Landlord Ordered to Repay Housing Benefit Due to Unlicensed Rental Properties

OUTCOME: Allowed

1

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : BIR/OOFY/HSH/2024/0004 and 5 Properties :

106A and [ADDRESS], Nottingham [POSTCODE]

Applicant : [redacted] Representative :

Mr [COUNSEL], [NAME] and Public Protection, Nottingham City Council

Respondent : [redacted] : None Type of application : Application for a rent repayment order Tribunal members :

Judge C [NAME] [NAME], J.P

Date and place of hearing : Paper determination Date of decision

DECISION

© CROWN COPYRIGHT 2024

2 Decision

By way of a rent repayment order made under section 43 of the Housing and Planning Act 2016, we order that: a. In relation to [ADDRESS], Nottingham, the Respondent must repay to the Council the sum of £5,100.16; b. In relation to [ADDRESS], Nottingham, the Respondent must repay to the Council the sum of £4,244.76. Background 2. On 6 February 2024, Nottingham City Council (“the Council”) made two applications for rent repayment orders under the Housing and Planning Act 2016 (“the 2016 Act”), seeking orders that the Respondent repay housing benefit paid as part of the rent for two properties owned by the Respondent. The two properties are 106A (“106A”) and 108 (“108”) [ADDRESS], Nottingham (“the [COMPANY]”).

3. The basis of the applications is that both properties are in an area of selective licensing, that they were occupied by tenants under tenancies that were not exempt tenancies, and that accordingly they qualified as Part 3 properties under the Housing Act 2004 (“the 2004 Act”) and were required to be licensed. Contrary to section 95 of the Act, they were not so licensed.

4. The application is for repayment of £5,100.16 in respect of 106A, being 52 weeks of housing benefit paid at the rate of £98.08per week. In respect of 108, the repayment sought is £4,244.76 also being 52 weeks of housing benefit paid at the rate of £81.63 per week.

5. Directions were issued by the Tribunal on 13 May 2024. The two applications were consolidated and ordered to be heard together. Both parties were ordered to provide statements of their cases. The applications were then to be determined by a Tribunal on the basis of the documentation, unless either requested a hearing.

6. The Applicant has provided a bundle of documents in support of the applications. The Respondent has not complied with the Directions and has made no submissions to the Tribunal.

7. The Tribunal has considered the applications on the basis of the Council’s written submissions alone. As will be apparent, we grant the applications for the reasons that appear below. Law 8. The relevant provisions of the 2004 Act, so far as this application is concerned are as follows-

3 79 Licensing of houses to which this Part applies

(1) This Part provides for houses to be licensed by [NAME] where—

(a) they are houses to which this Part applies (see subsection (2)), and

(b) they are required to be licensed under this Part (see section 85(1)).

(2) This Part applies to a house if—

(a) it is in an area that is for the time being designated under section 80 as subject to selective licensing, and

(b) the whole of it is occupied either—

(i) under a single tenancy or licence that is not an exempt tenancy or licence under subsection (3) or (4)…

85 Requirement for Part 3 houses to be licensed

(1) Every Part 3 house must be licensed under this Part unless—

(a) it is an HMO to which Part 2 applies (see section 55(2)), or

(b) a temporary exemption notice is in force in relation to it under section 86, or

(c ) a management order is in force in relation to it under Chapter 1 or 2 of Part 4.

95 Offences in relation to licensing of houses under this Part

(1) A person commits an offence if he is a person having control of or managing a house which is required to be licensed under this Part (see section 85(1)) but is not so licensed.

…

(3) In proceedings against a person for an offence under sub-section (1) it is a defence that, at the material time-

…

(b) an application for a licence had been duly made in respect of house under section 87,

4 and that … application was still effective.

(4) In proceedings against a person for an offence under subsection (1) or (2) it is a defence that he had a reasonable excuse—

(a) for having control of or managing the house in the circumstances mentioned in subsection (1), or

(b) for failing to comply with the condition, as the case may be.

9. The relevant provisions of the 2016 Act, so far as this application is concerned, are as follows –

40 Introduction and key definitions

(1) This Chapter confers power on the First-tier Tribunal to make a Rent Repayment Order where a landlord has committed an offence to which this Chapter applies.

