Landlord’s £5,000 penalty cancelled following successful appeal

Wednesday, September 22nd, 2021 - By Richard Tacagni, Managing Director at London Property Licensing

In Summer 2020, I was approached by a private landlord for advice. He was renting out a House in Multiple Occupation (HMO) in the south of England. He was an experienced landlord operating several properties in the local area, and well aware of licensing requirments.

Following an inspection of the property, the borough council had issued a notice of intent to impose a penalty of £5,000 for an alleged licensing offence.

I agreed to undertake a case review, examine the paperwork and offer professional advice in my capacity as a Chartered Environmental Health Practitioner.

Case review to establish the facts

The desktop review confirmed the facts. The council had inspected the property in the presence of the landlord in January 2020. They gained access to four of the five rooms.

The council officer and landlord had an amicable conversation at the property. The officer asked the landlord to submit an HMO licence application. The landlord agreed and an application was submitted later that month.

Three months later, the council sent the landlord a notice of intent to impose a £5,000 penalty for allegedly renting the property to five unrelated people without applying for a mandatory HMO licence. It alleged that the offence occurred between October 2019 and January 2020.

In May 2020, the landlord submitted a representation, disputing the penalty. In June 2020, the council issued a final penalty notice of £5,000.

The final notice contained scant information about the alleged offence. It narrowed the date of offence to 6 October 2019, three months before the officer had inspected the property. It did not disclose any of the evidence or explain how the penalty had been calculated.

First-tier Tribunal Appeal

At my client’s request, an appeal with lodged with the First-tier Tribunal. Directions were issued and informal discussions took place between both parties but failed to resolve the issue.

With civil penalty appeals, it is common for the Tribunal to instruct the council to prepare their bundle first. This is important, as it enables the landlord to study the evidence and comment upon it.

When the council’s bundle of documents arrived in September 2020, their case started to unravel. The officer’s inspection notes from their only inspection in January 2020 were incomplete. They had not met or spoken to all the tenants, had not recorded their names, or taken any statements from them. An alleged significant verbal statement by the landlord had not been properly recorded.

There was no direct evidence of an offence three months before the officer’s visit, this being the alleged date of offence in the final notice.

There was some weak circumstantial evidence. For example, the council put weight on the landlord’s fire risk assessment which described the property as a five-bedroom HMO. This was not disputed. The crux of the case was how many people occupied the property on the relevant date.

The alleged fifth tenant

By their very nature, these cases are never straight-forward. There was however, one central issue.

Both parties accepted there were four tenants in occupation. The issue concerned the alledged fifth tenant, who we will call Mr X.

Mr X had moved into the property in 2017. He suffered from alcohol and gambling dependency and stopped paying the rent in Summer 2019. Rather than take formal steps to evict him, the landlord was supportive and dealt with the matter informally. It was mutually agreed that Mr X would move out, the landlord would allow him time to find somewhere else and would not chase him for rent arrears once he had gone.

The question, which neither the council nor landlord could answer, was exactly when did Mr X finally vacated the property and did his occupation overlap with another tenant who moved in during October 2020 – were there ever five tenants living there?

Further investigations

A detailed bundle of documents was prepared on behalf of the landlord. The case was always about the principle, rather than the level of penalty. The landlord was a successful businessman, well respected and with an unblemished record. He did not want a criminal offence recorded against his name when he felt he had done nothing wrong.

With the Tribunal hearing fast approaching, there was a breakthrough in the case. I spoke to another tenant who had been living in the property for a considerable time. She had a good recollection about events, as Mr X collected money for utility bills and paid on behalf of all the tenants. In Summer 2020, she recalled he moved out, leaving some of the utility bills unpaid. She provided a statement of witness to confirm this.

The tenant’s statement was lodged with the Tribunal. Then, just one week before the hearing, the council conceded and withdrew the penalty notice.

With the penalty notice withdrawn, the Tribunal decided there could be no appeal hearing, nor any ruling on costs.

Bringing the matter to a close

Whilst the landlord’s appeal was successful, he still felt aggrieved about how the case had been handled by the council.

With that in mind, the landlord lodged a corporate complaint about failure to follow their own enforcement policy during the investigation. The council appointed a senior officer not associated with the case to investigate.

Following an internal investigation, the council acknowledged shortcomings in their investigation. The council agreed there was no evidence of any criminal offence and said they would apply learning to their future investigations. This was the outcome the landlord had wanted. It absolved him of any wrongdoing.

As a gesture of goodwill, the council made a financial contribution towards the landlord’s costs and the matter was resolved.

The author of this blog, Richard Tacagni MCIEH CEnvH, is Managing Director of London Property Licensing and acted as the landlord’s representative. He can be contacted here.

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