the breaches of the management regulations had been remediated. However, the fire detection system was again disabled, the fire doors propped open and the kitchen dirty. He therefore considered that whilst remedial works had been carried out the [NAME] remained poorly managed. A photograph of the fire detection unit showing the disablement code, taken on the inspection on 4th of November 2019, was annexed to the bundle at page 44.

29) On 21st of May 2020 [NAME] [NAME] sent two Final Notices imposing the financial penalties to [NAME] [APPELLANT] having reviewed the offences against the agreed matrix and having taken into account [NAME] [APPELLANT]’s representations. The Final Notices and “penalty justification forms” are at pages 104-118 of the Bundle. The tribunal asked [NAME] [NAME] why there had been a substantial delay of some 8 months between receiving [NAME] [APPELLANT] submissions and the issue of final notices, given that the penalties were unchanged from the notices of intent. [NAME] [NAME] confirmed that there had been no contact between the Council and [NAME] [APPELLANT] during this period (other than the inspection on 4 November 2019). The delay was purely due to resource issues at the Council.

[NAME] [APPELLANT]’s submissions

30) [NAME] [APPELLANT]’s written submissions are virtually identical to his submissions to the Council in response to the Notices of Intent, as summarised at paragraph 20 above. In addition, he attached a copy of a letter of advice from his solicitors [NAME] dated 13th of September 2019 concerning [NAME] [APPELLANT]’s representations to the Council and on any appeal, should final penalty notices be issued. It is clear from the letter that [NAME] obtained counsel’s opinion on the issues in this case. The solicitors identify the critical issue relevant to the failure to licence allegation, as being whether, assuming only the four rent paying tenants were in occupation, [NAME] [NAME] [NAME] was occupying bedroom 3 as her “only or main residence”. In their view this would have the effect of tipping the [NAME] into a licensable HMO.

31) The solicitors had clearly been provided with some questionnaires completed and signed by [NAME] [NAME], [NAME] [NAME]. [NAME] and [NAME] [NAME]. [NAME]. They are referred to in the 1st and 2nd paragraphs of the letter which states that the questionnaires indicate [NAME] [NAME] [NAME] was staying at the house up to 3 nights per week.

“[NAME] [NAME] [sic] says that on occasions she did not stay at all and he puts the number of nights as ranging between 1 per week and 3 per week (an average of 2). It was in around March that [NAME] [NAME] [NAME] stopped staying with him and [NAME] [NAME] [sic] indicates that when she was not at the house she was at her parents’ home. This arrangement he said had been going on to 12 months. [NAME] [NAME] says something very similar as does [NAME] [NAME]. On occasions she did not stay at all but the maximum number of nights was 3 per week. The average seems to be 2 nights per week. Some weeks she did not stay at all. She ceased to stay in

11 March 2019 or around then ([NAME] says April) and her home when she was not staying at the house was her parents’ house stop”

32) The letter goes on to explain the difficulty of proving the extent of [NAME] [APPELLANT] [NAME]’s occupation, or whether [NAME] [APPELLANT]’s lack of knowledge of the circumstances could amount to the defence of “reasonable excuse” and recommends that it might be preferable to seek to mitigate the level of financial penalty. 33) [NAME] [APPELLANT] refers to “third-party written statements, that [NAME] [NAME] [NAME] was only ever regarded as a visitor to the [NAME], and had her main place of residence elsewhere” in his grounds of appeal. When asked why the questionnaires/statements were not in evidence [NAME] [APPELLANT] said that the tenants’ had written out statements which he had collected and sent to his solicitor in September 2019. He did not retain copies but thought they were in his solicitors file. He had tried to ascertain whether the solicitor had retained copies but they had closed their file.

34) In cross-examination [NAME] [APPELLANT] said that, other than [NAME] [APPELLANT], the tenants did not have an issue with occupation. They told [NAME] [APPELLANT] that [NAME] had been behind everything and they had written statements confirming that [NAME] [NAME] [NAME] was a temporary visitor. He had tried to get copies of the statements from his solicitor but failed. When asked why the other tenants had not attended the hearing to give evidence for him, [NAME] [APPELLANT] said that [NAME] had said that he would attend and give evidence, but has since moved and [NAME] [APPELLANT] is unable to contact him. All the tenants have now left now except [NAME] [NAME].

