Comment

How quickly should an HMO licence application be processed?

Thursday, April 2, 2020 - By David Smith, Former Partner at Anthony Gold Solicitors

David Smith, Partner at Anthony Gold Solicitors

In a recent blog post Richard discussed the government’s online HMO licence application process and raised the question of whether tacit consent can apply to licensing as the government website suggests (read here). He kindly invited me to write a further blog post discussing this issue.

The concept of tacit consent comes from the Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on Services in the Internal Market (here). As with all EU legislation this Directive has been given effect in the United Kingdom by a Statutory Instrument. For the Services Directive this is the Provision of Services Regulations 2009 (here).

The Directive and the UK Services Regulations do a whole lot of things relating to services and have a great deal of impact in terms of how service providers must tell people about the services they offer and what they must offer in terms of complaints procedures. It is very likely that anyone reading this article will have made use of something required by the Services Directive and Services Regulations at some stage. Even though the UK has left the EU and is busy extricating itself from EU legislation the Directive will continue to have substantial effect as the Provision of Services (Amendment etc.) (EU Exit) Regulations 2018 (here) carry on the Services Regulations largely unchanged although with suitable amendments to make them wholly British.

How does an EU Directive have anything to do with HMO licensing?

Well the Services Directive not only applies to how services are provided but also applies to the manner in which governments, whether national or local, authorise people to provide those services.

In the case of Gaskin, R (On the Application Of) v Richmond Upon Thames London Borough Council & Anor [2018] EWHC 1996 (Admin) (here) the High Court held unequivocally that the provision of accommodation in an HMO was a service and therefore that the Services Directive applied to it. Specifically, that the rules about how authorisation to provide the service of accommodation applied. This means, of course, that the Services Directive applies to the HMO licensing regimes operated by local authorities.

The Directive requires at Article 13 that authorisation procedures do a number of things. Whether each local authority actually does this is a matter of opinion. The Directive requires that authorisation procedures:

1. “are clear, made public in advance and be such as to provide the applicants with a guarantee that their application will be dealt with objectively and impartially”;
2. “shall not unduly complicate or delay the provision of the service”;
3. “shall be easily accessible”;
4. “shall provide applicants with a guarantee that their application will be processed as quickly as possible”.

I am quite sure that some readers of this post will feel that the process does none of these things. However, that is not entirely correct. The Housing Act 2004 sets out the process by which local authorities must carry out licensing and specifies in some detail the questions they can ask and the structure of the licensing process. There is also a detailed structure to appeal local authority decisions to an impartial tribunal, the FTT.

The 2004 Act further specifies that local authorities are under a duty to “ensure that all applications for licences … are determined within a reasonable time”. Additionally, the 2004 Act specifies that once a licence has been applied for that the applicant is no longer committing the offence of having an unlicensed HMO, and so there is no delay to landlords providing accommodation services as they can rent property immediately they have made an application. Finally, the government has itself created an online portal which allows applications to be made to most local authorities.

While none of the above may sound like the kind of application service that many landlords will feel the Services Directive should be offering them, it is important to realise that EU Directives are intended to create general obligations on national governments to put in place the mechanisms to meet their requirements. To a large extent the UK government has done exactly that.

So what is Tacit Consent?

The Services Directive is actually quite explicit about how long it should take to deal with a licence application (or authorisation procedures in EU speak). The Directive states that applications must be dealt with:

within a reasonable period which is fixed and made public in advance … when justified by the complexity of the issue, the time period may be extended once, by the competent authority, for a limited time.

In other words every local authority should be specifying clearly how long the licence application is going to take to process, they can extend this if they write and say that they will do so. It is this obligation that the government portal has tried to address with the wording Richard referred to in his post where he received a message stating that the local authority will “contact you within [five weeks]”.

However, the Directive goes further. It also says (and this is the important bit):

Failing a response within the time period … authorisation shall be deemed to have been granted. Different arrangements may nevertheless be put in place, where justified by overriding reasons relating to the public interest, including a legitimate interest of third parties.

It is this first sentence which is commonly referred to as “tacit consent”. It is saying that if the local authority has set a time estimate (as they should have done) for processing a licence application then they can extend it once but once it expires, the licence is granted automatically (by tacit consent) if they have not dealt with it properly.

However, there is a potential get out clause for local authorities. The Directive says that they can assert that this automatic approval should not apply if there is a legitimate public interest. In practice, this is what many local authorities do. They assert on their licensing website that they do not allow for deemed automatically grant of licences on the basis that there is an overriding public interest. The reason given is that it is necessary to protect public safety to allow for inspection of the property first.

However, this is a difficult position to arrive at. Firstly, it is hard for a local authority that has delayed in granting a licence for several months to assert that it has been concerned for public safety during that period. Given that a landlord who has applied for a licence is subject to no substantial control during the period of consideration then a local authority is in a weak position to assert that they are protecting the public by waiting until they inspect the property. Second, not all local authorities inspect properties before granting licences. A local authority that does not inspect at all is in an even weaker position than one that inspects on a delayed basis as the public interest in having an inspection before licence grant cannot apply.

Finally, it might in fact be more protective of the public for a local authority to grant licences based on information provided in the application and based on a set of conditions that are standardised and then inspect properties and prosecute for failure to adhere to the relevant conditions or revoke licences where the property was not at the standard suggested by the landlord’s application form.

Implications

The implications of tacit consent are potentially huge. If it is the case that tacit consent does apply and that local authorities cannot simply avoid the issue by claiming public safety then they are in a very difficult position. For example, any local authority that failed to meet its targets for processing a licence application would find that this application was granted automatically. If there was no clearly publicised standard terms for such an automatically granted licence then the landlord would effectively be given a licence with no limits on it at all. In addition, a local authority would not then be able to decide to refuse a licence, because it would alredy have been granted. They would instead have to try to find a justification to revoke the licence, which is altogether harder than refusing one.

Conclusions

This is an issue that will not go away. It is almost inevitable that it is going to end up in the Tribunals and possibly beyond them in the Court of Appeal. However, local authorities also need to look closely at their licence application processes and start trying to set realistic targets for turning around licences which they are then going to meet. Ultimately, this is not just an issue of the law but one of simple fairness to landlords who have made the effort to apply for a licence and is important in building confidence among landlords that licensing is an effective mechanism which they should engage with rather than just a costly piece of paper.

The author of this blog, David Smith, is a Former Partner in the Housing team at Anthony Gold Solicitors and outgoing Policy Director of the RLA. He will shortly join JMW Solicitors as a Partner.

Please note that the views and opinions expressed in these blogs are those of the author and do not necessarily represent the views of London Property Licensing. These blogs are designed to stimulate discussion and debate within the property industry. This article does not represent legal advice and should not be treated as such.

For all the latest news and comment, you can sign up for the free London Property Licensing newsletter here.

Central Housing Group Advert Sign up to our London Property Licensing newsletter Gas safe Register advert Water for Kids charity advert