First-tier Tribunal Confirms Improvement Notices for Property Condition

OUTCOME: Dismissed

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Case Reference : CHI/00HH/HIN/2024/0006 (Flat 1) CHI/00HH/HIN/2024/0007 (Flat 2) CHI/00HH/HIN/2024/0008 (Flat 3) CHI/00HH/HIN/2024/0009 (Bedsit) Property : Flats 1 – 3 and the bedsit at the [NAME], [ADDRESS], Paignton, Devon. [POSTCODE] Applicant : [redacted] : [COUNSEL] (Counsel) Respondent : [redacted] Representative : [COUNSEL] and [COUNSEL] of Application : Appeal against an improvement notice Paragraphs 12 and 15 of Schedule 1 to the Housing Act 2004 (the Act) Tribunal Members : Judge C A Rai (Chairman) [NAME] [NAME]. [NAME] type and venue of Hearing : 3 October 2024 Parties appearing remotely with the Tribunal sitting at the [ADDRESS] [POSTCODE], Date of Decision : 16 October 2024

DECISION

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

2

Summary of Decision 1. The Tribunal made an order confirming the four Improvement Notices served by the Respondent on the Applicant dated 31 January 2024 (Flats 1 – 3) and the 15 February 2024 (bedsit [NAME]) relating to the Property.

2. The reasons for its decision are set out below. Background 3. Torbay Council, the Respondent, served four Improvement Notices on the Applicant dated 31 January 2024 (Flats 1 – 3) and 22 February 2024 (Bedsit) respectively. (For consistency, the Tribunal has referred to the Property as comprising four flats but acknowledges that the ground floor flat is a bedsit). The four flats are located within the [NAME] [NAME] at 503 [ADDRESS] [POSTCODE].

4. The Applicant appealed against all four Improvement Notices making two valid applications to the Tribunal. Those applications were consolidated by the Tribunal and heard together.

5. The Tribunal received a single hearing bundle containing the four Notices and supplementary documents, both parties witness statements, other evidence and various reports (427 pages). On the day before the hearing, it received a skeleton argument from Mr [NAME] (11 pages) with a bundle of authorities (94 pages). (Where documents within the bundles are referred to in this decision the pdf page numbers are shown in square brackets and with the page number with the page numbers for documents in the other two bundles preceded by S or A.)

6. Flats 1 – 3 are located on the first floor of the [NAME]. The bedsit is located on the ground floor of the [NAME] next to the swimming pool.

7. The following description of the site and the [NAME] is taken from a report referred to by the parties as the “Howden Report”, [221] a site investigation report written by [NAME]:- 8. “This report pertains to the site located at [ADDRESS] [POSTCODE]. The site has approximately 100 plots, all of which are privately owned, with a combination of chalets and lodges. [223]. There is also a large [NAME] known as the Baytree, which formerly housed the clubhouse/restaurant, ball room and swimming pool. The [NAME] is now part unoccupied, and part let to residential tenant under AST’s. The ground floor of the Baytree is unoccupied with the exception of one bedsit and an area used by the maintenance employee as a workshop. The first floor has a large unoccupied area (former ballroom and swimming pool) which is currently being used to store large amounts of waste, plus 3 tenanted flats. The first- floor flats have separate entrances to the unoccupied first-floor area. One flat is accessed externally only via a metal staircase, the other two flats are accessed via a shared hallway and stairs, with the ground floor hallway also providing access to the bedsit.” [223/4].

3 9. Although Tribunal has not inspected the Property, it concluded that the swimming pool is located on the ground floor since other statements and reports refer to it as being “next to” the bedsit. In her statement Mrs [NAME] stated that the pool is at the rear of the [NAME] commercial area [268].

10. The Howden Report, relied on by the Applicant as evidence of the structural disrepair of the Property and its unsuitability for residential occupation, was prepared by [NAME], insurance advisors, appointed by the [NAME] of the previous owner (see paragraph 20).

11. Prior to the Hearing, the Applicant was represented by its solicitors [APPELLANT], who had exchanged correspondence with the Respondent after the service of the Improvement Notices.

12. Following the insolvency of the previous owner, the site (with other property) was transferred to the Applicant (a newly formed company) by the [NAME]. The tenancies of the flats predate the transfer of ownership to the Applicant. During the hearing Mrs [APPELLANT] told the Tribunal that some tenants had occupied flats for between 10 and 12 years.

