Councils lose Court cases over HMO licence fees

by Mark Alexander

17:46 PM, 11th November 2013
About 6 years ago

Councils lose Court cases over HMO licence fees

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Councils lose Court cases over HMO licence fees

Three cases have recently been tested in the Courts whereby Councils have charged more for HMO licensing then was reasonable.

There are rules to prevent Councils using HMO licensing to raise funds for other activities.

Hemming v Westminster City Council: The case outlines the type of costs that councils can recover through locally set licence fees and the processes councils have in place to ensure fee setting is transparent and open to scrutiny. The key issue addressed was whether the fees set by Westminster City Council complied with the requirements of the European Services Directive 2009 and the interpretation of Article 13(2) of the Directive. The Services Directive also makes it clear that licence fees covered by the Directive can only be used to recover costs and should not be used to make a profit or deter service providers from entering a market. Councils lose Court cases over HMO licence fees

Crompton v Oxford City Council: The power to charge fees in respect of HMO licensing is found in s63 of the Housing Act 2004. Importantly, this power is granted in respect of licence applications only. Oxford City Council has sought to charge a fee for the variation of an HMO licence. The Residential Property Tribunal (RPT) ruled that the fee was unlawful and that it could not be charged.

Bristol City Council v Digs (Bristol) Ltd: The defendant was the private landlord of a maisonette in multiple occupation. The council brought a prosecution for failure to obtain an HMO licence and for breaches of the HMO regulations. A District Judge at Bristol Magistrates Court tried the preliminary issue of whether the maisonette was a licensable HMO. It extended over two storeys of a building with a further entrance corridor and hallway on a lower storey. The council included the lower storey in deciding that the HMO extended to three storeys. The Judge held that having regard to Article 3 of the HMO (Prescribed Description) (England) (Order) the maisonette was not an HMO. The council had been wrong to include the lower storey. In the light of that ruling, the council offered no evidence and the defendant was acquitted.

In the wake of these rulings the NLA is asking all local authorities in England to contact any affected landlords, informing them of their right to appropriate refunds and providing details of how they may make a claim.

Richard Lambert, Chief Executive Officer at the National Landlords Association (NLA), said:

we have asked local authorities to come clean about the level of fees they have charged private-landlords, if they were entitled to make these charges, and when they will refund any money unjustly demanded.

Mr Lambert went on to add:

“In writing to all local authorities in England we’re acknowledging the good working partnership many private landlords have with town halls, but making clear they should not be absorbing the costs of overcharging to support other council functions”.



Comments

Ben Reeve-Lewis

18:30 PM, 11th November 2013
About 6 years ago

Well this raises questions about Newham doesnt it?

Landlords have registered 30,000 properties since the start of their licensing programme this year. There was a discount for landlords who registered before the end of January 2013; after that it was the full fee.

If all 30,000 properties had registered in January the income would have been £4.5 million. If all 30,000 properties had been registered after that date then the licensing income would be £15 million.

Obviously the true figure would be somewhere between those two points. Newham has a team of around 40 to deal with licensing. My council has 2.

Extended HMO licensing is a corporate committment. As I keep saying of this matter it is not an approach driven by front line officers but is a political initiative. The question is "What is Newham doing with the income?"

Joe Bloggs

18:43 PM, 11th November 2013
About 6 years ago

now that LBN have achieved their goal of blanket licensing, their pr offensive citing beds in sheds etc etc has gone very quiet.
be interesting to know how many of the 40 officers process the licences and how many investigate/enforce?

Ben Reeve-Lewis

18:47 PM, 11th November 2013
About 6 years ago

Yeah I honestly dont know how they apportion the jobs in the team.

The fact is that before they introduced licensing they had an enviable record of prosecution, 120 last year alone but this isnt all the figures puts forward. The fact is that among the rash of enforcement actions being proferred it isnt just landlords being nicked for bad properties but also tenants for ASB.