(2) A rent repayment order is an order requiring the landlord under a tenancy of housing in England to—

(a) repay an amount of rent paid by [NAME], or …

(3) A reference to ‘an offence to which this Chapter applies’ is to an offence, of a description specified in the table, that is committed by a landlord in relation to housing in England let by that landlord.

Act Section General description of offence 6 Housing Act 2004 Section 95(1) Control or management of unlicensed house

41 Application for rent repayment order

(1) [NAME] or a local housing authority may apply to the First-tier Tribunal for a rent repayment order against a person who has committed an offence to which this Chapter applies. …

(3) A local housing authority may apply for a rent repayment order only if—

(a) the offence relates to housing in the authority's area, and

(b) the authority has complied with section 42.

…

5

42 Notice of intended proceedings

(1) Before applying for a rent repayment order a local housing authority must give the landlord a notice of intended proceedings.

(2) A notice of intended proceedings must—

(a) inform the landlord that the authority is proposing to apply for a rent repayment order and explain why,

(b) state the amount that the authority seeks to recover, and

(c) invite the landlord to make representations within a period specified in the notice of not less than 28 days (“the notice period”).

(3) The authority must consider any representations made during the notice period.

(4) The authority must wait until the notice period has ended before applying for a rent repayment order.

(5) A notice of intended proceedings may not be given after the end of the period of 12 months beginning with the day on which the landlord committed the offence to which it relates.

43 Making of rent repayment order

(1) The First-tier Tribunal may make a rent repayment order if satisfied, beyond reasonable doubt, that a landlord has committed an offence to which this Chapter applies (whether or not the landlord has been convicted).

(2) A rent repayment order under this section may be made only on an application under section 41.

(3) The amount of a rent repayment order under this section is to be determined in accordance with—

(b) section 45 (where the application is made by a local housing authority);

…

45 Amount of order: [NAME]

(1) Where the First-tier Tribunal decides to make a rent repayment order under section 43 in favour of a local housing authority, the amount is to be determined in accordance with this section.

6

(2) The amount must relate to universal credit paid during the period mentioned in the table.

If the order is made on the ground that the landlord has committed the amount must relate to universal credit paid in respect of an offence mentioned in row … 6 .. of the table in section 40(3) a period, not exceeding 12 months, during which the landlord was committing the offence

(3) The amount that the landlord may be required to repay in respect of a period must not exceed the amount of universal credit that the landlord received (directly or indirectly) in respect of rent under the tenancy for that period.

(4) In determining the amount the tribunal must, in particular, take into account—

(a)the conduct of the landlord,

(b)the financial circumstances of the landlord, and

(c)whether the landlord has at any time been convicted of an offence to which this Chapter applies.

46 Amount of order following conviction

(1) Where the First-tier Tribunal decides to make a rent repayment order under section 43 and both of the following conditions are met, the amount is to be the maximum that the tribunal has power to order in accordance with section 44 or 45 (but disregarding subsection (4) of those sections).

(2) Condition 1 is that the order—

(a) is made against a landlord who has been convicted of the offence, or

(b) is made against a landlord who has received a financial penalty in respect of the offence and is made at a time when there is no prospect of appeal against that penalty.

(3) Condition 2 is that the order is made—

(a) in favour of [NAME] on the ground that the landlord has committed an offence mentioned in row 1, 2, 3, 4 or 7 of the table in section 40(3), or

7

(b) in favour of a local housing authority.

(4) For the purposes of subsection (2)(b) there is “no prospect of appeal”, in relation to a penalty, when the period for appealing the penalty has expired and any appeal has been finally determined or withdrawn.

(5) Nothing in this section requires the payment of any amount that, by reason of exceptional circumstances, the tribunal considers it would be unreasonable to require the landlord to pay.

…

51 Housing benefit: inclusion pending abolition

(1) In this Chapter a reference to universal credit or a relevant award of universal credit includes housing benefit under Part 7 of the Social Security Contributions and Benefits Act 1992.