13. After its acquisition of the Property, the Applicant served section 21 notices on the four tenants of the flats. The Applicant admitted that the notices were defective. The Tribunal were told by Mr [RESPONDENT] during the Hearing that the Respondent had wanted to remove the tenants so it could redevelop the [NAME] [NAME].

14. In response to an approach from the tenant of Flat 1, Mrs [APPELLANT] visited that flat (20 December 2023). She later visited the commercial parts of the [NAME] (21 December 2023) and the other three flats (29 December 2023). She was accompanied by her colleague, [NAME], whose role was “to check the structural stability issues” on the latter two dates. Following those inspections the Respondent decided to obtain a Structural Engineers report. Mrs [NAME] and Mr [NAME] are both Environmental Health Officers. 15. [COUNSEL], a senior structural engineer instructed by the Respondent, inspected the ground floor commercial area, the [NAME] at the rear of the that area, where the swimming pool is located, and the four flats on 17 January 2024. He was accompanied by Mrs [NAME] [273].

16. Mr [NAME] described the [NAME] condition as “tired and wanting maintenance” but considered there were currently no conditions of significant compromise to structure affecting the first floor apartments [274]. Based on that conclusion, the Respondent decided that it was not appropriate to serve Prohibition Notices and that the appropriate course of action was to serve Improvement Notices.

4 The Hearing 17. Mr [APPELLANT] represented the Applicant at the hearing with both Mr [APPELLANT] and Mr [APPELLANT], who had supplied statements, attending. Mrs [RESPONDENT] represented the Respondent with her manager Mr [RESPONDENT] attending.

18. Having noted that the Respondent was incorrectly named in applications and proceedings, the Tribunal amended the name of the Respondent to Torbay Council. (Torbay Council became a unitary authority in 1998). The Applicant’s evidence 19. Mr [APPELLANT] said that the Applicant was aware of the poor condition of the [NAME] [NAME] before the Improvement Notices were served. He said that there had been an exchange of information with the Respondent and that the Applicant had disclosed the Howden Report to the Respondent before Christmas 2023. He implied that the Respondent had not shared the content of [NAME]’s report with the Applicants before issuing the Improvement Notices.

20. Following questions from the Tribunal it was established that the Howden Report was commissioned by the [NAME] of the previous owner of the site with the sole purpose of identifying relevant insurance risks and exposures to enable the [NAME] to assess, understand and where possible mitigate the risk of injury to persons and loss/damage to property [223]. The site visit, which preceded the report, took place on 26 September 2023. The Applicant was aware of the content of the report and the condition the [NAME] [NAME] before it acquired ownership. The parties accept that [NAME], the author of the report is not a structural engineer or a [NAME] surveyor.

21. Mr [NAME] said that the estimated cost of carrying out the works required to comply with the improvement notices, although these have been “mixed in” with the cost of rubbish removal and emptying the swimming pool, are in the region of £300,000. He said that this was prohibitive and uneconomic in comparison to the annual rental income generated by the four flats.

22. The Applicant submitted that it wanted to remove the tenants to enable it to undertake works because of the state of the wider disrepair within the [NAME] [NAME]. However, both parties agreed that the [NAME] is not currently structurally unsound.

23. No planning application has been submitted for the redevelopment of the [NAME]. The Applicant did not suggest that an application has been prepared. References to a proposed redevelopment of “five or six units” made by Mr [NAME], appear to the Tribunal be indicative rather than specific.

5 24. Mr [NAME] stated that the joint expert report ([NAME]) was unhelpful in referring to there being “no defects significant enough or beyond economic repair that would prevent the continued use of the residential sections of the property” [416]. He said that the expert was not instructed to comment on repair costs or economic factors and such a statement was misleading because the expert had no actual knowledge about the cost of the carrying out repairs.

25. Mr [APPELLANT] said that the Applicant does not accept that serving Improvement Notices was an appropriate course of action. He submitted that it was an unreasonable course of action.

26. Mr [NAME] stated that after the Improvement Notices were issued, some fire protection work to the ceiling of the floor beneath the first floor flats has been carried out to achieve 60 minute fire protection. The Applicants have also procured the removal of some of the rubbish from the “workshop” area and obtained quotations for the remaining works required to address some of the hazards referred to in the Improvement Notices. He suggested that the cost of the necessary remedial works would be in the region of £300,000 but that the costings are presently “estimated”, and the works have not been tendered. Mr [NAME] was unable to state whether those works could be carried out with the residents of the flats remaining in occupation. He said that the Applicant has not carried out an asbestos survey of the [NAME] nor has the swimming pool been emptied.

