First-tier Tribunal Dismisses Appeal Against Financial Penalty for Unlicensed Property Management

OUTCOME: Dismissed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : LON/00AL/HNA/2025/0634 Property : [ADDRESS] [POSTCODE] [NAME] :

(1) [COMPANY]. (2) Mr. [COUNSEL] : Mr. [COUNSEL]. [NAME] (counsel) for the First Appellant Respondent : [redacted] Representative : Mr. [COUNSEL]. [NAME] (counsel) Type of Application : Appeal against a financial penalty Tribunal : Judge S.J. Walker Tribunal Member Ms. S. Coughlin MCIEH Date and Venue of Hearing : 1 August 2025 – 10, [ADDRESS] [POSTCODE] Date of Decision : 1 September 2025

DECISIONS

(1) The appeal against a financial penalty imposed by the Royal Borough of Greenwich on [COMPANY]. in respect of an offence under section 95(1) of the Housing Act 2004 – management or control of a house which is required to be licensed but which is not – in respect of the [ADDRESS] [POSTCODE] is dismissed. The penalty notice dated 26 November 2024 is confirmed. The penalty of £2,500 is upheld.

(2) The appeal against a financial penalty imposed by the Royal Borough of Greenwich on Mr. [NAME] in respect of an offence under section 95(1) of the Housing Act 2004 – management or control of a house which is required to be licensed but which is not – in respect of the [ADDRESS] [POSTCODE] is dismissed. The penalty notice dated 26 November 2024 is confirmed. The penalty of £1,000 is upheld. Reasons

Procedural History 1. On 15 December 2024 the Tribunal received an application to appeal against the imposition of two financial penalties under section 249A of the Housing Act 2004 (“the Act”) in respect of the property known as the [ADDRESS] [POSTCODE] (“the property”). The penalties imposed were for an offence contrary to section 95(1) of the Act - having management or control of a house which is required to be licensed but which was not. The first penalty was imposed on the First Appellant and was in the sum of £2,500. The [NAME] penalty was imposed on the [NAME] Appellant and was in the sum of £1,000.

2. Notice of intention to impose financial penalties on the [NAME] was sent to them on 17 October 2024. The proposed penalties were £2,500 for the First Appellant and £1,000 for the [NAME] Appellant (see pages R117 to 131).

3. Written representations against the proposed penalty were submitted by the First Appellant on 22 October 2024 (pages R135-150). Written submissions from the [NAME] Appellant were submitted on 1 November 2024 (page R156).

4. The Respondent rejected the submissions made by both [NAME] and on 26 November 2024 they issued final notices to the [NAME] in the same sums as originally proposed (pages R162 to 178).

5. On 9 December 2024, before the notice of appeal was issued, the [NAME] Appellant, Mr. [APPELLANT], discharged his liability to pay the penalty imposed upon him by paying £500 to the Respondent, thus taking advantage of the 50% discount which applied if payment were made within 14 days of the notice (page R180).

6. The notice of appeal, which was not included in either hearing bundle, purported to be made by both [NAME]. However, the only contact details provided in it were for the First Appellant. The statement of

3 truth in it was stated to be made by Mr. [APPELLANT], a director of the [NAME]. There was no signed notice of appeal from the [NAME] Appellant.

7. Directions were issued on 5 March 2025 and in due course a hearing was fixed for 1 August 2025. On 28 July 2025 the Tribunal were informed that the First Appellant would be represented at the hearing and that the [NAME] Appellant would be attending.

The Hearing 8. The First Appellant is a body corporate. A director, Mr. [COUNSEL] attended as did the First Appellant’s representative, Mr. [COUNSEL] of counsel. The [NAME] Appellant Mr. [COUNSEL] did not in fact attend and Mr. [APPELLANT] made it clear that he had no instructions to act on behalf of him. The Respondent was represented by [NAME] of counsel.

9. The Tribunal had before it a bundle of 184 numbered pages from the Respondent. References to pages in this bundle will be to the page numbers printed on the documents with the prefix R – eg page R100. It also had a bundle of 18 numbered pages from the First Appellant. References to this bundle will be to the page numbers printed on the documents with the prefix A – eg page A10.

10. In addition to the hearing bundles the Tribunal was provided with the following documents before the hearing; (a) A witness statement from [NAME] provided by the Respondent; (b) A two-page note from Mr. [RESPONDENT] together with an extract from [NAME], and a copy of the Licensing and Management of Houses in Multiple Occupation and Other Houses (Miscellaneous Provisions) (England) Regulations 2006 (“the 2006 Regulations”); and (c) A six-page note from Mr. [NAME] together with copies of three authorities.

