A property company has been told that it cannot avoid a civil penalty for running an unlicensed house in multiple occupation (HMO).
The case involved Thurrock Council and Palm View Estates.
The landlord, Palm View, had bought the house in 2014. It was converted for occupation by six people with a shared kitchen. On 20 September 2017, the local authority served two prohibition notices requiring work to be carried out, including the creation of a kitchen of a suitable size for six households, as the one provided was too small.
The landlord built an extension to the kitchen to comply with the notices. On 1 October 2018, the Licensing of Houses in Multiple Occupation Order came into force, which meant the property required an HMO licence.
In the meantime, planning permission for the landlord’s kitchen extension was refused but allowed on appeal on 13 February 2019.
The landlord applied for an HMO licence on 16 July 2019. It did not dispute that it had been managing or in control of the HMO without a licence but relied on the defence of reasonable excuse in that it had been told by an employee of the local authority that there was no point in applying for an HMO licence while the planning position for the kitchen remained in dispute.
The First-tier Tribunal concluded that the landlord did have a reasonable excuse for having control of the premises without a licence for the relevant period.
The Upper Tribunal has overturned that decision. It held that the issue was not whether the landlord had a reasonable excuse for not applying for a licence, but whether it had a reasonable excuse for continuing to manage and control the HMO without one.
The reason given by the landlord for not applying for a licence was not a reasonable excuse for committing the offence. The tribunal had made a mistake of law and thereby reached an obviously incorrect conclusion. For that reason, its decision would be set aside.
Please contact Simeon Clipstone if you would like more information about the issues raised in this article or any aspect of commercial property law.
Landlord penalised over unlicensed House in Multiple Occupation
 UKUT 355 (LC)
THURROCK COUNCIL v PALM VIEW ESTATES (2020)
UT (Lands) (Judge Elizabeth Cooke) 15/12/2020