HMO Licensing and Fees, Again!

Friday, July 8th, 2016 - By David Smith, Partner at Anthony Gold Solicitors

When a landlord seeks a licence from a local housing authority to use his property as an HMO or because a selective licensing scheme is in operation the local authority is entitled to charge a reasonable fee, set by them, as a pre-condition for processing the licence application.

The power to charge a fee is set out in s63(3) of the Housing Act 2004, or in s87(3) for selective licences, the two provisions are essentially the same. The fee charging power is limited by s63(7) (or 87(7)). These state that a fee must reflect the cost of running the scheme. To put it another way the local authority cannot make a profit. The fee is however allowed to reflect all of the costs including the operation of the scheme itself, education about the scheme, and the necessary inspections and enforcement activity to make the scheme effective.

And that is it! No charge can be made in respect of any other function under the licensing regime, such as a variation of a licence, a Temporary Exemption notice or anything else. In fact, this point was endorsed some time ago by the Residential Property Tribunal (as it was called at the time) in the case of Crompton v Oxford City Council CAM/38UC/HMV/2013/0006-7. A case I am particularly familiar with as it was my own! This decision made clear that the power to charge a fee was only the power provided by s63 (or s87 as appropriate) and no other fees were permissible.

It now appears that some local authorities are now seeking to charge fees again. Take the example of Tower Hamlets. They are looking to charge a fee (see here) for the provision of a Temporary Exemption Notice (£30) and for any licence variation (£30), the very thing that the FTT said was unlawful in the Crompton case. It is very disappointing that despite such a clear decision which was well publicised at the time Local Authorities continue to try to seek charges that are unlawful.

It may be that some local authorities have misunderstood the Supreme Court decision in R(Hemming) v Westminster City Council [2015] UKSC 25. This case involved sex shop licensing and stated that where a Local Authority is allowed to charge for licence applications that fee can include the overall cost of enforcement. However, this says nothing about additional fees for other matters and in no way authorises the kind of additional fees that Tower Hamlets and others are looking to charge.

Any landlord being asked to pay these fees should probably refuse, make clear that they are unlawful, and state that if the application is refused as a result of an unlawful fee that they will appeal.

If you have any questions and would like legal advice, please contact David Smith who is a Partner in the Housing team at Anthony Gold. His email is David.Smith@anthonygold.co.uk

Note: In August 2016, Tower Hamlets Council informed London Property Licensing that they had reviewed their schedule of charges and had removed the application fee for a Temporary Exemption Notice or licence variation. We are grateful to Tower Hamlets for resolving this issue and would encourage other councils to do the same.