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Landlord of unlicensed HMO has penalties reduced

Posted: 12th February 2013   In: Dispute Resolution, Commercial Property

A landlord has won his appeal against the level of penalties imposed on him for operating an unlicensed House in Multiple Occupation (HMO).

The case arose after six tenants sought Rent Repayment Orders (RRO) after discovering their HMO was not licensed. The tribunal made an order in their favour for the repayment of all the rent that each of them had paid in the 12 months preceding the application.

The landlord appealed to the Upper Tribunal (Lands) which gave some useful advice on how such issues should be handled.

It said that tribunals should consider the total amount that the landlord would have to pay in fines and under an RRO. There was no presumption that the RRO should be for the total amount received by the landlord during the relevant period.

An RRO was limited to the period of 12 months ending with the date of the occupier’s application, but the tribunal should also consider the total length of time during which the offence had been committed.

The fact that the tenant would have had the benefit of occupying the premises would not generally be an important consideration.

Tribunals should take account of the landlord’s conduct and financial circumstances. A deliberate flouting of the law would merit a larger RRO than inadvertent errors.

In this particular case, the tribunal had erred because part of the RRO related to a period which post-dated the landlord’s application for a licence.

It was also mistaken in disregarding the amounts included in the rent to cover utilities and council tax. It would not be appropriate to impose on the landlord an RRO that exceeded his profit.

The Upper Tribunal held that the RRO should oblige the landlord to pay 75% of his profit less the amount of the fine imposed on him.

Please contact Matthew Melling about the issues raised in this article or Hugh Beeley in respect of any aspect of commercial property law.