35) So far as the possible occupation of bedroom 4 by [APPELLANT] and formerly “[APPELLANT]” is concerned [NAME] [APPELLANT] said that he had no knowledge of anyone called [APPELLANT] staying at the [NAME]. He understood that [APPELLANT] was one step away from homeless. [NAME] [APPELLANT] was told that [APPELLANT] visited friends in houses hoping to stay for a few days because it was better than the park bench. He had no idea who came and went unless he happened to see them. He understood that [NAME] had turned up one night homeless and the tenants’ allowed him to stay in bedroom 4. [NAME] [APPELLANT] wasn’t aware of this and he didn’t collect any rent from him. Bedroom 4 did not have a lock on the door, it was used for storage. 36) [NAME] [APPELLANT] said he was aware that the tenants’ visitors sometimes stayed overnight at the [NAME], the tenancy agreements permit this, but he wouldn’t allow anyone to move in permanently. If [NAME] [NAME] [NAME] stayed longer than 3 to 4 days it was outside his knowledge. [NAME] [APPELLANT] inspects his properties about twice a year but with this [NAME] more often because he stated that the tenants were dirty, he said that he had cleaned common areas numerous times. He stated that in his view some of the tenants suffer from depression. They stay in their room and throw things out onto the corridors. [NAME] [APPELLANT] has attended the [NAME] about 10 to 15 times a year, but it varies hugely. Sometimes there is a 2 month gap, but on average, he probably attends once a month. In all his visits [NAME] [APPELLANT] has never met [NAME] [APPELLANT] [NAME]. He called once about 2 years ago concerning rent arrears. [NAME] [NAME] girlfriends was in the

12 room. She did not open the door, she just said that [NAME] [APPELLANT] was not there. 37) [NAME] [APPELLANT] said that [NAME]’s room was originally occupied by [NAME] [NAME] sister. [NAME] [NAME] moved in to take care of her but she subsequently left to go home due to her illness. [NAME] [APPELLANT] remained in occupation and [NAME] [APPELLANT] realised sometime later that he had overlooked giving [NAME] [NAME] a written tenancy agreement. He asked [NAME] to sign a tenancy agreement shortly before the Council visit in March 2019. [NAME] refused to sign unless [NAME] [APPELLANT] put his [NAME] on the agreement. [NAME] [APPELLANT] refused because as far as he was concerned she was an occasional visitor. When asked why, as landlord, he did not know at any one time who was living at the [NAME], [NAME] [APPELLANT] said that he was obliged to give notice or notify the tenants’ of any inspection or visit. As a consequence, when he turned up any visitors would make themselves scarce. When asked to comment specifically on what the tenants’ had told the Council officers during the inspection on 11 March 2019, [NAME] [APPELLANT] said that Jesse Lee would likely claim to be an occupant due to concerns about being thrown out. [NAME] [NAME] [NAME] would say that she was an occupant because that was [NAME] [APPELLANT] stance, he wanted her to be a tenant even though she wasn’t. 38) [NAME] [APPELLANT] confirmed that the 4 tenants paid £60 per week inclusive of all utilities, including Council tax. Council tax for the [NAME] was about £1,200 per year. Electricity and gas was expensive, about £4-£6,000 per year. [NAME] [APPELLANT] produced bank statements and accounts (pages 143 -156 of the bundle), that show a rental income of approximately £12,500 per year, which is consistent with 4 tenants paying £60 per week rent. After payment of Council tax and utilities together with maintenance [NAME] [APPELLANT] confirmed that he makes very little profit. Given that, it was [NAME] [APPELLANT] submitted inconceivable, that he would allow [NAME] [APPELLANT] girlfriends or anyone else to occupy the [NAME] without payment. 39) [NAME] [APPELLANT] confirmed that all tenants have a night latch and mortice lock to their rooms. The Yale lock opens without a key from the inside. The mortice lock is just a latch. He confirmed the bedroom 4 has no locks because it was used for storage. 40) [NAME] [APPELLANT] accepted that the [NAME] was an HMO. He said there was some confusion on his part initially because he thought there needed to be more than 4 occupiers for a [NAME] to be an HMO. He accepted therefore that the [NAME] was subject to the Management Regulations, but not that the [NAME] was an HMO that required to be licensed, because he submitted, there were only 4 tenants. [NAME] [APPELLANT] said that he had originally owned 8 rental properties. He personally drafted his tenancy agreements and had been a landlord to some 20 to 25 years.

