Shocking case illustrates significant issues with housing law
Landlord Licensing & Defence deals with calls from desperate landlords every day, but this case shocked even the most experienced legal experts. It involves incompetent agents, unscrupulous tenants, an unrepentant local authority, and an innocent couple put through unimaginable stress and the threat of financial ruin.
The appalling set of circumstances illustrates the importance of landlords keeping a close eye on their property, even if management has been entrusted to professional agents.
Many landlords don’t realise that even when they use an agent, they remain legally responsible for all the housing regulations in the legislation. The agents appointed to manage this property, which its owners intended to be enjoyed as a single-family dwelling, made three major errors.
First, they failed to secure the correct licence. The property was in an area requiring Additional Licensing, with the conditions stipulating that any privately rented property with three or more tenants would be classed as a licensable HMO as well as being subject to all HMO regulations.
The agents incorrectly applied for a Selective Licence, automatically placing the owners in breach of licensing conditions. Then, they rented it to three individual tenants – immediately creating an unlicensed HMO.
As soon as the owners became aware of the agent’s error, they served noticed on the tenants to bring themselves back within the confines of the law. The tenants responded by trashing the property and causing a huge amount of damage. The same tenants then reported the damage to the local housing authority, claiming the house was uninhabitable.
After inspecting the property, local authority enforcement officers ignored the mountains of evidence of the tenants’ actions provided by the owners and instead proceeded to issue a series of civil penalty fines against the landlord for multiple breaches of housing legislation.
Horrifyingly, this created a perverse situation in which the tenants who caused the damage were able to profit from it by claiming a Rent Repayment Order for a refund of all the rent they’d paid: £25,800.
As the owners desperately attempted to rectify the damage caused by their tenants and remedy the list of faults issued by the local authority, they were hit with penalties and claims running into tens of thousands of pounds. And, while the tenants enjoyed the protection of the law, the owners had no legal defence.
How did this happen? Firstly, against the landlord’s instructions, the agent let the property as an HMO.
All breaches of legislation and regulations that have been enacted by the provisions of the Housing Act 2004 are strict liability criminal offences. This means that as soon as they occur, the person liable (in this case, the owner of the property) has committed a crime, even if they’re not aware of it.
The Housing Act and other legislation also grants sweeping powers to local authorities, including the ability to impose penalties of up to £30,000 per single breach of any of the regulations.
Civil penalties can be imposed instead of criminal charges and are favoured by councils – because they keep the cash.
Councils enjoy a significant amount of discretion when interpreting the regulations, meaning what constitutes a breach can vary between individual enforcement officers. This makes it almost impossible for landlords to anticipate what may or may not be classed as a breach, resulting in heavy fines for spurious misdemeanours – the proceeds of which go directly into council coffers.
As well as breaches creating windfalls for local authorities, they offer tenants the opportunity to claim back their rent via a Rent Repayment Order (RRO). Occupants can claim an RRO if the landlord doesn’t comply with certain regulations, including failure to have the correct licence. Landlords can be forced to return up to 12 months of rent, and also be liable for costs incurred by both the tenant in pursuit of the claim.
As any breach is a strict liability offence, landlords can’t say that they were unaware of licensing requirements, or that the agent acted without their authority. The result, as this horrified couple discovered to their signficant cost, is an almost total lack of protection from the malicious actions of tenants.
The financial impact on this couple was lessened significantly by mediation from Landlord Licensing & Defence: the ‘no-win, no-fee’ claims company acting on behalf of the tenants was forced to settle for £16,770, a reduction of over £9,000.
However, the saving doesn’t negate the awful fact that the law forced an innocent couple to hand over a life-changing sum to the people who ruined their property.
CS1509
