[2024] UKUT 255 (LC)

By section 72(1), 2004 Act a person commits an offence if he is a person having control of or managing an HMO which is required to be licensed under Part 2 of the Act but is not so licensed. The FTT was satisfied that Mr Kumar was both a person having control and a person managing the House, which it is agreed was an unlicensed HMO. The meaning of these expressions has already been explained in paragraphs [16] and [17] above.

The parties agree that the FTT was wrong to suggest that Mr Kumar was a person managing the House. He did not satisfy the description in section 263(3), 2004 Act because he received no rent or other payments from the persons who were in occupation as tenants of parts of the premises; he received his rent from LML, not from the respondents.

The second ground of appeal turns on the FTT’s finding that both Mr Kumar and LML were persons having control of the House, notwithstanding the fact that it was let to LML and that LML exercised day to day control over it. The issue concerns the proper interpretation of section 263(1), 2004 Act which (so far as relevant) defines “person having control” as “the person who receives the rack-rent of the premises”.

Mr Morris recognised that more than one landlord in a chain of title may receive a rack-rent for a house, and that the FTT had been entitled to find that the rent paid by LML to Mr Kumar was a rack-rent. His submission was that the definition of “person having control” in section 263(1) allows for there to be only one such person. The definition uses the definite article and contemplates one rack-rent received by one party (although a number of persons may jointly comprise the person having control where they each receive rents for different parts of the premises which in aggregate amount to a rack-rent for the whole).

Mr Morris referred to the discussion of the long statutory history of section 263, 2004 Act in the speech of Lord Bridge in Pollway Nominees v Croydon LBC [1987] AC 79, at 91-92:

“[T]he rationale of the use of the formula to designate the person on whom the relevant obligation is cast is surely plain. The owner of that interest in premises which carries with it the right, actual or potential, to receive the rack rent, as the measure of the value of the premises to an occupier, is the person who ought in justice to be responsible for the discharge of the liabilities to which the premises by reason of their situation or condition give rise.”

Mr Morris also referred to two decisions of this Tribunal, one of HHJ Behrens,Urban Lettings (London) Ltd v Haringey LBC [2015] UKUT 104, and one of my own Hastings BC v Braear Developments Ltd [2015] UKUT 145 (LC), which were said to support his submission, although neither decided in terms that there could only ever be one person having control of any one property.

For the respondents, Mr Neilson submitted that any person who was in receipt of the rack-rent of premises, whether from persons in occupation or from someone with an intermediate leasehold interest, was a person in control within the meaning of section 263(1), 2004 Act. He referred to a more recent decision of the Tribunal (Mr Justice Fancourt, Chamber President) in Global Guardians Management Ltd & Ors v LB Hounslow & Ors [2022] UKUT 259 (LC) at [74]-[79], which concluded:

“Any person who falls within the definitions of “person having control” and “person managing” commits an offence if the HMO is unlicensed. The definitions show that a person who receives rent may commit an offence regardless of whether they have an interest in the property or are entitled to the rent. It is not the purpose of Part 2 to identify only one person having control of the premises and one person managing them.”

Mr Neilson also pointed out that section 72(1), 2004 Act provides that a person commits an offence if he is “a person” having control of or managing an unlicensed HMO and does not require that he be “the person” doing so.

I do not think the passage cited by Mr Neilson from Global Guardians is as supportive of his argument as he suggested. The Tribunal was considering whether the property in question was let at a rack-rent and the submission that it was logically impossible for the person who received the income from the property and another person to whom part of that income was passed on both to be persons in control of the property because both could not be in receipt of a rack-rent. The argument did not turn on whether more than one person could be a person having control.

It is not necessary for me to determine in this appeal whether there may be more than one person having control of an HMO, and without intending any disrespect to the careful arguments of Mr Morris and Mr Neilson, I prefer not to reach a conclusion on that question. It is preferable to leave it to be considered in a case where it makes a difference.