11. In the course of the hearing the Tribunal noted that it did not have before it a copy of any policy or guidance relied on by the Respondent when fixing the level of the penalties imposed. These were requested from the Respondent and were made available to the parties and the Tribunal during the hearing.

Preliminary Issue – The Position of the [NAME] Appellant 12. Before considering the substantive issues in the appeal the Tribunal raised with those present the question of whether or not it had jurisdiction to consider any appeal by Mr. [APPELLANT], the [NAME] Appellant. Firstly, it was not clear from the Tribunal file that Mr. [NAME] was ever truly a party to the appeal, as he had had no direct correspondence with the Tribunal and there was no evidence that he had signed or otherwise approved the notice of appeal which was issued on his behalf. Mr. [APPELLANT] stated that Mr. [APPELLANT] was aware that the First Appellant was appealing and was also aware that they were appealing on his behalf.

4 However, despite this, the Tribunal was not satisfied that Mr. [NAME] was in fact a party to the appeal.

13. Secondly, the Tribunal raised the question of whether a person who had paid the penalty demanded of them or, as in the case of Mr. [NAME], who had in fact taken advantage of the 50% discount for early payment, had any right to appeal in any event. On behalf of the Respondent Mr. [RESPONDENT] submitted that in such circumstances there was no right to appeal. Although the Tribunal allowed Mr. [NAME] time in which to obtain any authority on the question, none could be found.

14. The Tribunal concluded that where a person pays a financial penalty they have conceded that they are liable to pay. In those circumstances, even if they have a technical right to appeal, any such appeal must be doomed to fail on the grounds of the previous admission of liability.

15. In all the circumstances the Tribunal decided that, even if Mr. [NAME] could be considered to be a genuine party to the appeal, which it very much doubted, any such appeal must inevitably fail as it was clear that he had paid the sum demanded, less the early payment discount, and must, therefore, be treated as having admitted his liability to pay.

16. The Tribunal therefore dismissed the appeal of the [NAME] Appellant and proceeded to consider the appeal of the First Appellant alone.

The Law 17. Section 249A of the Act permits a local housing authority to impose a financial penalty for a number of housing offences, amongst which is the offence contained in section 95(1) of the Act of having control of or managing a house which is required to be licensed under Part 3 of the Act but which is not.

18. Section 80 of the Act allows local authorities to designate areas as subject to selective licensing under Part 3 of the Act. Before making a designation, a local authority must be satisfied that either any of the general conditions set out in sections 80(3) or 80(6) of the Act are met or that any conditions specified in the Selective Licensing of Houses (Additional Conditions) (England) Order 2015 (“the Order”) are met.

19. Section 80(9) of the Act states that before making a designation the local housing authority must; “(a) take reasonable steps to consult persons who are likely to be affected by the designation;”

20. The 2006 Regulations make provisions about how any designation under section 80 of the Act is to be publicised. Regulation 9(3)(b) of the 2006 Regulations requires notice of any designation made by a local authority to be given to; “any organisation which, to the reasonable knowledge of the authority (i) represents the interests of landlords or tenants within the designated area; or

5 (ii) represents managing agents, estate agents or letting agents within the designated area;”

21. It is not necessary to consider the law in relation to the elements of an offence under section 95 of the Act in any great detail. This is because there was little in dispute between the parties in this regard. Save for the public law point which is explained below, it was not suggested by the First Appellant that the property was not a house which was required to be licensed under Part 3 of the Act. It was also not suggested that the First Appellant was not a person having control of the property. (The evidence clearly showed that a selective licensing scheme was purportedly in force in respect of the property and that the First Appellant was the managing agent for the property and in receipt of rent from it.)

22. In addition to the public law point the First Appellant relied on section 95(4) of the Act, which provides for a defence of reasonable excuse. Such a defence must be established on the balance of probabilities.

The First Appellant’s Case 23. The First Appellant’s case is set out in the note from Mr. [APPELLANT]. The first point he raises is what has been referred to as the public law point. This has two limbs. The first relates to consultation and the [NAME] to notification. The first argument put forward on behalf of the First Appellant was that the consultation process which the Respondent carried out when deciding whether or not to make a designation under section 80 of the Act was defective. Complaint was made of two aspects of the consultation process. Firstly, it was argued that the consultation carried out by the Respondent did not invite consultees to express a view about whether or not any of the general conditions set out in sections 80(3), 80(6) or the Order were in fact met. Secondly, it was argued that the First Appellant was a person likely to be affected by the designation but was not consulted by the Respondent in breach of section 80(9) of the Act.

