Successful appeal against penalty brought by HMO landlord

The starting point for the licensing rules for houses in multiple occupation (HMOs) is that the landlord of a ‘large’ HMO requires a licence if the property is occupied by five or more people living in two or more separate households as their permanent or full-time residence, who share facilities such as a toilet, bathroom or kitchen and at least one tenant pays rent.

Some local councils have additional licensing requirements for HMOs and it is important for landlords to appreciate that even if the above conditions are not met, a property will still be regarded as an HMO and should be treated as such from a compliance standpoint if it is occupied by at least three tenants forming two or more households and who share basic facilities.

The fees to obtain an HMO licence vary from one council to another and range from around £300 to £2,000. The fines that may be imposed on landlords for not having the appropriate licence can be up to £30,000, although landlords may also face criminal prosecution exposing them to an unlimited fine.

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If the landlord of an HMO has a civil fine imposed by a local council for a breach of the rules, it is possible to challenge this through the First-Tier Tribunal (FTT).  If the decision of the FTT is not accepted, then an appeal can be made to the Upper Tribunal (UT).

The UT has recently overturned a penalty imposed on a landlord for managing an unlicensed HMO, raising some interesting points.

In this case the property had five bedrooms which were let out to individuals who were from different households. A licence was therefore required if all five occupants were using the property as their permanent residence. The local authority imposed a penalty of £15,000 on the landlord for failing to have a licence.

The landlord appealed, mainly because on the date in question he maintained there were only four people living in the HMO, and one of the occupants didn’t live there as her main residence. However, the FTT appeared to be satisfied beyond reasonable doubt that there were five people using the property as their main residence on the date in question and imposed a penalty of £7,500, half of that originally imposed by the local authority.

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The landlord appealed again, this time to the UT, on the basis that the FTT had not had sufficient evidence to conclude that one of the five occupants lived there as her only or main residence.

It transpired that the FTT had considered evidence from two council officers and two of the residents of the HMO. The council officers had formed the view that all the rooms they had seen looked as though they were being used as main residences. However, further investigation revealed that the council representatives had not seen either the fifth room or the woman who was renting it. The other resident who had said the most about her had only been living there for a month.

The Upper Tribunal concluded that this was an unusual set of circumstances and that there had not been sufficient evidence provided to the FTT to conclude that more than four people were using the property as their full-time residence. The penalty was therefore quashed.

At Fraser Dawbarns we assist landlords with many different types of property issue, including those relating to HMOs.  If you need individual advice, contact David Moulton on davidmoulton@fraserdawbarns.com.

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This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek advice specific to your own circumstances. Fraser Dawbarns LLP is always happy to provide such advice.