First-tier Tribunal Upholds Financial Penalty for Unlicensed HMO

OUTCOME: Dismissed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case Reference : HAV/00MR/HNA/2024/0609

Property : 84 [ADDRESS], [POSTCODE] Applicant: [redacted]

Respondent : [redacted] Type of Application :

Appeal against a financial penalty under s.249A of the [NAME] Tribunal Members :

Judge H [NAME] [NAME] : [ADDRESS] [POSTCODE] Date of Hearing : 15 April 2025

Date of Decision : 29 April 2025

DECISION

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Decision of the Tribunal

1. The decision by the Respondent to impose a financial penalty of £8,125 is upheld.

2. In the light of the above, the appeal made by the Applicant against the imposition of a financial penalty imposed by the Respondent against him, under section 249A and schedule 13A of the [NAME], is therefore dismissed.

Introduction

3. The Applicant appeals against the imposition of a financial penalty imposed by the Respondent pursuant to s. 249A of the Housing and Planning Act 2016. The Notice of Financial Penalty was dated 29 November 2024 and the appeal was lodged by the Applicant on 9 December 2024.

4. The civil penalty of £8,125 was imposed on the Applicant as owner of the Property by reason of the Applicant’s breaches of the section 72 of the [NAME] in relation to the licensing of a House in Multiple Occupation (“HMO”). The offence was said to have occurred between 24 July 2024 and 15 October 2024.

5. The Property comprises a two storey house and contains a kitchen/diner, five rooms presented as bedrooms and a number of shower rooms capable of communal use.

6. The Respondent carried out an unannounced inspection of the Property on 3 June 2024 but was not granted entry; the Applicant told the officers attending that he lived there with one tenant. A further unannounced visit occurred on 14 June 2024 and a calling card left at the Property; in response the Applicant informed the Respondent “For some reason you are giving me stress and problems which I do not need being 83 years of age and not in good health”.

7. The Respondent then obtained a Warrant to enter Premises from the Magistrates Court; this warrant was exercised on 24 July 2024. The Respondent contends that the Applicant was aggressive towards council officers during the visit and subsequently on 29 July 2024. On the same date, the Respondent instructed the Applicant to apply for an HMO licence.

8. The Respondent on 8 August 2024 obtained copies of four tenancy agreements relating to current tenants of the Property.

9. A Notice of Intent to issue a Financial Penalty dated 4 September 2024 was served on the Applicant, referring to an intent to issue a penalty of £12,500, comprising two elements, £10,000 for a failure to obtain a property licence and an additional £2,500 for acts or omissions demonstrating high culpability – this

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related to attempting to mislead the council on the number of occupants and the Applicant’s aggressive behaviour.

10. On 16 October 2024, the Applicant applied for an HMO licence in relation to the Property.

11. The Respondent subsequently imposed a reduced financial penalty of £8,125 on 29 November 2024. A 25% reduction was applied to take account of the Applicant’s HMO licence application and an additional 10% for addressing certain works identified by the Respondent.

12. The Tribunal did not inspect the Property as it considered the documentation and information before it in the set of documents prepared by the Respondent enabled the Tribunal to proceed with this determination.

13. Prior to the hearing, the Applicant applied for this to be postponed on health grounds, explaining that he was 83 and has a condition which causes extreme fatigue. This application was refused by the Tribunal, the Applicant being invited to submit medical evidence. He subsequently applied again, this time accompanied by a note from his GP which confirmed he was due to undergo studies for obstructive sleep apnoea. The GP’s note did not say he was unfit to attend the hearing nor did it give an indication of when the condition would change. The Tribunal considered that the hearing should proceed and that reasonable adjustments such as regular breaks could be introduced to accommodate the Applicant’s condition.

14. This has been a determination following a hearing on 16 April 2025. The documents that the Tribunal were referred to are in a bundle of 329 pages, the contents of which included details of the issues found on inspection by the Respondent, copies of notices served and details of the methodology used to calculate the financial penalty. It also included a statement of case and evidence from the Applicant and witness statements from three officers of the Respondent (Mr [RESPONDENT], Ms [RESPONDENT] and Mr [RESPONDENT]) as well as a witness statement from Mr [NAME] of [NAME]. The bundle also contained correspondence between the parties, including letters from the Applicant copied to various people including the chief executive of the council, an [NAME] and a [NAME]. The contents of all these have been noted by the Tribunal. No financial information had been provided by the Applicant notwithstanding directions to so from the Tribunal.

