[2024] UKUT 349 (LC)

The respondent is registered as a co-operative society under the Co-operative and Community Benefit Societies Act 2014. It was founded to provide housing for those who are homeless or at risk of homelessness, and while it prioritises persons over 35 it does accommodate some students. The FTT heard evidence that the respondent currently has 75 to 80 properties with 500 bed spaces.

On 23 March 2023 the appellant issued to the respondent financial penalty notices, each of £15,000, in relation to each of the two properties on the basis that the respondent had committed the offence created by section 72(1) of the 2004 Act of managing or being in control of an HMO that was required to be licensed and was not. The respondent appealed to the FTT on a number of grounds, one of which was that the properties were not HMOs (and therefore no offence had been committed) because of the provisions of Schedule 14 to the 2004 Act. The FTT decided that ground in the respondent’s favour, which meant that none of the other grounds was needed

Schedule 14 begins:

“1(1) the following paragraphs list buildings which are not houses in multiple occupation for any purposes of this Act other than those of Part 1.

(2)

In this schedule “building” includes part of a building.”

Part 1 of the 2004 Act is about health and safety standards and is not relevant to this appeal. Paragraph 2B of Schedule 14 to the Housing Act 2004 reads as follows:

“(1)

A building where—

(a)

the person managing or having control of it is a co-operative society whose rules are such as to secure that each of the conditions set out in sub-paragraph (2) is met, and

(b)

no person who occupies premises in the building does so by virtue of an assured tenancy, a secure tenancy or a protected tenancy.

(2)

The conditions are—

(a)

that membership of the society is restricted to persons who are occupiers or prospective occupiers of buildings managed or controlled by the society,

(b)

that all management decisions of the society are made by the members (or a specified quorum of members) at a general meeting which all members are entitled to, and invited to, attend,

(c)

that each member has equal voting rights at such a meeting, and

(d)

that, if a person occupies premises in the building and is not a member, that person is an occupier of the premises only as a result of sharing occupation of them with a member at the member's invitation.

(3)

For the purposes of sub-paragraph (1) “co-operative society” means a body that—

(a)

is registered as a co-operative society under the 2014 Act or is a pre-commencement society (within the meaning of that Act) that meets the condition in section 2(2)(a)(i) of that Act,

(b)

is neither—

(i)

a non-profit registered provider of social housing, nor

(ii)

registered as a social landlord under Part 1 of the Housing Act 1996.

…”

The point of paragraph 2B is obvious: where a building that would otherwise be an HMO is managed or controlled by a body of which the residents are all members with equal voting rights on all management decisions then there is no need for that body to be regulated in order to protect its members from their manager; they manage themselves and can protect themselves. The exemption applies whether the co-operative society manages and controls just the building in question, or (as in the present appeal) a number of buildings, provided that only and all the residents in the buildings are themselves the decision-makers.

The parties’ positions in the appeal are the same as before the FTT: the respondent says that its rules meet the terms of paragraph 2B and therefore the properties are not HMOs; the appellant says that the respondent’s rules meet them all except paragraph 2B(1)(a) in relation to paragraph 2B(2)(b), and that therefore the properties are HMOs.

Accordingly I have to set out the text of the relevant rules of the respondent.