Khan and Reid: the Upper Tribunal considers the length of landlords’ property licences

Tuesday, December 5th, 2017 - By Sarah Cummins, Solicitor at Anthony Gold Solicitors

Twice this year the Upper Tribunal (UT) has considered appeals relating to the length of a landlord’s property licence. The first appeal was Waltham Forest v Khan [2017] UKUT 153 (LC) and the second was Waltham Forest v Reid [2017] UKUT 396 (LC).

In both appeals the UT examined Waltham Forest’s policy relating to the duration of selective licences granted under Part 3 of the Housing Act 2004. The specific issue in both appeals was whether Waltham Forest was justified in granting the landlord a shorter licence limited to one year.

Background

Part 3 of the Housing Act 2004 enables local authorities to implement selective licensing schemes to cover all privately rented accommodation within a particular area. Selective licensing is designed to assist local authorities improve housing conditions in the private rented sector. Schemes are often introduced to deal with low housing demand or anti-social behaviour.

Waltham Forest introduced a borough-wide selective licensing scheme in 2015. The effect of the scheme is that all landlords in the borough, even those who let to one family or one individual, have to apply to Waltham Forest for a property licence.

Licences are usually granted for the maximum length of five years. Local authorities, however, have the discretion to grant shorter licences and they usually have policies setting out factors that housing officers should consider when determining the length of a licence.

If a landlord is not satisfied with the local authority’s decision it is able to appeal to the First-Tier Tribunal (Property Chamber) (FTT). Appeals of FTT decisions lie to the Upper Tribunal (UT).

Waltham Forest v Khan

In Khan, the Upper Tribunal agreed with the local authority’s decision to grant the landlord a shorter licence on the basis that the planning status of the property needed to be regularised.

Mr Khan, the landlord, had converted several flats without obtaining planning permission from the local authority. When Waltham Forest’s selective licensing scheme came into force he applied for licences for the flats. Waltham Forest granted licences but limited their duration to one year so that Mr Khan could regularise the planning status of the flats in that period. Mr Khan appealed the local authority’s decision to the FTT.

The FTT overturned the local authority’s decision increasing each licence to the maximum period of five years. The FTT was of the view that compliance with planning law was not relevant to the issue of licensing. As planning considerations did not fall within the statutory criteria that local authorities are required to take into account when determining licensing applications, it was commonly thought that breaches of planning were not relevant to the local authority’s decision to grant or refuse a licence or the terms of the licence.

The local authority successfully appealed to the UT. The UT stated that in light of the objective behind Waltham Forest’s selective licensing scheme, to reduce the area’s significant and persistent problem with ASB which landlords were failing to combat, it was not possible to state that a breach of planning control was irrelevant to the local authority’s licensing decisions. Martin Rodger QC, the Deputy Chamber President commented that it was unnecessary and unrealistic ‘to regard planning control and Part 3 licensing as unconnected policy spheres in which local authorities should exercise their powers in blinkers.’ Local authorities were perfectly entitled to consider the planning status of a property when determining whether to grant or refuse a licence or the terms of any licence granted. Waltham Forest’s policy of granting landlords in breach of planning law shorter licences to allow them time to resolve outstanding planning issues was deemed to be a rational and pragmatic course.

Waltham Forest v Reid

The UT came to a different conclusion in Reid. In this more recent appeal, the UT concluded that it was not reasonable for Waltham Forest to reduce a landlord’s licence to allow time for a conviction to become spent.

In this case the landlord, Mr Reid, had failed to obtain selective licences for his properties. He was convicted in the magistrates’ court for failing to license five of his properties and fined. Mr Reid subsequently applied to license the properties. Licences were granted but only for a one year term. Mr Reid appealed to the FTT and the Tribunal extended the licences to expire at the end of Waltham Forest’s selective licensing designation in 2020. Again, the local authority appealed to the UT.

This time the UT upheld the FTT’s decision to extend the landlord’s licence past the shorter one-year period. In this case the decision to grant the landlord a shorter licence was not to enable the property to be legally rented while the landlord remedied the issue that gave rise to the shorter licence, but it was for the landlord’s criminal conviction to become spent. Under the Rehabilitation of Offenders Act 1974 where a person is fined, the conviction becomes spent after a year.

The UT considered Khan and commented that the local authority had been justified in granting a shorter licence in that case because there was a continuing breach of planning law that the local authority was right to want to ensure had been discontinued. In Reid the sole reason for limiting the licence term was to allow the conviction to become spent. Unlike, the planning issue, this had nothing to do with the purpose of the selective licensing scheme and local housing conditions.

What can be learnt from these two cases?

Local Authority Policies
These cases serve as yet another reminder of the need for local authorities to adopt flexible, nuanced polices that are capable of justification. The effect of Waltham Forest’s policy in Reid was that all landlords with unspent convictions would automatically be granted a shorter licence regardless of the relevance of the convictions to the grant of the licence or the length of the licence. This was found to be unreasonable.

In contrast, Waltham Forest was able to justify its policy in Khan. The grant of a shorter licence was found to be a sensible solution to problems that can arise from the overlapping and sometimes irreconcilable planning and licensing regimes. Landlords seeking to regularise the planning status of a property are often required to obtain possession. However, under the Housing Act 2004 a landlord is not able to serve a section 21 notice to regain possession of an unlicensed property. Therefore, if the local authority refused to grant a licence, the landlord would not be able to gain possession in order to regularise the planning status. However, if the local authority granted a licence it would be sanctioning the letting of a property in breach of planning control. The grant of a one year licence, which allowed the landlord time to regularise the planning issues whilst lawfully letting the property was found by the UT to be a sensible and practical solution to this problem.

How much weight should the tribunal give to the local authority’s policy?
In both cases there was also a discussion about the role of the Tribunal and the deference that needed to be given to local authority policies. As has been frequently emphasised in recent UT decisions, the FTT hearing is a ‘re-hearing.’ The FTT’s job is not to simply review the local authority’s decision and determine whether it was decided properly but to come to its own decision on the landlord’s application. The result is that the FTT hears the evidence, which can include evidence which was not before the local authority, and decides the application afresh.

The inevitable question then is how much deference should the FTT give to local authority policies. It was emphasised in both Khan and Reid that substantial weight should be given to the policies of local authorities as they have greater knowledge and experience than the tribunals and courts of housing conditions within their areas. However, that does not mean that the Tribunal cannot come to a different decision to that of the local authority. The FTT, unlike the county court, is a specialist property tribunal with its own expertise and while proper consideration should be given to a local authority’s policy, the Tribunal is entitled to depart from the policy and come to its own conclusion.

If you have any questions and would like legal advice, please contact Sarah Cummins, Solicitor in the Housing team at Anthony Gold. Her email is sarah.cummins@anthonygold.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.

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