Case No. UKUT-179-(LC)-UTLC-Case-Number:-LC-2022-146

concerns the offence created by section 95(1) of the 2004 Act:“(1) A person commits an offence if he is a person having control of or managing a house which is required to be licensed under this Part (see section 85(1)) but is not so licensed.”16.Section 263 states that the “person having control” in relation to premises means the person who receives the rack-rent of the premises, or would receive it if it were let at a rack-rent. So a freeholder who has let a house or flat on an assured shorthold tenancy is in control of it; if the freeholder grants a long lease of the premises at a peppercorn rent then he or she is no longer in control of it because only the long leaseholder is in a position to let it at a rack-rent.17.Section 263 also defines the “person managing” premises, as an owner or lessee who receives rent from the occupiers of a Part 3 house, or would receive it but for an arrangement for another person to receive it. Where the freeholder grants a long lease of the premises and the lessee then sub-lets, the freeholder is not managing the premises because he or she is not entitled to rent from the occupiers.18.A person who commits the offence created by section 95(1) may be prosecuted; alternatively the local housing authority may require them to pay a financial penalty under section 249A(1) of the 2004 Act. In addition (to prosecution or to a financial penalty) a landlord who commits the offence may be subject to a rent repayment order pursuant to section 41 of the Housing and Planning Act 2016.19.Paragraph 10 of Schedule 13A gives the FTT jurisdiction to hear appeals from financial penalties imposed by local housing authorities, and the present appeal is from a decision of the FTT exercising that jurisdiction.The facts, and the FTT’s decision20.William Meadows House in Margate, Kent, is a mid-terrace period house converted into 22 flats, in an area which between 2011 and 20 April 2021 was designated by the respondent as a selective licensing area. In February 2020 the appellant acquired the freehold of the building; some of the flats were already tenanted, and the appellant itself granted tenancies of some of the flats. The appellant’s predecessor in title had held a licence for the building. The director of the appellant did not realise that licences are not transferable; no application was made for a licence by the appellant until March 2021, and a licence was issued on 23 April 2021.21.Meanwhile the local housing authority had contacted the appellant pointing out the requirement for a licence. Notices of Intent to impose a financial penalty were sent to the appellant in respect of five of the flats (flats 10, 12, 17, 19 and 21) in January 2021 on the basis that the appellant was committing the section 95(1) offence as the person managing those flats. A Final Notice in respect of each of those flats, imposing a financial penalty of £10,000 in each case, was issued on 16 March 2021.22.The respondent’s explanation (given to the FTT) for the imposition of five penalties was that it had only been able to gain access to five of the flats and that therefore it was only in respect of the five flats that it had the information it needed to establish that they were Part 3 houses and that the offence was being committed. It did not know, for example, which of the other flats were occupied, nor whether any of the flats was held on an exempt tenancy or licence.23.The appellant appealed to the First-tier Tribunal pursuant to paragraph 10 of Schedule 13 to the 2004 Act. A defence of reasonable excuse failed, and there is no appeal from that. But the appellant also argued that it was not open to the local housing authority to impose five financial penalties; the only Part 3 house which was required to be licensed – and which indeed had been licensed before the appellant’s acquisition, and was eventually licensed on the appellant’s application - was the building, not the individual flats. A licence cannot relate to more than one house, according to section 91(1), and therefore where the building itself was a Part 3 house the individual flats could not be Part 3 houses.24.That argument did not find favour with the FTT. It found that the “plain and ordinary meaning” of section 99 of the 2004 Act is that a flat falls within the definition of a house for the purposes of Part 3. It added that section 91(1) of the 2004 Act “may well prevent the grant of a licence for the whole house” (paragraph 44), although it took the view that “different considerations may apply to whether a licence may be granted to a person in respect of premises and whether a person commits an offence in relation to premises.”The appeal25.The appellant appeals with permission from this Tribunal, on the ground that the flats are not Part 3 houses and that the only offence it committed was in relation to the whole house. Its thesis is that in any given case an individual can only commit one offence in relation to a building because there is only ever one Part 3 house so far as that person is concerned, whether it be the whole or part of the building.26.The respondent’s position is that while the decision of the FTT as regards these five financial penalties was correct, that does not mean that section 91(1) renders it unlawful to licence the whole building. The scheme is flexible, and a licence can be granted to the freeholder of a building in respect of the whole building or of part of it, or of a single flat within it.27.The FTT’s decision was of course simply that the financial penalties were upheld. Its comment about the effect of section 91(1) was obiter, not part of its decision and of no legal effect, and its comment is not the subject of this appeal. Nevertheless it is important that in deciding the appeal I explain whether or not that obiter comment was correct. It was not, for the reasons given below, although the appeal fails and the decision of the FTT about the five penalties is upheld.