March 15, 2019
The question of what is and is not a house in multiple occupation (HMO) is far from straightforward to answer, as a recent decision of the First-tier Tribunal (FTT) showed. It was held that landlords who fail to take legal advice on the issue can be hit in the pocket after unwittingly breaching the law.
The owner of a three-bedroom home, which was not licensed for use as an HMO, had leased it to managing agents, who in turn rented it out to two Eastern European tenants. A local authority inspection of the property subsequently revealed that one of the tenants had sublet rooms in the property to at least 14 men, taking separate rent from each of them.
The owner failed to comply with the warning notice served on him by the council resulting in a fine of £750 for failing to comply with the Management of House in Multiple Occupation (England) Regulations 2006.
Fines totaling £5,000 were imposed on the managing agents breaches of the Regulations and failure to license the house as an HMO, as required by the Housing Act 2004.
The Next Steps
Both the owner and the managing agents challenged the penalties before the FTT. the owner submitted that, by granting a lease of the property to the managing agents, he had handed over all responsibility for the property to them. the managing agents argued that they had let the property to apparently respectable tenants and had neither knowledge of nor reasonability of their unlawful use of the premises.
In ruling the appeals, the FTT noted that it was not disputed ,m in any great details, that the property had been used unlawfully, for a substantial period as an unlicensed HMO. Serial breaches of the Regulations were confirmed by photographs of the premises that revealed their squalid conditions. The owner and the managing agents had been put on notice of the breaches and had no reasonable excuse for failing to act promptly to remedy the position.
The fine imposed on the owner was at the bottom end of the scale and was justified. However, in reducing the managing agents’ overall fine to £1,500, the FTT noted that they had acted properly in checking the tenants were legitimate. The tenant who had sublet rooms without authority was the real villain of the piece and he had received a fine of only £750. The imposition of the much heavier penalty on the meaning agents was, in the circumstances, perverse.
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Dilip & Ors v The London Borough of Newham. Case Number: LON/OOBB/HNA/2018/0006&0014