24. The [NAME] limb of the public law point was as follows. It was argued on behalf of the First Appellant that the Respondent had failed to comply with its duty under regulation 9(3)(b) of the 2006 Regulations to notify the First Appellant of the making of the designation, thereby impugning the designation itself.

25. The First Appellant’s other argument was that it had a defence of reasonable excuse and that this defence was substantiated by the public law arguments set out above.

26. Once the Respondent’s enforcement policy was provided to the parties the First Appellant made it clear to the Tribunal that the only challenge put forward was in respect of the imposition of the penalty itself. It was conceded that if the Respondent had the power to impose a penalty then there was no challenge to the amount of that penalty. It was not, therefore, necessary for the Tribunal to consider quantum.

6

The Public Law Points 27. [NAME] conceded that the proceedings before the Tribunal are not judicial review proceedings and that it would be exceptional for the Tribunal to, in effect, conclude that the purported designation by the Respondent was unlawful and of no effect.

28. The Tribunal decided not to take the unusual step of concluding that the Respondent’s designation was unlawful or of no effect. It was satisfied that a consultation exercise was carried out over a period of 12 weeks as explained in the [NAME] report produced for the Respondent (see page R29). The First Appellant argued that consultees were not invited to express a view as to the existence of the prescribed general conditions. However, the condition prescribed in section 80(6)(a) is that the proposed area is experiencing a significant and persistent problem caused by anti-social behaviour. The summary of responses to the consultation (page R29) shows that 71% of residents and 66% of consultees overall responded that there was a problem with anti-social behaviour. This shows that consultees were asked about at least one of the prescribed conditions and so the Tribunal rejected that challenge to the consultation process.

29. The other challenge to the consultation process was the failure to consult the First Appellant. It was argued that the Respondent was aware that the First Appellant managed a property in its area as shown by correspondence with them in 2016 relating to an improvement notice in respect of the property (pages A14 to 16) and by virtue of the Respondent paying Housing Benefit directly to the First Appellant from 200 onwards (page A17). The Tribunal reminded itself that section 80(9) of the Act only requires a local authority to take reasonable steps to consult those who are likely to be affected by a designation. It was satisfied that the [NAME] report showed that reasonable steps had been taken. The mere fact that one person who should have been consulted was not in fact contacted does not, in the view of the Tribunal, invalidate the whole of the consultation process and, thereby, the designation.

30. In summary the Tribunal rejected the First Appellant’s challenges in respect of the consultation process.

31. The other limb of the public law point was the argument that the Respondent had failed to comply with the publication requirements of regulation 9(3)(b) of the 2006 Regulations. On behalf of the First Appellant Mr. [APPELLANT] argued that notice of the making of the designation should have been sent to the First Appellant as they were an organisation which represented the interests of landlords within the designated area. It was argued that because the First Appellant managed properties on behalf of a number of different landlords within the designated area they should be regarded as such an organisation. The Tribunal rejected that argument. It concluded that the First Appellant was merely a managing agent acting as such for various

7 landlords. It was not an organisation which represented landlords collectively and, therefore, they were not an organisation falling within the scope of regulation 9(3)(b). In support of this conclusion the Tribunal noted that regulation 9(3)(b)(i) refers to organisations representing landlords and 9(3)(b)(ii) refers to organisations representing managing agents. There is no requirement to notify all landlords or all managing agents. If, as the First Appellant contends, they are an organisation representing landlords because they undertake the management of properties for landlords, it would follow that regulation 9(3)(b)(i) would require all managing agents to be notified. This would make the requirement to notify those representing managing agents in regulation 9(3)(b)(ii) pointless as all those represented would already have been notified under sub-paragraph (i).

32. In addition, regulation 9(3)(b) only requires the local authority to notify organisations which, to the reasonable knowledge of the authority represent the interests of landlords. Whilst the Respondent may have had knowledge of the First Appellant’s connection to the property, this is far from reasonable knowledge of their being a representative organisation, even if they are such.

33. The Tribunal therefore concluded that the Respondent had not failed in its obligations under the 2006 Regulations.

34. It follows, therefore, that all the public law challenges put forward by the First Appellant failed.

The Reasonable Excuse Defence 35. In considering the reasonable excuse defence put forward by the First Appellant the Tribunal bore the following facts in mind.

