[2025] UKUT 2 (LC)

A local housing authority is required by paragraph 12 of Schedule 13A, 2004 Act to have regard to guidance given by the Secretary of State in relation to financial penalties. Relevant guidance was issued by the Department for Communities and Local Government in April 2017 which encourages the formulation of an enforcement policy. The guidance was taken into account by the Council when it revised its Housing and Licensing Team Enforcement Policy in February 2020 to incorporate an appendix dealing specifically with civil penalties under section 249A.

The DCLG guidance identifies seven factors which an authority should consider to ensure that financial penalties are set at an appropriate level. In summary, those factors are: the severity of the offence; the culpability and track record of the offender; the harm caused to the tenant; punishment of the offender; deterrence of the offender; deterrence of others from committing similar offences; and, removal of any financial benefit obtained as a result of committing the offence. Each factor is supported by some further explanatory text.

The Council’s policy begins by explaining that the general objective of the document is to promote transparency and consistency in the imposition of penalties. For those reasons the policy will only be departed from in exceptional circumstances and after careful consideration on a case-by-case basis.

The policy then recites the same seven factors as had been identified in the DCLG guidance as relevant to the determination of an appropriate penalty, together with their explanatory text, before stating that the Council will consider those factors “when deciding where, within the relevant band of the Civil Penalties Matrix below, a particular offence and penalty fall.”

The Civil Penalties Matrix is a table identifying six bands covering offences of different levels of seriousness (moderate, serious or severe) with each band having a specified “band width” of £5,000. The lowest band, band 1, covers offences of moderate severity attracting a penalty from 0 to £4999. Band 2 is also for offences of moderate severity with penalties of £5,000 to £9,999. Bands 3 and 4 are for serious offences and provide for penalties from £10,000 to £14,999 (band 3) and from £15,000 to £19,999 (band 4). Bands 5 and 6 are for severe offences.

The policy explains that the Civil Penalties Matrix is intended to provide an “indicative minimum ‘tariff’ under the various offence categories with the final level of the civil penalty adjusted in each case, and generally within the relevant band, to take into account aggravating and mitigating factors.” The tariff would normally be increased by up to £4,999 for each aggravating factor identified and the Council could “exceptionally, increase the penalty above the band maximum or, again exceptionally, decrease it below the minimum tariff”. In the interests of consistency and transparency that discretion will be exercised only in exceptional circumstances and only after consideration on a case-by-case basis.

The policy then considers each of the housing offences for which a civil penalty may be imposed and places them in a band, or bands, depending on the characteristics of the offender. It explains that when committed by a landlord with one or two properties the offence of managing an HMO subject to an additional licensing scheme without a licence (the offence with which these proceedings are concerned) will be regarded as a moderate matter, representing a band 2 offence, and attracting a penalty of at least £5,000. The policy continues:

“Where a landlord or agent is controlling/owning a significant property portfolio, and/or has demonstrated experience in the letting/management of property, the failure to licence an HMO would be viewed as being a serious matter attracting a civil penalty of £15,000 or above [a band 4 offence].”

For licensing offences potentially aggravating factors are identified, including the presence of significant hazards, evidence of poor management, overcrowding or inadequate safety precautions, and evidence that the offender is familiar with the need to obtain a licence, such as where the premises had previously been licensed in their name.

Finally, the policy allows a 20% discount to be applied to the penalty if the offender remedied the breach before the service of a final penalty notice. A discount of 20% of the original penalty can also be obtained if the penalty is paid within 28 days of the date of the Final Notice.

When it determined the penalty appropriate to MPL’s offence in this case, the Council selected a figure of £15,000 from the matrix, a figure at the bottom of the range appropriate to a band 4 offence. It made no adjustment up or down for any aggravating or mitigating factors, but it applied a discount of 20%, reducing the penalty to £12,000 in accordance with the policy because a licence had been applied for before the final penalty notice was served. In its final notice dated 18th May 2023 it explained that the penalty would be reduced to £9,000 if payment was made within 28 days.