41) In relation to the alleged breaches of Management Regulations, [NAME] [APPELLANT] only disputed 2 items. He explained the shower leak had been repaired some 12 months prior to the inspection in March 2019 and the staining was a consequence of the original leak. He did not accept that the

13 cooker was tripping out. [NAME] [APPELLANT] had arranged for the cooker to be thoroughly inspected and nothing was found to be wrong with it.

42) In mitigation of the other matters [NAME] [APPELLANT] said that the electricity certificate was genuinely lost. He was in the process of selling the properties and may have sent it to the solicitors acting for the buyer. It was a 5 year certificate that had not run out, but having been unable to locate it, he had arranged for an [NAME] to do a new inspection and certify the [NAME]. In the process the consumer unit had been replaced and upgraded to a unit with a metal case. He said that notices have been displayed but the tenants knock them off and they also lose their tenancy agreements. The tenants also block the fire escapes and the main passageway with bicycles etc which [NAME] [APPELLANT] is constantly having to clear. 43) [NAME] [APPELLANT] confirmed that he had inspected the [NAME] about a month before the Council inspected on 11 March 2019. He did notice that there was a mess on the landing, the upstairs bathroom was dirty, the tenants had put a table in the hall for mail which he had repeatedly asked them to move. He cleared the landing while there but did not notice any other issue. When asked whether the defects identified in [NAME] [APPELLANT] letter were present at this inspection [NAME] [APPELLANT] said the fire alarm panel didn’t read other than normal. He acknowledged that the stair handrail was missing, that there was a damaged socket and a damaged kitchen unit door but doesn’t recall any other issue. [NAME] [APPELLANT] asked the tenants to clean up their rooms and he cleaned the common areas. [NAME] [APPELLANT] confirmed that he had left the washing machine on the back stairs after removing it to install a replacement. In relation to the disabled fire alarm [NAME] [APPELLANT] acknowledged that he had left the key on top of the box where he presumed it had been found by one of the tenants. He suggested that one of the tenants, with technical knowledge, had disabled it to prevent the fire alarm being triggered repeatedly when they are smoking. THE LAW 44) Section 72 of the 2004 Act provides as follows: (1) [NAME] commits an offence if he is [NAME] having control of or [NAME] an HMO which is required to be licensed under this Part (see section 61(1)) but is not so licensed. (2) (3) (4)…… (5) In proceedings against [NAME] for an offence under subsection (1), (2) or (3) it is a defence that he had a reasonable excuse— (a) for having control of or [NAME] the house in the circumstances mentioned in subsection (1), or (b) for permitting the person to occupy the house, or (c) for failing to comply with the condition,

14 as the case may be.

45) In the case of Management Regulations in respect of HMO’s, section 234 (3) of the Act provides that “[NAME] commits an offence if he fails to comply with a regulation under this section”. Section 234(4) provides that “in proceedings against [NAME] for an offence under subsection (3) it is a defence that he had a reasonable excuse for not complying with the regulation” 46) In the case of an HMO, section 263 defines the “[NAME]” `as the owner or lessee of the [NAME] who receives, directly or through an agent or trustee, rents or other payments from persons who are tenants or licensees of parts of the [NAME], or who are [NAME].

47) By virtue of section 55 of the 2004 Act, any HMO in a local authority’s district is required to be licensed by the authority for the purposes of Part 2 if it falls within any prescribed description of HMO.

48) Under section 61, every HMO to which Part 2 of the Act applies must be licensed under this unless either: a temporary exemption notice is in force in relation to it under section 62; or an interim or final management order is in force in relation to it under Chapter 1 of Part 4. Neither situation is relevant to this appeal.

49) Section 249A of the 2004 Act allows a local authority to impose financial penalties for certain housing offences and provides as follows: (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) ….. (b) section 72 (licensing of [NAME]), (c) - (d) ……. (e) section 234(management regulations in respect of [NAME]) (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) – (9) …… 50) Schedule 13A of the Act deals with the procedure for imposing financial penalties and appeals against financial penalties Paragraph 10 of that Schedule states:

15 (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.