36. On their own admission, the First Appellant has a substantial involvement in the management of residential properties, managing at least 200 of them. In their representations made to the Respondent after they received the notice of intention to issue a financial penalty they said the following; “we have a portfolio of property ranging up to 200 units at any one time and our portfolio stretches from East to South London, to North London up to Southend on Sea and Great Wakering area” (page A1)

37. They go on to say; “We have properties licensed in Southend on Sea, Redbridge, Havering, Newham, Waltham Forest area and all properties required to be licensed under selective licensing in all these boroughs are appropriately licensed” (page A1) In addition, they have provided copies of correspondence showing how they have been consulted about the possibility of selective licensing schemes being introduced in other boroughs in London (pages A4 to A13)

8 38. In the circumstances, therefore, it was clear that the First Appellant was very well aware of the existence of selective licensing schemes in parts of London and elsewhere. Given the size of the First Appellant’s portfolio this is nothing less than the Tribunal would expect.

39. It was, therefore, slightly surprised by the submission made on behalf of the First Appellant by Mr. [APPELLANT], which was as follows. He argued that the First Appellant was doing their best to run their business properly and efficiently and that it would be unreasonable to expect them to have to check with any particular London borough whether or not a licensing scheme was in force. In the circumstances, he argued that they had a reasonable excuse for what they did.

40. There is no doubt that the First Appellant was well aware of licensing regimes in parts of London where they have properties, including selective licensing designations. They must, therefore, have been well aware of the possibility of such schemes being in existence in other parts of London yet, by their own admission, they did not take any steps to ascertain whether or not such a scheme existed in respect of this particular property.

41. Mr. [NAME] sought to argue that the failure to consult and/or notify the First Appellant added weight to the reasonable excuse defence. The Tribunal rejected that contention. Firstly, it cannot be reasonable for a managing agent with a substantial portfolio of properties to neglect to check whether or not there are any licensing requirements in force but rather to wait to be notified of the making of a designation and, in the absence of such notice, to assume that no such scheme exists. That is the case even if they have in the past managed properties in the area in question. The process of checking is extremely simple and straight forward and can be carried out in just a few minutes.

42. Secondly, it is difficult to see how, even if the First Appellant were indeed consulted about the possibility of the Respondent making a selective licensing designation, they would be in any different position. Being consulted would give them notice that a scheme may be in place at some time in the future, but given their knowledge of such schemes generally, they must – or at least ought to – realise that such a scheme may be put in place anyway.

43. The substance of the First Appellant’s case was that, in the absence of consultation or notice, it was reasonable for them not to make enquiries. In the course of argument, the Tribunal raised with Mr. [APPELLANT] the situation where the First Appellant took on a new property in a London borough in which they had not operated before and in which a designation had been made a few years previously. In such a situation the First Appellant would receive neither a consultation nor notice of the making of a designation as they had had no previous connection with the area in question and so would not be contacted by the local authority. When asked if it were reasonable in such circumstances for the First Appellant to do nothing and simply assume

9 that no licensing scheme was in place, Mr. [NAME] was unable to provide a satisfactory answer. In the Tribunal’s view, this showed the weakness of the First Appellant’s argument.

44. In summary the Tribunal roundly rejected the contention that the First Appellant had a reasonable excuse for committing the offence. Whilst the Tribunal accepted their contention that they did not know that a licensing scheme was in place, it simply could not accept that they acted reasonably by failing to find out whether a scheme existed or not.

45. The Tribunal was, therefore, satisfied that the First Appellant had committed the alleged offence of being in control of a house which was required to be licensed but which was not, contrary to section 95(1) of the Act.

46. It was, therefore, also satisfied that the Respondent had the authority to issue the notice that it did, and to issue a financial penalty.

47. As explained above, there was no challenge to the amount of the financial penalty.

Conclusions 48. It follows from what is set out above that the Tribunal concluded that the appeals should be dismissed and the penalties of £2,500 and £1,000 upheld.

Name: Judge S.J. Walker Date: 1 September 2025

ANNEX - RIGHTS OF APPEAL

• The Tribunal is required to set out rights of appeal against its decisions by virtue of the rule 36 (2)(c) of the Tribunal Procedure (First-tier Tribunal)(Property Chamber) Rules 2013 and these are set out below.

• If a party wishes to appeal against 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.

10 • 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.