15. The Applicant did not attend the hearing. The Tribunal heard from Ms [COUNSEL], counsel for the Respondent, and Mr [COUNSEL] of the Respondent. Ms [RESPONDENT], Ms [RESPONDENT] and Mr [RESPONDENT] of the Respondent were also in attendance but did not contribute.

16. Having considered all of the documents provided and heard the submissions of the parties, the Tribunal has made determinations on the issue as follows.

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Absence of the Applicant

17. The Applicant had confirmed prior to the hearing that he would not be attending. The Tribunal reconfirmed the day before the hearing that it would be going ahead and the Applicant in response stated his continuing refusal to attend.

18. Rule 34 of the Tribunal’s Rules of Procedure permit the Tribunal to proceed with a hearing in a party’s absence if it:

“(a) is satisfied that the party has been notified of the hearing or that reasonable steps have been taken to notify the party of the hearing; and (b) considers that it is in the interests of justice to proceed with the hearing”

19. The Tribunal had already refused the Applicant’s requests for an adjournment but in addition considered whether to proceed in the Applicant’s absence. The Tribunal is satisfied that he had been notified of and was fully aware of the hearing.

20. The Tribunal is also satisfied that the Applicant was fully aware that the Tribunal could make adjustments to address his condition but had nonetheless chosen not to attend. He had not produced satisfactory evidence that he was unable to attend. He had also not produced evidence that his condition was likely to improve so as to allow a hearing in the foreseeable future. He could have sent a representative in his place but chose not to do so.

21. The Tribunal’s overriding objective includes a requirement to avoid delays, so far as compatible with the proper consideration of the issues. The Applicant had stated his case in advance and the Tribunal was able to make a proper assessment of this. A potentially indefinite delay was not in the interests of justice. The Applicant’s case as stated appeared to be weak and there was a possibility that the applications to adjourn were simply a tactic to avoid payment of a fine levied as a consequence of an offence the Applicant had committed.

22. As a result of these various factors, the Tribunal considered that it was in the interests of justice to proceed with the hearing and accordingly chose to proceed in the Applicant’s absence.

The Law

23. In order to impose a financial penalty, there must be a “relevant housing offence” committed by the person served with the notice.

24. Section 249A of the 2004 Act provides:

“249A Financial penalties for certain housing offences in England

The local housing authority may impose a financial penalty on a person if satisfied, beyond reasonable doubt, that the person's conduct amounts to a

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relevant housing offence in respect of premises in England.

In this section “relevant housing offence” means an offence under— (a) section 30 (failure to comply with improvement notice), … (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. … (6) Schedule 13A deals with— the procedure for imposing financial penalties, appeals against financial penalties, enforcement of financial penalties, and guidance in respect of financial penalties...”

25. The “relevant offence” relied upon in this case is section 72 of the [NAME]. Section 72 (1) provides that:

“A person commits an offence if he is a person having control or managing an HMO which is required to be licensed under this Part (see Section 61 (1)) but is not so licensed”

26. An HMO is a house in multiple occupation, as defined in section 254 of the [NAME]. For these purposes, an HMO is a property comprising living accommodation occupied by persons who do not form a single household as their main or only residence, rent is paid by at least one such occupier and that two or more of the households in occupation share a kitchen and/or a bathroom and/or toilet.

27. An HMO is required to be licensed if the number of households in the HMO equal a specified number. For all properties, this is five households, although local authorities have powers to lower this number in specified areas. This is the case here, where Portsmouth City Council have designated the whole of the area covered by the council as subject to additional licensing from 1 September 2023. The effect of this designation is to require any HMO occupied by three or more households to be licensed as an HMO.

28. This means that if the Property at any time from 1 September 2023 was an HMO and occupied by three or more households, then the person who had management or control of the Property would be required to have an HMO licence from Portsmouth City Council. A failure to do so would be an offence pursuant to section 72(1) of the [NAME].

