The question of what is and is not a house in multiple occupation (HMO) is far from straightforward to answer and, as a First-tier Tribunal (FTT) decision showed, landlords who fail to take legal advice on the issue can be hit in the pocket after finding themselves in unwitting breach of 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 a separate rent from each of them.
The owner did not swiftly comply with a warning notice served on him by the council and received a £750 fine for failing to comply with the Management of Houses in Multiple Occupation (England) Regulations 2006. Fines totalling £5,000 were imposed on the managing agents for breaches of the Regulations and their failure to license the house as an HMO, as required by the Housing Act 2004.
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 entire 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 responsibility for the unlawful use to which they put the premises.
In ruling on the appeals, the FTT noted that it was not seriously disputed that the property had for a substantial period been unlawfully used as an unlicensed HMO. Serial breaches of the Regulations were confirmed by photographs of the premises that revealed their squalid condition. 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’ bona fides. 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 managing agents was, in the circumstances, perverse.