DELIBERATIONS AND

DECISION 51) The Tribunal considered this appeal in three parts: a) Whether the Tribunal was satisfied, beyond reasonable doubt, that the a “relevant housing offence” had been committed in respect of the [NAME] (sections 249A (1) and (2) of the Act; and section 234(3) and (4) of the Act); b) Whether the local housing authority had complied with all necessary requirements and procedures relating to the imposition of the financial penalty (see section 249A and paragraphs 1 to 8 of Schedule 13A of the Act); and/or c) Whether the financial penalty was set at an appropriate level, having regard to any relevant factors, including: (i) the offender’s means; (ii) the severity of the offence; (iii) the culpability and track record of the offender; (iv) the harm (if any) caused to a tenant of the premises; (v) the need to punish the offender, to deter repetition of the offence or to deter others from committing similar offences; and/or

16 (vi) the need to remove any financial benefit the offender may have obtained as a result of committing the offence. Was an offence committed by [NAME] [APPELLANT]? The offence of failing to licence the [NAME]

52) We are satisfied beyond all reasonable doubt that on 11 April 2019, when the Council inspected the [NAME], [NAME] [APPELLANT] was [NAME] having control of and [NAME] an HMO which was required to be licensed under the Act but was not so licensed.

53) It does not appear to be in dispute that [NAME] [APPELLANT] was [NAME] having control and management of the [NAME]. [NAME] [APPELLANT] is the person in receipt of the rents and the person, on his own evidence, responsible for the day-to-day management and maintenance of the [NAME].

54) It is also not in doubt that on the date of the inspection the [NAME] met the statutory definition of an HMO because it was a house occupied by persons who do not form a single household, the four rent paying tenants occupied the living accommodation as their only or main residence, occupation of the living accommodation constituted the only use of the [NAME] and at least 2 households who occupied the living accommodation shared one or more basic amenities, namely the bathroom and kitchen.

55) We are not satisfied that there is sufficient evidence to conclude that either [NAME]” or [NAME] were, or had been for any period, occupying the living accommodation as their only or main residence.

56) We are satisfied that [NAME] [NAME] [NAME] was occupying the living accommodation as her only or main residence at the date of the inspection on 11 April 2019. We are not however satisfied, on the balance of probabilities, that [NAME] [APPELLANT] was aware of this. We therefore find, in relation to the offence under section 72 (1) of the Act, that [NAME] [APPELLANT] has established a defence of reasonable excuse under section 72 (5) of the Act for, in particular, the following reasons: (i) We accept [NAME] [APPELLANT]’s evidence that the cursory exchange of text messages with [NAME] [NAME] was primarily focused on collecting outstanding rent and that he didn’t give much thought to the expression “move in”. We also accept [NAME] [APPELLANT]’s evidence that his tenancy agreements (written or otherwise) allow some flexibility for tenants’ girlfriends and visitors to stay overnight on an occasional basis and that he genuinely believed that to be the case in respect of [NAME] [APPELLANT] [NAME]. We also accept [NAME] [APPELLANT]’s evidence that he had intentionally restricted the number of tenants at the [NAME] to four, so as not to fall within a prescribed description that would require the [NAME] to be licensed. (ii) We find [NAME] [APPELLANT]’s belief to be reasonable because on his visits to the [NAME] he had not seen any evidence of occupancy by [NAME]

17 [NAME] [NAME], also it is unlikely that he would have agreed to permanent occupancy by [NAME] [NAME] [NAME] given that [NAME] [NAME] rent of £60 per week was inclusive of utilities and Council tax. (iii) We find it likely that [NAME] [APPELLANT]’s solicitor was provided with statements from the other tenants which cast some doubt on the extent of occupancy by [NAME] [APPELLANT] [NAME] and that [NAME] [APPELLANT] has been prejudiced in producing this evidence, partly as a consequence of the 8 month delay by the Council in issuing the final notices. By the time [NAME] [APPELLANT] received the final notices his solicitor had closed the file and the tenants that were prepared to support [NAME] [APPELLANT] at the hearing had moved out leaving him in difficulty contacting them. (iv) [NAME] [NAME] provided a witness statement to the Council but did not attend the hearing for cross-examination. At the time [NAME] [NAME] made the statement he had an interest in establishing that his [NAME] was a tenant and a financial interest in the outcome of the Council’s proceedings. For that reason, we afford only limited weight to [NAME] [NAME] statement.