27. Mr [NAME] also confirmed that he considered the cost of complying with the Improvement Notices to be in the region of £300,000. He also said that all costings obtained are estimates not tendered costs. He conceded that the total amount does not relate solely to the repair of the residential units but suggested that will cost approximately £280,000. He also confirmed that recent works have been carried out to address the fire safety issues, including removal of combustible waste and some fire boarding but that this work has revealed rotten joists beneath the first floor.

28. Mr [APPELLANT] stated that the objective of the Applicant is to upgrade the site from “problematical”, as it is now, to “stable”. That will enable the Applicant to either redevelop the site or sell it. He suggested that the Applicant’s preferred intention is to demolish the [NAME] and replace it with static caravans.

29. In his skeleton argument, Mr [NAME] suggested that the Improvement Notices might be invalid because, he said, that the notes containing information about the Applicant’s right to appeal, although supplied and served with the improvement notices, was ancillary to it rather than contained within the document. The Respondent’s evidence 30. Mr [RESPONDENT] reminded the Tribunal that the local authority has power under the Housing Act 2004 to carry out necessary works and recharge the owners. He said, without being specific, that he did not believe that the cost of carrying out works to comply with the order would amount to £280,000. He posed a rhetorical question - would the Applicants allow the Respondent to carry out works and recharge them?

6 31. Mrs [NAME] told the Tribunal that most of the flats are in quite good condition. She recounted the history of her inspections of the Property. She stated that she is satisfied that the Respondent has established that there are no structural issues affecting the [NAME] which would change the Respondent’s decision to serve Improvement Notices.

32. The Respondent carried out a full internal consultation before issuing the Improvement Notices and has had regard to all possible options. The Respondent would not serve a hazard awareness notice unless it is confident that that service of such a notice will prompt the [NAME] to undertake the works required to remove the hazards. A demolition order could only relate to Category 1 hazards and the Respondent does not believe that would have been an appropriate course of action open to it in this case. The whole team refer to worked examples of the categorisation of hazards of the type identified in the case of these four flats before deciding on a course of action. 33. [NAME] confirmed she had received a copy of the Howden report before Christmas 2023 but was unaware that the Applicant had served further section 21 notices until she received a call from the [NAME] [267]. She said that none of the tenants had received those section 21 notices before the Improvement Notices were served.

34. In response to questions about one of the reasons given on the Improvement Notices [78] which was “The high values of property in Torbay and the demand on available units of accommodation within the area would deem that demolition or clearance is not the most appropriate course of action”, both Mr [NAME] and Mrs [NAME] conceded that those reason could have been expanded or expressed better.

35. Accepting that it is accurate that there is a high demand for rental accommodation nationwide, Mrs [NAME] said that Torbay is “high deprivation” area, by which the Respondent had meant “higher than the nationwide average”. This was in direct response to Mr [RESPONDENT] criticism of the Respondent for not providing the Applicant with actual evidence of the demand for housing and the high value of property in Torbay.

36. Mr [NAME] indicated to the tribunal that he considered that the numbering of the pages in the Improvement Notices, which each contained 9 pages, numbered at the bottom 1 of 9, 2 of 9 and so on, clearly evidenced that the notes at pages 7, 8 & 9 are an integral part of the Improvement Notice. The Law 37. The duties of a local housing authority to take enforcement action are contained in the Housing Act 2004. Section 5(1) states that if a local housing authority consider that a category 1 hazard exists on any residential premises, they must take appropriate enforcement action.

38. Subsection (2) defines the appropriate enforcement action, which includes seven options, serving an improvement notice, making a prohibition order serving a hazard awareness notice, taking emergency remedial action, making an emergency prohibition order, making a demolition order and declaring the area a clearance area. Of those, the relevant possible actions

7 for consideration because of the hazards on the Property identified by the Respondent were the service of an improvement notice, prohibition order and hazard awareness notice. The Applicant referred to a demolition order but there is no evidence that the Respondent ever considered this as an appropriate course of action.