29. The questions the Tribunal must consider are:

a) Whether the Tribunal is satisfied beyond reasonable doubt that the offence has been committed.

b) If an offence is found to have been committed, the question then arises as to whether, on the balance of probabilities, the Applicant has a defence.

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c) There then must be consideration of whether the financial penalty has been properly imposed by reason of the requirements in section 249A of and paragraphs 1 to 8 of Schedule 13A of the 2004 Act.

d) The final consideration is whether the penalty imposed is for an appropriate sum.

The Applicant’s Case

30. The Applicant provided a statement of case, setting out his reasons for appealing against the imposition of a financial penalty. The arguments centre around his treatment by the Respondent, he says that he is 83 and in poor health with happy tenants, the council entered his property without consent, have bombarded him with correspondence together with “numerous belligerent and aggressive phone calls from various departments of the Private Sector Housing of Portsmouth City Council”. He argues that the Respondent should withdraw the demand due to the effect it is having on his health and instead negotiate a settlement.

31. He provided examples of his correspondence with the Respondent; the letters from him are in the Tribunal’s opinion rather belligerent in tone, containing words such as “cruel and non-caring” in capitals and large font size. These are often copied to the chief executive of the council, the local [NAME], the Magistrates Court and the local press.

32. He sets out details of works and actions being done to comply with the requirements of an HMO licence; these comprise paying the licence fee of £195, obtaining an electrical safety report and carrying out remedial works costing £650, providing a gas/heating report/certificate at a cost of £100 and spending £750 on remedying roof leaks.

33. The only details provided of his financial situation or ability to pay is a statement that he is “a pensioner aged almost 84 years of age on a state pension – I cannot sell the house as it is negative equity”.

The Respondent’s Case

34. The Respondent’s case is primarily set out in four witness statements, being from [NAME] (Housing Regulations Licensing Team Leader), [NAME] (Housing Regulations Licensing Team Leader), [NAME] (Housing Regulations Officer) and [NAME] (Deputy Site Moderation Manager of [NAME]). The first three work for the Respondent and attended the hearing. These demonstrate the process gone through to establish that the Property was an HMO, that it required but did not have a licence, establishing that the Applicant managed or was in control of the Property and in establishing the level of financial penalty and adjusting this, following submissions from the Applicant.

35. The Respondent’s counsel, Ms [COUNSEL], also provided a skeleton argument in advance of the hearing. This essentially summarised the Respondent’s case. This is that the Applicant had committed an offence under section 72(1) of the

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[NAME] and had exacerbated this by seeking to prevent the Respondent inspecting the Property and by breaches of the required safety standards. They argued that the Applicant’s mitigation of age and ill-health conflicted with his ability to use online websites to advertise the Property together with his ability to create tenancy agreements and collect rent. The penalty had been calculated in accordance with their enforcement policy, including the application of a discount. The proper procedure had been followed and the penalty was set at an appropriate level. The Respondent therefore argued that the appeal should be dismissed and the financial penalty upheld.

36. The Tribunal asked various questions to the Respondent. Mr [RESPONDENT] explained that their case was that there were at least three people in occupation of the Property, triggering the requirement for an HMO licence. When they carried out the inspection, there were at least four people in occupation, in addition to the Applicant. The Applicant’s room had clothes and a made bed in it and the council tax records said he lived there but the Applicant had claimed at first to live elsewhere and then said he did live there. As a result, Mr [NAME] could not be fully sure whether he lived there and so make the number of occupants five.

37. Mr [APPELLANT] was asked about the Applicant’s accusation that the council had been aggressive and bombarded him with correspondence. He denied that any of the Respondent’s officers had been aggressive and suggested that the Applicant had been the one who was aggressive. He said he had received personal abuse from the Applicant, for example shouting and swearing at him when they had inspected the Property. The Applicant had also telephoned Mr [APPELLANT], saying he would get him sacked and threatening to “shove a rocket up your backside”. Mr [RESPONDENT] said that all bar one of the letters sent by the Respondent to the Applicant were in the bundle and he felt all were appropriate for a council to send.