57) As the requirements for the offence under section 72 (1) of the Act are not met, we find that the Council was not entitled to impose a financial penalty under section 249A of the Act in respect of this matter and accordingly, the financial penalty is cancelled. The offence of failure to comply with Management Regulations 58) We are satisfied beyond all reasonable doubt that an offence was committed by [NAME] [APPELLANT], in that on 11 April 2019, when the Council inspected the [NAME], he was [NAME] having control of or [NAME] an HMO, that had failed to comply with Management Regulations. In particular we find that there were breaches of regulation 3, regulation 4, regulation 6, regulation 7 and regulation 8, as detailed in the Schedule of Deficiencies sent to [NAME] [APPELLANT] on 18th March 2019 because: (i) [NAME] [APPELLANT] does not dispute the items of disrepair in the Schedule of Deficiencies other than in respect of 2 of the 6 items of disrepair under regulation 7 (the cooker circuit socket and the leaking shower). (ii) [NAME] [APPELLANT] has offered mitigating circumstances in relation to many of the items of disrepair but we are not satisfied that the behaviour of the tenants or [NAME] [APPELLANT]’s inability to track down his certificates could amount to a defence of reasonable excuse. Has the local housing authority complied with all necessary requirements and procedures? 59) There was no challenge by the Applicant in this element of the appeal and the Tribunal determines that the procedural requirements for the

18 imposition of a Financial Penalty have been satisfied. As all the requirements for the Management Regulations offences, under section 234 of the Act have been met, the Council was entitled to impose financial penalties under section 249A of the act Was the financial penalty set at an appropriate level? 60) The amount of the penalty imposed for each offence is the starting penalty for the offence, as set out in the matrix adopted by the Council, which is derived from the relevant Government guidance, Civil Penalties under the Housing and Planning Act 2016. The Council has not found there to be any aggravating factor that should increase the penalty. The Councils matrix does not make any provision for mitigating factors to be considered which might reduce the starting penalty, other than where the landlord’s income is below £440 per week.

61) It is in [NAME] [APPELLANT]’s favour that most of the items of disrepair were remediated promptly. However, the Tribunal share [NAME] [RESPONDENT] view that a competent professional landlord should not need to be prompted by the local authority to comply with Management Regulations. The Tribunal finds that the items of disrepair were largely a consequence of long-term poor management, rather than items that had recently fallen into disrepair in an otherwise well-maintained [NAME].

62) Although the offences in relation to the fire safety measures in the [NAME] are serious and could have result in significant harm occurring, because none of the tenants were “a vulnerable person” as defined under HHSRS, the matrix does not allow for a premium to be applied.

63) The Tribunal finds that [NAME] [APPELLANT] operates a no-frills, low rent HMO for tenants that are unable to afford better quality accommodation. His profits are extremely modest and this undoubtedly plays some part in limiting the affordability of maintaining the [NAME] in good condition. However, he is operating in a sector that is regulated and it is simply not good enough to make allegations as to the character of the tenants and attribute most of the failings to this. Putting tenants at risk from inadequate fire safety measures can never be justified. Neither can low profitability justify poor maintenance and management of an HMO. 64) [NAME] [APPELLANT] did not provide any evidence of his means.

65) The Tribunal therefore finds that a financial penalty of £1000 per offence, totalling £5000.00, to be an appropriate penalty which balances the objectives of the need to punish the offender, act as a deterrent to further offending by the offender and others, against the mitigating circumstances put forward by [NAME] [APPELLANT] and the financial penalty is accordingly confirmed.

66) The Tribunal therefore finds, weighing all the circumstances of the case, that a financial penalty of £5000.00 to be proportionate and confirms the penalty.

19

Judge D Barlow

Date: 12 January 2021

APPENDIX - RIGHTS OF APPEAL 1. 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.

2. 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.

3. 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.

4. THE APPLICATION FOR PERMISSION TO APPEAL MUST IDENTIFY THE DECISION OF THE TRIBUNAL TO WHICH IT RELATES (I.E. GIVE THE DATE, THE [NAME] AND THE CASE NUMBER), STATE THE GROUNDS OF APPEAL, AND STATE THE RESULT THE PARTY MAKING THE APPLICATION IS SEEKING.