39. The Respondent decided to serve improvement notices under section 11 of the Act. It gave reasons in those notices why it did not consider it appropriate to serve a hazard awareness notice, make a prohibition order or a suspended order, or pursue demolition or clearance.

40. Section 11(1) of the Act states that if a local authority are satisfied that a category 1 hazard exists on any residential premises, …. serving an improvement notice under section 11 in respect of the hazard is a course of action available to it in relation to that hazard for the purposes of section 5.

41. Subsection (3) states if those premises are one or more flats it may require such action to be taken in relation to the [NAME] containing the flat or flats or any part of the [NAME] or any common parts.

42. In these proceedings the Improvement Notices related to four specific flats, but the Act gives wide powers a local housing authority to serve a notice requiring action to be taken in relation to common parts of a [NAME] serving one or more flats (s.11(3)(c)).

43. Section 12(1) of the Act states that if a local housing authority are satisfied that a Category 2 hazard exists on any residential premises…the authority may serve an improvement notice under this section in respect of the hazard. The difference is that the power is discretionary…. “may” not “must”.

44. Whilst the Act is specific as to the content of Improvement Notices, the content of the four Improvement Notices was not specifically challenged in the context of these proceedings, save and except in relation to a single discrete challenge as to validity adduced in Mr [NAME] skeleton (and addressed later in this decision).

45. Paragraph 12 of Schedule 1 to the Act states that an appeal may be made by a person under paragraph 10, on the ground that one of the courses of action mentioned in sub-paragraph (2), is the best course of action in respect of which the notice was served.

46. The courses of action in paragraph 12(2) are making a prohibition order, serving a hazard awareness notice or making a demolition order.

47. Paragraph 15(2) provides that an appeal to the Tribunal made under paragraph 10 is to be by way of a re-hearing but may be determined having regard to matters of which the authority were unaware.

48. Paragraph 15(3) states that the Tribunal may by order, confirm, quash or vary the improvement notice.

8 49. In Waltham Forest v [NAME] and others [2023] EWCA Civ 733 the Court of Appeal considered, as a key issue, whether the First Tier Tribunal makes its own assessment on the date of the appeal hearing or whether the First Tier Tribunal should determine whether the decision of the local housing authority was wrong on the date on which that decision was made and Andrews LJ concluded (para 63 of the judgement) that the task of the First Tier Tribunal is to determine whether the decision under appeal was wrong at the time it was taken. Reasons for the Tribunal’s decision 50. Whilst it has considered all the evidence provided in the bundles and during the Hearing this decision refers only to the main issues in dispute and explains why the Tribunal has reached its decision.

51. Mr [NAME] refers to six grounds for the Applicants appeal. The first ground was that the Respondent has prevented the Applicant from obtaining vacant possession of the Property by issuing the Improvement Notices. He also complained the Respondent acted perversely irrationally and/or unreasonably.

52. The Tribunal does not agree. The Applicant’s evidence confirmed that it served defective section 21 notices on the tenants of the flats in September 2023, before the Respondent inspected the Property. According to Mrs [RESPONDENT] of [COMPANY], telephoned her on 2 February 2024 to advise her that he did not agree with the service of Improvement Notices or Mr [RESPONDENT] report and to inform her that the Respondent had already served further section 21 notices. Following the issue of the Improvement Notices, Mrs [NAME] contacted the tenants who told her that none of them had received section 21 notices [267].

53. This ground of appeal is without merit. The Applicant admitted that it had served section 21 Notices as soon as it acquired ownership of the Property. The failure by the Respondent to serve valid section 21 notices on the tenants of the flats is unconnected with the service of the Improvement Notices by the Respondent.

54. The second ground of appeal refers to a failure, by the Respondent, to exercise its discretion or take the best course of action. The Applicant appealed because it considers that, following the Respondents inspection of the four flats and the identification of the Category 1 and Category 2 hazards listed in the four Improvement Notices, it should have served a Hazard Awareness Notice. However, the Respondent has no discretion under section 5(1). It must take enforcement action. Therefore, the only other part of this ground of appeal, which could be relevant, was whether or not the service of an Improvement Notice was the most appropriate course of action. Taking account of the Respondents submissions the Tribunal finds that it was.