Sian Hemming-Metcalfe, MARLA (INV)

19:57 PM, 11th November 2013
About 6 years ago

Am I reading the Hemming V Westminster Council case wrongly then as their's was about licensing of a group of sex shops in Soho not HMO's although clearly there are far reaching consequences of the ruling (no relation by the way; I think!).

Paul Maguire

20:03 PM, 11th November 2013
About 6 years ago

What a difference in Licence fees. In Edinburgh I pay £410 each year to renew my licence [for up to 10] but in Oxford it would be £180 , in Newham [as it's valid for 5 years] £130 a year and £245 in the City of London. I wonder if the Independence Referendum will have an option C...... "To make Scotland more English".

John Daley

10:47 AM, 12th November 2013
About 6 years ago

Reply to the comment left by "Sian Hemming-Metcalfe" at "11/11/2013 - 19:57":

Hi Sian,

The essence of the Hemmings case was that Westminster charged Hemmings and his mates a fee which covered licensing but was also used to regulate and enforce closure on unlicensed shops, the fee was something like £25k a year. Hemmings argued successfully that a piece of European legislation made it illegal to use the proceeds of licensing for regulation.

Therefore the LA can only charge resonsable costs for licensing in itself and not use the cash for other, arguably appropriate uses.

I might add that this case is likely to go back to the European Court for appeal so I would not say that this is over.

Industry Observer

11:59 AM, 12th November 2013
About 6 years ago

Time to step back and look at what these three actually mean. I don't want to be a wet blanket but the devil is always in the detail, not the headlines, as follows:-

Westminster Case

The rules and regs have always stated that licensing schemes, whether mandatory, additional or selective, should be non profit making and only cover the costs of running such schemes.

RESULT - expect LAs to get far more creative about the actual specific costs involved - and don't be surprised if licence fees increase.

Oxford case

I imagine the fee was relatively small compared to a full licence fee? Anyway expect a variation to s63 of 2004 Act legitimising such fees.

Bristol case

Surprised the LA gave up so easily as any actual accommodation off a mezzanine floor, for example, counts as a storey. Given that lofts deemed capable of habitation, basements where tenants need access to services and even underground car parks count as storeys, this one rather surprises me.

Again expect further clarification/confirmation it counts but all three of these cases are local Court are they not? Means NLA may have wasted a lot of postage since as such they are not binding on other Courts.

Alfington

12:24 PM, 12th November 2013
About 6 years ago

Is there any obligation on Councils to publish their costs in relation to HMO licensing and an explanation of how their fee is made up?
I am in Newcastle upon Tyne and expect a "license fee" of around £500 when I relicense my HMO's.
Newcastle upon Tyne Council have never explained or justified this fee and I know other authorities charge far less.

Industry Observer

13:49 PM, 12th November 2013
About 6 years ago

Stewart good question - Ben would this be a Freedom of Information Act question that could be asked?

You are very lucky though Stewart. Newcastle along with Bristol were two of the application forms I saw when the 2004 Act first introduced mandatory licensing. Both had very big fees, four figures. £1200 rings a distant memory bell for one of them think it was Bristol but Newcastle wasn't far behind..

I'd suggest £500 is probably a very reasonable fee for a 5 year licence. Imagine how much a full survey costs on a house - probably not much change out of £350+ probably more these days.

Now imagine how much a HHSRS inspection looking at all 29 potential hazards might cost.

Alfington

14:55 PM, 12th November 2013
About 6 years ago

Reply to the comment left by "Industry Observer " at "12/11/2013 - 13:49":

Hi Industry Observer. I'm not sure I follow the logic there. In my HMO's I certify the wiring, provide PAT tests every year, I have CP12's carried out and visit my houses to make quarterly checks on door closing, tidyness and general condition. All this and in addition I have to pay the local authority money!
But if my HMO is 4 beds - no license fee. If the Council (or a private landlord) have a family of 7, 8, 9 or more living in a house, no license needed - no fee. Where is the sense in this and why do we, as Landlords, put up with this discrimination and these fees I wonder.

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