38. The Tribunal also asked about the conclusion that the Applicant had a high degree of culpability in relation to the offence. Mr [APPELLANT] explained that the Applicant had deliberately sought to mislead the council as to the number of occupants in the Property and to prevent access. In addition, there was numerous breaches of the safety standards in the Property, referring to a collapsing ceiling, damp and mould and two large fridge freezers blocking the escape route in the event of fire. In addition, a discount had been applied as a result of the Applicant addressing the issues raised.

Consideration

39. As there is a criminal offence at the heart of the jurisdiction to impose a financial penalty, the Tribunal must be satisfied beyond reasonable doubt of the commission of the offence.

40. In this case, the offence in question is the management or control of an HMO without a licence, pursuant to section 72(1) of the [NAME].

41. The Tribunal began by assessing whether the Property was an HMO. It comprised bedrooms together with shared bathrooms and a shared kitchen.

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Neither party had argued it was not an HMO. The Tribunal were satisfied that the Property was an HMO at all material times.

42. It then considered whether the Applicant was in control or managed the Property. It was registered in the Applicant’s name at the Land Registry and he controlled access to the Property. He also was undertaking the letting, as evident from the witness statement of Mr [RESPONDENT] and the tenancy agreements produced to the Respondent and contained in the bundle. It was clear to the Tribunal that the Property was managed and controlled by the Applicant.

43. It is not disputed that the Property was not licensed as an HMO.

44. The remaining question at this stage was whether there were sufficient separate households in occupation of the Property to require an HMO license. The Applicant had originally told the Respondent that only he and one tenant were in occupation. However, on the day of the inspection on 24 July 2024, the Respondent has argued that there were four tenants in occupation, evidenced by the physical inspection and the tenancy agreements. The Applicant has not disputed this. The Tribunal is satisfied beyond reasonable doubt that there were at least four tenants in occupation and that these formed separate households.

45. The Tribunal was not able to ascertain beyond reasonable doubt whether the Applicant was also in occupation on that date. It would seem likely based on the made bed and clothing in the Applicant’s room but, as a result of the Applicant’s changing position on this, it is not possible to be more definite.

46. However, Portsmouth City Council’s additional licensing scheme requires only three households to be in occupation for a licence to be required. As the Tribunal is satisfied that there were at least four people in occupation on 24 July 2024, a licence would have been required as at that date. As the Property was not licensed at that date, the Applicant was at that point in control and managing an HMO that required a licence but was unlicensed.

47. The Tribunal is therefore satisfied beyond reasonable doubt, based on the evidence provided by the Respondent, that the Applicant has committed an offence pursuant to section 72(1) of the [NAME].

48. The question then arises as to whether the Applicant has a defence to the commission of the offence, which it needs to establish only on the basis of a balance of probability. The Applicant has not denied that he committed the offence but instead argues the penalty should not be imposed due to his age and health, his treatment by the Respondent and the purported illegal entry into the Property.

49. The Tribunal considered the Applicant’s arguments with care. It does not consider that age or health are a defence to the commission of the offence but could amount to a reasonable excuse. However, it finds that the Applicant was fully capable to run the Property as an HMO, shown by his ability to advertises rooms for let, produce tenancy agreements, carry out repairs and apply for an HMO licence. It therefore concludes that the Applicant’s age and health do not

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provide a defence or reasonable excuse for his failure to obtain an HMO licence.

50. It also considered whether the Respondent’s behaviour was such that a financial penalty was not appropriate. It finds that the Respondent’s behaviour was at all times appropriate and proportionate. It took reasonable steps to investigate the potential breach and its correspondence was in no way excessive or aggressive. It was right to be concerned at the potential breach, as a result of the potential danger to the safety of the occupants of the Property. The Respondent faced substantial obstruction and obfuscation from the Applicant, for example by refusing entry, attempting to use his age and health as excuses to prevent investigation and the use of threats against council officers, including Mr [RESPONDENT]. It also finds that the Respondent was fully entitled to obtain a warrant to obtain entry, given the Applicant’s behaviour. The warrant to enter was legal and proportionate and this provides no defence or excuse for the offence.

51. The Tribunal therefore concludes that the Applicant has no defence or reasonable excuse for the offence and that the imposition of a financial penalty was a legitimate and proportionate response by the Respondent to the offence.