55. The third ground of appeal is repetitive; the action of the Respondent is described by the Applicant as being perverse irrational and unreasonable and the Respondent is criticised for ignoring the “very real risks with the [NAME] and the threat they posed to the tenants”. It has already been established that the [NAME] report was not undertaken by a structural

9 engineer. The Respondent obtained a report from a structural engineer and considered its content before deciding upon the most appropriate course of action. The report from [NAME], the jointly appointed expert, obtained prior to the hearing, written by [NAME] (a structural engineer) who inspected the Property on 5 September 2024, stated that “there appeared to be no structural defects evident” [416]. The Tribunal therefore decided that the evidence does not support the Applicant’s criticism.

56. The fourth ground on which the Applicant relied, is that it was perverse irrational and unreasonable for the Respondent not to issue a demolition order. This ground relies on the Applicant’s “false” assessment of the condition of the [NAME] [NAME]. Mr [NAME] admitted, during the course of the hearing, that the Applicant accepted that the [NAME] [NAME] is not structurally unsound. Therefore, the Tribunal finds no merit in this ground of appeal.

57. The fifth ground of appeal, linked to the fourth ground of appeal, is that the reasons given by the Respondent for deciding that the issue of a Demolition Order was not an appropriate course of action (high property values and high demand for accommodation), when balanced against the condition and disrepair of the [NAME].

58. The Tribunal does not this ground of appeal is valid. The Respondent has decided that the condition of the Property, insofar as it affected the flats, can be satisfactorily improved. Therefore, it was not appropriate to serve a demolition order on the [NAME]. Whilst Mr [NAME] told the Tribunal that it could have put forward a better explanation of its reasoning, the failure to do this does not detract from the Respondent’s identification of the “most appropriate course of action”.

59. The Tribunal accepts that the Respondent might have provided a better reason perhaps by simply stating that it had considered all material and evidential factors and concluded that demolition or clearance was not the most appropriate course of action. The evidence and statements provided by the Respondent support that reason. It was unnecessary for the Respondent to justify its decision to serve an Improvement Notice by relying on anything other than the condition of the [NAME]. The Tribunal is satisfied that the Respondent has provided sufficient factual evidence explaining its assessment of the condition of the [NAME].

60. The sixth ground of appeal is that the Improvement Notices were invalid. The Applicant said that the information, about the right to appeal and the period during which an appeal could be made, was not incorporated within the Improvement Notices. Mr [NAME] accepted that this information had been supplied but stated that it was supplied with, rather than part of the notices.

61. The Respondent stated that it is clear that the notices incorporate this information. The Tribunal agrees with the Respondent. It finds that the Improvement Notices are valid.

10 62. Generally, the Tribunal concluded that the underlying reason for the Appeal is that the Applicant believed that the Respondent should take account of the fact that:- a. it had recently acquired the Property, and b. that the current rental income made it uneconomical to spend an estimated, albeit unconfirmed amount, of £280,000 on repairing a [NAME] which was no longer fit for purpose, and which would not repay the investment.

63. However, the Applicant has failed to convince the Tribunal that any of those reasons individually or collectively could or should have persuaded the Respondent to change its assessment of the categories of hazard identified or the appropriate enforcement action necessary to remedy those hazards. The Tribunal is satisfied that the Respondent having identified the hazards took the appropriate course of action by serving Improvement Notices on the Respondent.

64. Having dismissed all the grounds of appeal, the Tribunal makes an order confirming the three Improvement Notices dated 31 January 2024 (Flats 1, 2 & 3) and the Improvement Notice dated 22 February 2024 (Bedsit) for the Property, served by Torbay Council on [COMPANY].

Judge C. A. Rai (Chairman) Appeals 1. A person wishing to appeal this decision to the Upper Chamber must seek permission to do so by making written application to the First-tier Tribunal at the Regional office which has been dealing with the case.

2. The application must arrive at the Tribunal within 28 days after the Tribunal sends to the person making the application written reasons for the decision. Where possible you should send your further application for permission to appeal by email to [EMAIL] as this will enable the First-tier Tribunal to deal with it more efficiently.

3. If the person wishing to appeal does not comply with the 28-day time limit, the person shall include with the application for permission to appeal a request for an extension of time and the reason for not complying with the 28-day time limit; the Tribunal will then decide whether to extend time or not to allow the application for permission to appeal to proceed.

4. The application for permission to appeal must identify the decision of the Tribunal to which it relates, state the grounds of appeal, and state the result the party making the application is seeking.