![[2025] UKUT 264 (LC)](https://backend.juristeca.com/files/emisores/logo_lnJS4Uj.png){kind=logo}
The FTT decision
The FTT decision
The respondents (guardian occupiers) sought rent repayment orders pursuant to section 43 Housing and Planning Act 2016 on the ground that the FTT could be satisfied beyond reasonable doubt that the appellant had committed an offence to which the relevant Chapter applied, that is, an offence to which the table in section 40 of that Act referred, committed by a landlord in relation to housing in England let by that landlord.
The offence relied on was the one for which section 72 (1) Housing Act 2004 provides. That offence is committed by a person having control of or managing a house in multiple occupation (“HMO”) which ought to be licensed but is not. The only point at issue in this case was whether this property was such an HMO. It was accepted that unless the property fell within the statutory exception for which paragraph 2 Schedule 14 of the 2004 Act provided, it would be such an HMO. The relevant exception for present purposes applies to a building where the person managing or having control of it is a local housing authority. The question for the FTT was therefore whether the local housing authority was the person managing or having control of the property. The appellant argued that it was, so that the exception applied.
Section 263 Housing Act 2004 defines the meaning of “person having control” and “person managing.” So far as relevant, it reads as follows.
In this Act “person having control”, in relation to premises, means (unless the context otherwise requires) the person who receives the rack-rent of the premises (whether on his own account or as agent or trustee of another person), or who would so receive it if the premises were let at a rack-rent.
In subsection (1) “rack-rent” means a rent which is not less than two-thirds of the full net annual value of the premises.
In this Act “person managing” means, in relation to premises, the person who, being an owner or lessee of the premises–
receives (whether directly or through an agent or trustee) rents or other payments from–
in the case of a house in multiple occupation, persons who are in occupation as tenants or licensees of parts of the premises; and
in the case of a house to which Part 3 applies (see section 79(2)), persons who are in occupation as tenants or licensees of parts of the premises, or of the whole of the premises; or
would so receive those rents or other payments but for having entered into an arrangement (whether in pursuance of a court order or otherwise) with another person who is not an owner or lessee of the premises by virtue of which that other person receives the rents or other payments;
and includes, where those rents or other payments are received through another person as agent or trustee, that other person…
As the judgment of the FTT recites (para 15), the appellant accepted in the course of argument that it could not succeed in arguing that the local housing authority was a person having control of the property within s.263(1) because of the decision of the Tribunal in the case of Cottam v Lowe Management Ltd [2023] UKUT 306 (LC), where it was held (paras 48 and 49) that a freeholder who has let property at less than a rack-rent cannot be a person in control, as they are not a person who could, if they chose, grant a lease at a rack-rent.
Moreover, the appellant only relied on s. 263(3)(b) of the 2004 Act, since the local housing authority did not receive payments from the people in occupation of the property.
Accordingly, the FTT stated that,
In order for the exemption in Schedule 14 to apply, therefore, the situation must be such that the London Borough of Haringey would receive payments from the occupiers but for having entered into an arrangement with another person by virtue of which that other person receives those payments. In addition, that other person must not be an owner or a lessee of the premises.
There were, therefore, two questions for the Tribunal to consider. Firstly, was GGM a lessee or merely a licensee of the property. If the agreement between the local authority and GGM was a lease, then the Respondent’s argument failed.
The second question, which only arises if the agreement is not a lease, was whether or not the local authority would receive payments but for having entered into an arrangement with GGM “by virtue of which that other person receives the rents or other payments”.
On the first question, the FTT concluded that the agreement between the local authority and GGM was a not a lease. The second question therefore arose. The FTT considered (para 32) that
…for section 263(3)(b) to apply, the arrangement between the local authority and GGM must meet two requirements. Firstly, it must be the case that “but for” that arrangement the local authority would itself receive payments from occupiers. Secondly, the arrangement must be one “by virtue of which” GGM receives those payments.
The FTT accepted that the appellant was not an owner of the premises and also accepted that, but for the agreement, the local housing authority would itself have received payments from occupiers. But, on the second question, the FTT held that the arrangement was not one “by virtue of which” GGM received those payments. No other matters being in dispute, it was satisfied that the appellant had committed the offence, and it made the rent repayment orders.