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

3.The Housing Act 2004 established two regimes for the licensing of rented accommodation, in Part 2 for houses in multiple occupation and in Part 3 which provides for the selective licensing of other residential accommodation.Selective licensing4.Part 3 begins with section 79:“(1) This Part provides for houses to be licensed by local housing authorities where–(a) they are houses to which this Part applies (see subsection (2)), and(b) they are required to be licensed under this Part (see section 85(1)).(2) This Part applies to a house if–(a) it is in an area that is for the time being designated under section 80 as subject to selective licensing, and(b) the whole of it is occupied either–(i) under a single tenancy or licence that is not an exempt tenancy or licence under subsection (3) or (4), or(ii) under two or more tenancies or licences in respect of different dwellings contained in it, none of which is an exempt tenancy or licence under subsection (3) or (4).Subsections (3) and (4) provide that an exempt tenancy or licence is one granted by a social housing provider or a social landlord, or a tenancy or licence designated by order; the details do not concern us but the fact that some tenancies are exempt does. And it is worth noting that the relevant order designates as exempt a wide range of tenancies and licences: see the Selective Licensing of Houses (Specified Exemptions) (England) Order 2006.5.So for a house to be required to be licensed, three conditions must be met. First, it must be in an area designated by the local housing authority as subject to selective licensing under section 80, which sets out the conditions for designation (not in issue in this appeal). Second, it must be “occupied” (I come back to that word later) in the way set out in section 79(2)(b)(i) or (ii). Third, it must be required to be licensed under section 85(1).6.Section 85 reads so far as relevant as follows:“(1) Every Part 3 house must be licensed under this Part unless–(a) it is an HMO to which Part 2 applies (see section 55(2)), or(b) a temporary exemption notice is in force in relation to it under section 86, or(c) a management order is in force in relation to it under Chapter 1 or 2 of Part 4.(2) A licence under this Part is a licence authorising occupation of the house concerned under one or more tenancies or licences within section 79(2)(b).…(5) In this Part, unless the context otherwise requires–(a) references to a Part 3 house are to a house to which this Part applies (see section 79(2)) …7.This appeal is about what is a “Part 3 house” in any given situation; a Part 3 house is required to be licensed if it falls within section 85(1). And that brings us back to the crucial term “house”.8.A “house” is defined in section 99 which states:“In this Part–“dwelling” means a building or part of a building occupied or intended to be occupied as a separate dwelling;“house” means a building or part of a building consisting of one or more dwellings;and references to a house include (where the context permits) any yard, garden, outhouses and appurtenances belonging to, or usually enjoyed with, it (or any part of it).”9.It will be seen that a house is a building or part of a building, consisting of one or more dwellings (section 99), and that a Part 3 house is one that is in a designated area (section 79(2)(a)), the whole of which is “occupied” as specified in section 79(2)(b).10.That would appear to mean, and has been taken by many local authorities to mean, that all of the following can be a Part 3 house which may be required to be licensed under section 85(1):•a flat (part of a building consisting of one dwelling)•part of a building consisting of several flats (being part of a building consisting of more than one dwelling).•a building consisting of several flats (being a building consisting of more than one dwelling)11.Accordingly it has been the practice of local authorities to grant licences under Part 3 both in relation to houses consisting of several flats owned and managed by a single landlord, and in relation to individual flats where more than one flat in the same building is owned and managed by the same landlord, and in relation to groups of two or more flats. That flexible practice was the background to the Tribunal’s decision in London Borough of Waltham Forest v Khan [2017] UKUT] 153 (LC), where Mr Khan owned six flats in a building and the local housing authority granted Part 3 licences in respect of each of four of the flats for five years, and further Part 3 licences for only one year in respect of two of the flats because they appeared to have been created without planning permission, in order for the planning issue to be resolved. The Tribunal (the Deputy President, Martin Rodger QC) found that the planning status of the property was a relevant consideration in the grant of licences. The practice of granting licences relating to more than one flat, and of granting more than one licence to the same landlord in relation to different parts of the building, was not called into question in that appeal, but it is in this one.Other aspects of licensing practice12.Section 87 of the 2004 Act provides that an application for a licence under Part 3 is to be made to the local housing authority, which may charge a fee. Section 88 provides that the authority must either refuse or grant the licence; they may grant it if they are satisfied that the proposed licence holder is a fit and proper person to hold the licence, and that the proposed manager is the person having control of the house or an agent or employee of that person.13.Section 91 sets out a number of general requirements about licences, of which the following are relevant to the present appeal:“(1) A licence may not relate to more than one Part 3 house.(2) A licence may be granted before the time when it is required by virtue of this Part but, if so, the licence cannot come into force until that time. (3) A licence–(a) comes into force at the time that is specified in or determined under the licence for this purpose, and(b) unless previously terminated by subsection (7) or revoked under [section 93 or 93A]1, continues in force for the period that is so specified or determined. …(5) Subsection (3)(b) applies even if, at any time during that period, the house concerned subsequently ceases to be a Part 3 house or becomes an HMO to which Part 2 applies (see section 55(2)).”14.Section 92 makes provision for the variation of licences, as follows:“(1) The local housing authority may vary a licence–(a) if they do so with the agreement of the licence holder, or(b) if they consider that there has been a change of circumstances since the time when the licence was granted. For this purpose “change of circumstances” includes any discovery of new information.The offence created by section 95(1)15.The appeal 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.