52. There then must be consideration of whether the financial penalty has been properly imposed by reason of the requirements in section 249A of and paragraphs 1 to 8 of Schedule 13A of the 2004 Act. Dealing with those requirements in Schedule 13A:

a) Paragraph 1 – this requires a local housing authority to give notice of its intention to impose a financial penalty upon a person under s.249A, and in this case, this was done as noted above, on 4 September 2024;

b) Paragraph 2 – the notice of intention must be given before the end of six months beginning with the day on which the authority has sufficient evidence of conduct to which the penalty relates and, given that the notice of intention was issued on 4 September 2024 and the inspection at which the evidence was gathered took place on 24 July 2024, this is within the required period;

c) Paragraph 3 – the notice must set out the amount of the penalty, the reasons for imposing it and the right to make representations – all of this detail was included within the notice as produced before the Tribunal and which it is accepted by the Applicant was served upon her;

d) Paragraph 4 – there is a right to make representations regarding the intended imposition of the penalty within 28 days after the notice of intention is served and in this case, such right was given and duly exercised by the Applicant;

e) Paragraph 5 – the Respondent is required to decide, having considered

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the representations, whether to proceed to impose the penalty and, if so, in what amount – again, in this case, this was done;

f) Paragraph 6 - if imposing a penalty, the authority must issue a final notice, which was done in this case on 29 November 2024;

g) Paragraph 7 - the final notice must require payment within 28 days after the day on which it was given – in this case, that requirement was imposed and set out in the notice;

h) Paragraph 8 - the final notice must set out (a) the amount of the penalty (b) the reasons for imposing the penalty (c) information about how to pay the penalty (d) the period for payment of the penalty (e) information about rights of appeal (which it did) (f) the consequences of a failure to comply with the notice. All these requirements were complied with.

53.

Accordingly, the Tribunal is satisfied beyond reasonable doubt that the offence under section 72(1) of the [NAME] has been committed and that the procedural requirements of s.249A and Schedule 13A of that Act have been complied with. Further, it is satisfied that no defence or reasonable excuse is made out, whether on the balance of probability or otherwise.

Accordingly, the Respondent was entitled to impose a financial penalty and that the Tribunal should support that decision, which it does.

54. The Respondent argued that the Applicant has a high level of culpability because he had deliberately sought to mislead the council as to the number of occupants in the Property and to prevent access, together with the various breaches of safety standards in the Property. The Tribunal agrees with this assessment, finding that the Applicant’s approach had been aggressive, given the tone of his emails and telephone calls to the Respondent. In addition, he had deliberately sought to evade inspection and the penalty.

55. The Tribunal has considered the Respondent’s Enforcement Policy. As a preliminary point, it finds that this is suitable policy, complying with the relevant statutory requirements for such policies. The policy contains minimum and maximum penalties of £5,000 and £30,000 and a menu of penalties to be applied. This includes a penalty of £10,000 for failing to have a licence for an HMO and an additional £2,500 for cases with high culpability. There are also discounts for applying for an HMO licence (25%) and remedying identified defects (10%). All of these have been correctly applied by the Respondent, giving an initial penalty of £12,500 and a discount of £4,175, resulting in a penalty of £8,125. The Tribunal agrees with the methodology applied and the resulting figures, these come from a correct application of the policy.

56. The Tribunal then considered whether there were any mitigating factors that

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should result in the financial penalty being reduced further. In doing so, it considered the various defences put forward by the Applicant, including his age, health, treatment by the Respondent and the supposedly unlawful entry. For the same reasons given above in relation to defence/reasonable excuses, the Tribunal finds that none of these amounted to mitigating factors. As a result, it considered no further reduction was appropriate.

57. It then considered whether the Applicant’s financial circumstances should be taken into account as an additional mitigation. However, no details of his financial position had been provided, beyond a few assertions in his statement of case. Without proper details, it was not able to consider any discount on this ground.

58. Overall, the Tribunal considers a financial penalty of £8,125 a fair and appropriate level under the circumstances, including when taking into account the Applicant’s ability to pay.

59. Accordingly, the Tribunal determines that the financial penalty imposed on the Applicant by the Respondent should be £8,125.

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Rights of appeal 1. A person wishing to appeal this decision to the Upper Tribunal (Lands Chamber) must seek permission to do so by making written application by email to [EMAIL]

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.

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.