Successful appeal against a civil penalty for an alleged HMO licensing offence

Tuesday, August 13th, 2019 - By Richard Tacagni, Managing Director at London Property Licensing

Since 2017, local authorities have been able to impose a financial penalty if they are satisfied, beyond reasonable doubt, that someone has committed a relevant housing offence in England.

The relevant offences are:

• failure to comply with an improvement notice;
• operating a licensable but unlicensed property in breach of a mandatory HMO, additional or selective licensing scheme, or failure to comply with a licence condition;
• failure to comply with an HMO overcrowding notice; or
• failure to comply with the HMO management regulations.

If a relevant offence has been committed, the council can issue a penalty of up to £30,000 per offence without having to secure a conviction in the Magistrates Court.

In reaching their decision to impose a financial penalty, statutory guidance says councils should consult the Crown Prosecution Service Code for Crown Prosecutors which outlines the evidential and public interest tests that should be satisfied before taking action.

The council must first issue a notice of intention to impose a penalty, setting out the proposed amount and the reasons for doing so. They must allow 28 days for the recipient to make a written representation.

Once a final notice has been issued, the recipient can appeal to the First-tier Tribunal if they do not agree with the council’s decision.

In one recent case, the London Borough of Islington issued a safeagent registered managing agent with a civil penalty of £14,999 for allegedly operating a licensable but unlicensed HMO. A 20% reduction was offered in return for prompt payment.

The company had submitted a written representation objecting to the penalty as they disputed any offence had occurred. However, the council still issued the final penalty notice.

This left the company in a predicament. Do they admit to a criminal offence, pay the civil penalty and benefit from a 20% discount or do they lodge an appeal and challenge the council’s decision? As this stage, London Property Licensing were asked to assist.

Following a case review, it transpired the property had been let to four friends on a single Assured Shorthold Tenancy with a no subletting clause.

This was below the licensing threshold of five people which is why no licence application had been submitted. The company managed a sizeable portfolio including some licensed HMOs and they were familiar with the licensing rules if letting to five or more people.

According to the agents, they had found no evidence of sub-letting on interim inspections and the tenants denied they had sublet any rooms. They admitted allowing friends stay with them from time to time, but only as guests.

Having considered all the circumstances, a decision was made to lodge an appeal with the First-tier Tribunal on evidential and procedural grounds, and also to challege the level of penalty imposed.

Following submission of the appeal, the council wrote to advise that they had reviewed the case and the civil penalty would be withdrawn. As a result, the agent withdrew their appeal and the case was satisfactorily resolved, thereby minimising time and expense incurred by both parties.

With many councils now issuing civil penalties as an alternative to prosecution, it is important there is a sound evidential basis to satisty a criminal burden of proof, that the prescribed process is followed and that the penalty reflects the severity of the alleged offence, having regard to statutory guidance.

If a landlord or agent believes a penalty has been unfairly imposed, or that the penalty is unreasonably high, the First-tier Tribunal appeals process provides the opportunity to challenge the decision.

The author of this blog, Richard Tacagni MCIEH CEnvH, MD, London Property Licensing was instructed to represent the managing agent in this case. You can contact him at Richard@londonpropertylicensing.co.uk.

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.

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