Discussion 10. On the basis of the Council’s bundle of documents, we are satisfied that the Respondent has committed an offence under section 95 of the 2004 Act. The Council’s evidence supports the following determinations: a. The Properties are Part 3 houses as defined in section 79 of the 2004 Act; b. The Properties are in an area of selective licensing. A designation was made on 1 August 2018 designating an area which includes Sneinton as subject to selective licensing for the period 1 August 2018 to 31 July 2023; c. The Respondent is the person having control of or managing the [RESPONDENT] as he is the freehold owner (confirmed by Land Registry official copies), and he received the housing benefit paid by the Council; d. No application for a licence had been made by the Respondent to licence the [RESPONDENT] under the Selective Licensing Scheme. In fact, the documents show that the Respondent did make an application for a licence on 27 December 2019 in respect of 106A, and an application for a licence on 22 December 2019 in respect of 108. However, he failed to pay the full fees for the applications, and they were accordingly refused on 22 November 2021 in respect of 108 and 14 December 2021 in respect of 106A. The Respondent therefore cannot avail himself of the benefit of the defence in section 95(3) of the 2004 Act, as his applications for licences were not “duly made”,

8 not being in accordance with the Council’s requirements, as is required under section 87 of the 2004 Act; e. There is no reasonable excuse, on the papers, for the failure to licence. Of course, we were unable to take into account any excuse the Respondent may have offered as he failed to participate in the applications; f. For the period 1 September 2003 to at least 10 July 2023, 106A has been occupied by an [NAME] with a tenancy agreement at a rent in 2023 of £425.00 per month. Part of that rent was paid by the Council by way of housing benefit at a rate of £98.08 per week; g. For the period 11 October 2018 until at least 21 July 2023, 108 has been occupied by an [NAME] with a tenancy agreement at a rent of £425.00 per month. Part of that rent was paid by Council by way of housing benefit at a rate of £81.63 per week.

11. On the basis of the above, we therefore determine that we should make a rent repayment order.

12. The Council’s bundle of documents included evidence relating to action already taken by them regarding commission of offences under section 95 of the 2004 Act in respect of the Properties, in the form of financial penalties.

13. On 27 November 2023, the Council issued two Final Notices under section 249A of the 2004 Act imposing a financial penalty of £5,990.00 for a section 95 of the 2004 Act offence relating to failure to obtain a licence for each of 106A and 108 (total £11,980.00).

14. Both conditions in section 46 of the 2016 Act are met, and the time for appealing the financial penalties has expired without an appeal being made. The Tribunal is therefore required to make a rent repayment order in the maximum sum that the Tribunal has power to order.

15. We therefore make a rent repayment order as follows: a. In relation to 106A, the Respondent must repay to the Council the sum of £5,100.16; b. In relation to 108, the Respondent must repay to the Council the sum of £4,244.76.

16. Finally, we considered, and rejected, whether our decision should have been affected by the following two procedural points: a. The application form in relation to 108 was incorrectly completed as the property was described as [ADDRESS] in the form, and box 9 (Grounds) was blank. However, the accompanying documentation all related to 108. The Tribunals Directions made it

9 clear that an application had been received for a rent repayment order relating to 108, and surrounding correspondence all referred to both 106A and 108. We did not consider that a reasonable recipient would have been misled by the errors; b. No evidence was provided to explain why the Council considered that the Notices and correspondence sent to the Respondent had been sent to his last known address. The address used is not the address given in the Land Registry documents, nor is it the address that the [NAME] of the Council appear to have used. In the light of the Respondent’s somewhat surprising decision not to engage with the enforcement actions taken by the Council at all (including the financial penalties) we were left wondering whether he had been aware of them. However, we decided that this was not a matter for us as it was clearly the Council’s view that the address they used to serve documents was the Respondents last known address and therefore the proper address for service. Appeal

17. Any appeal against this decision must be made to the Upper Tribunal (Lands Chamber). Prior to making such an appeal the party appealing must apply, in writing, to this Tribunal for permission to appeal within 28 days of the date of issue of this decision (or, if applicable, within 28 days of any decision on a review or application to set aside) identifying the decision to which the appeal relates, stating the grounds on which that party intends to rely in the appeal, and stating the result sought by the party making the application.

Judge C [NAME] First-tier Tribunal (Property Chamber)