[2024] UKUT 181 (LC)

The Flat is in the London Borough of Tower Hamlets, in a ward which was made the subject of a selective licensing scheme under Part 3 of the 2004 Act in 2016. The scheme initially lasted for five years but it was renewed for a further five years in October 2021. It required that a licence be obtained for any dwelling which was not already subject to mandatory HMO licensing, and which was occupied by two or more people sharing facilities but living in separate households. The Flat was such a dwelling and required a licence.

Mr Newell did not have a licence. He let only one property, the Flat, and did not become aware of the selective licensing scheme when it was introduced, or when it was renewed. Information was sent by the Council to the owner’s address shown in the register of title for the Flat at HM Land Registry, but Mr Newell had not kept that address up to date and the information did not reach him. Nor did any information about the scheme which may have been sent by the Council to the Flat itself.

Mr Newell did not employ an agent and adopted a low key approach to the management of the letting. When he first acquired the Flat in 2006 it was already let to a group of tenants whom he allowed to find replacements whenever one of their number left. One of the last group of tenants had lived in the Flat for eight years and she took responsibility for finding new tenants and explaining the letting arrangements to them. While the Flat may originally have been let as a whole to three joint tenants, the informal way in which vacancies were filled meant that by the time Mr Abbott and Mr Okrojek moved in, each of them understood that he was tenant of one room only, with the right to share the other facilities of the Flat. There were no written tenancy agreements and the FTT found that neither of the respondents had agreed to pay rent for the whole Flat to cover any vacancy.

The Flat is one of two flats on the upper storeys of a building with a restaurant on the ground floor. The other flat (No.9A) is also let, but its owner used a letting agent to manage the property. In February 2020 the agent told Mr Newell that No.9A needed an HMO licence and that the Council required the fire alarm system to be upgraded, including in the common parts. The expense of installing additional fire protection in the common parts was then shared between the two owners, with Mr Newell paying his contribution.

The agent also told Mr Newell that an officer of the Council had been trying to contact him. He attempted to get in touch with that officer by telephone and email, but by this time the first Covid-19 lockdown had been introduced and he received no response. If it occurred to Mr Newell that he might also need a licence for his Flat, he took no steps to apply for one. He told me that he had understood HMO licensing was for dwellings with five or more tenants and was unaware that selective licensing schemes were possible and had assumed that No.9A needed a licence because it was used for Airbnb rentals. Having contributed to the upgrading of the fire arrangements to satisfy the Council’s requirements for the neighbouring flat, Mr Newell said he assumed the matter which the Council had tried to contact him about was resolved.

During the Covid-19 lockdown Ms Betts, the third resident of the Flat, moved out and it proved difficult to find a replacement. Mr Newell tried to persuade the respondents to sign a new tenancy agreement making them joint tenants of the whole flat, but they were not prepared to take that responsibility. Eventually they both moved out in September 2022 and Mr Newell sold the Flat. Their departure appears to have been amicable, and Mr Newell provided them with references and invited them to help themselves to any of the furniture in the Flat as he would have no use for it once the Flat was sold.

The respondents made their joint application to the FTT for rent repayment orders on 15 May 2023. The application was prepared with the assistance of an officer of the Council, and each claimed repayment of £7,200. In Mr Abbott’s case the claim was stated to relate to the period from 18 July 2021 to 18 June 2022; in Mr Okrojek’s case it was from 23 August 2021 to 29 July 2022. After hearing all three parties in person the FTT issued its decision ordering Mr Newell to repay each of the respondent’s £5,760.

In the course of its decision the FTT recorded that Mr Newell did not dispute the need for a licence. It accepted that he had been unaware of the need to obtain one but dismissed his claim to have had a reasonable excuse for failing to do so. In dealing with quantum it first referred to a number of recent decisions of this Tribunal before considering the seriousness of the offence. Because the Flat had been unlicensed for such a long time, and Mr Newell had made no efforts to become aware of his obligations, the FTT considered that the offence was “at the serious end of the spectrum for the offence under section 95(1) of the 2004 Act” (i.e. the offence of managing an unlicensed house). It then listed numerous matters of conduct said by one side or the other to be relevant to the assessment of the sum to be repaid. It generally disparaged the examples relied on by Mr Newell, but made few, if any, specific findings of fact, referring to most of the evidence simply as “allegations”. It concluded that an award of £7,200 would not be “proportionate to the respondent’s offence, bearing in mind the purpose of the legislative provisions and all the circumstances as set out above”. It considered that a sum equivalent to 80% of the full amount should be awarded.