Selective licensing and licence conditions – the Court of Appeal gives a narrow interpretation to local authority powers

Wednesday, April 4th, 2018 - By Jonathan Manning, Barrister at Arden Chambers

The Court of Appeal has recently given guidance about the scope of local authorities’ powers to insert conditions into licences granted under the the selective licensing regime (Part 3, Housing Act 2004 – houses let as separate dwellings).

In the Brown v Hyndburn Borough Council case, the local authority had included two, fairly innocuous-sounding licence conditions in all their Part 3 licences (referred to as conditions 6 and 8), requiring the landlord:

• Condition 6: if gas was supplied to the property, to provide a suitable carbon monoxide detector and to maintain it in good working order and make the tenants aware of its operation and
• Condition 8: to ensure, throughout the period of the licence, that the property was covered by a valid Electrical Installation Condition Report (EICR) and, and to remedy any unsatisfactory part of the installation within 38 days.

Mr Brown’s properties all complied with these particular conditions, but he was somewhat alarmed at the principle of an authority, by means of licence conditions, seeking to require landlords to upgrade or improve their properties and/or to provide completely new equipment and facilities. Condition 8, for example could require a landlord to rewire a house, even where the existing wiring was perfectly safe.

He therefore appealed against both conditions to the First-tier Tribunal (FTT) which agreed with him that the council had no power to include either one. On the authority’s appeal, the Upper Tribunal disagreed and reinserted both conditions into the licence. The landlord appealed to the Court of Appeal.

What the Court of Appeal said

This appeal was essentially about the breadth of s.90, Housing Act 2004, the section that gives local authorities power to impose licence conditions. The key provision was s.90(1), which provides that an authority may impose such conditions as they consider appropriate for regulating the “management, use or occupation of the house concerned”. The Court of Appeal accepted that conditions 6 and 8 had nothing to do with use or occupation and so could only be imposed if their purpose was to regulate management.

The Court agreed with the landlord that “management” related to operational matters (i.e. what actually happens at and to the property) and not to improving or upgrading houses or installing new facilities and equipment. This was especially evident when the authority’s powers under Part 3, 2004 Act, were compared with those applicable to HMOs under Part 2 (where licence conditions may also relate to the “condition and contents” of the HMO), and when account was taken of their powers to deal with “hazards” under Part 1. The difference between the Part 2 and Part 3 powers must have been intentional. It was also relevant to bear in mind the statutory purposes of selective licensing (s.80, 2004 Act) which did not include improving or upgrading the housing stock of an area. Accordingly, the FTT decision was reinstated.

The implications

This is an important decision for several reasons, the most obvious being the narrow interpretation given to the powers to impose selective licence conditions. Indeed, Hildyard J held that the authority’s powers were confined to including conditions for the purpose of addressing the statutory purposes of selective licensing, (i.e. low housing demand, ASB, and presumably, now, the other purposes added to s.80 by the 2015 Additional Conditions (England) Order), though the other members of the Court did not go so far.

Nonetheless, on any analysis, the s.90(1) power was interpreted strictly and narrowly. The Court made it quite clear that a requirement to install any new equipment – even a carbon monoxide detector costing under £30 – was unlawful (unless of course Parliament, or the national authority, had imposed such a requirement, in which case s.90(3) and/or (4) makes separate provision for licence conditions). Underhill LJ considered the example of a hypothetical condition that required the prompt re-glazing of broken windows, suggesting that routine, non-structural maintenance of that kind probably would fall within “management”, (which is, surely, correct) but ultimately not reaching a final conclusion even on that point.

Additionally, the Court pointed out the importance of the Housing Health and Safety Rating System (Part 1, 2004 Act) for dealing with physical defects in PRS properties. It rejected the authority’s argument that s.90(5), by requiring authorities to proceed on the basis that, in general, they should deal with “hazards” under Part 1 powers rather than by licence conditions, had conferred a residual discretion to use licence conditions in some circumstances. It held that s.90(5) confers no power at all and is not the source of any residual discretion. Its true purpose is to re-emphasise the importance of the local authority’s Part 1 functions and the primacy to be accorded to seeking to identify, remove or reduce relevant hazards by constant review and inspection, and exercise of enforcement powers.

The result is that the only overlap between licensing and hazards is where Parliament or the national authority have specified matters under s.90(3) or (4) to be the subject of licensing that could otherwise have fallen within Part 1 powers (e.g. since the amendments made by the Carbon Monoxide Alarm (England) Regulations 2015, a carbon-monoxide alarm where there is a solid fuel burning appliance in the property).

The full judgement in the case can be viewed here.

The author of this blog, Jonathan Manning, was counsel for the appellant and is a barrister at Arden Chambers London and Birmingham. His email address is Jonathan.Manning@ArdenChambers.com

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.

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