Housing – Selective licensing – Civil penalty – Appellant acquiring freehold of property converted into flats – Property located in designated selective licensing area – Respondent local authority imposing separate financial penalties in respect of five flats – First-tier Tribunal upholding penalties – Appellant appealing – Whether individual flat constituting house required to be licensed under Part 3 of Housing Act 2004 – Appeal dismissed
In February 2020, the appellant acquired the freehold of William Meadows House in Margate, Kent, a mid-terrace period house converted into 22 flats. Some of the flats were already tenanted and the appellant granted tenancies of some of the flats. The area had been designated by the respondent local authority as a selective licensing area. The appellant’s predecessor held a licence for the building. The appellant did not realise that licences were not transferable; it applied for a licence in March 2021, which was issued on 23 April 2021.
Meanwhile, the respondent had contacted the appellant pointing out the requirement for a licence under Part 3 of the Housing Act 2004. Notices of intent to impose a financial penalty were sent to the appellant in respect of five of the flats in January 2021 on the basis that the appellant was committing an offence under section 95(1) of the 2004 Act as the person managing those flats. A final notice in respect of each flat was issued on 16 March 2021, imposing a financial penalty of £10,000 in each case.
The appellant appealed to the First-tier Tribunal (FTT) contending that it was not open to the respondent to impose five financial penalties; the only Part 3 house which was required to be licensed was the building, not the individual flats. A licence could not relate to more than one house, according to section 91(1). Therefore, where the building itself was a Part 3 house, the individual flats could not be Part 3 houses. The FTT rejected that argument. The appellant appealed.
Held: The appeal was dismissed.
(1) There was no one right answer to what was the Part 3 house required to be licensed where a selective licensing designation was in place. The meaning of section 91(1) could only be that the premises to which a licence related had to be a single Part 3 house, whether a flat, a number of flats comprising part of a building or the whole building. Any other construction led to a loss of the flexibility that was crucial to the scheme, and flew in the face of the clear drafting of the statute by importing a complicated requirement to identify the smallest or largest possible unit that could be a Part 3 house in any given case.
Once the meaning of section 91(1) was resolved in that way, it was clear that the FTT’s decision did not lead to unacceptable consequences, and it rightly concluded that each of the five financial penalties related to a Part 3 house because each flat was a Part 3 house that required to be licensed. Each was in a designated area, part of a building consisting of one dwelling (meaning part of a building occupied as a separate dwelling): section 99; the whole of each flat was occupied under a single non-exempt tenancy: section 79(2)(a); and section 85 required it to be licensed.
(2) The appellant’s argument that premises had to be licensed when they were intended to be occupied was an impossible reading of the plain words of section 79. There was no contradiction between section 99, which defined houses, and section 79 which stated to which houses Part 3 applied. Furthermore, there was no reason why parliament would have required empty premises to be licensed. The licence was for the protection of the occupier, and if there was none there was no reason why the applicant should be put to the trouble and expense of applying, nor why the local housing authority should undertake the work of granting a licence.
The statute required a licence where premises were occupied as set out in section 79(2), but it catered for changing circumstances. Section 91(2) enabled a licence to be obtained before premises were occupied and required to be licensed, so as to avoid commission of the offence once the premises were occupied. Section 91(5) ensured that a licence remained valid even if one flat in a licensed block became vacant. A landlord who renovated one flat at a time and let them one by one might get a licence for each as they were occupied, or might apply for a licence for the whole building once all the flats were let; there was no need for the landlord to apply to have the licence for one flat extended as the Part 3 house grew.
The statute did not require the local housing authority to make enquiries of the landlord or others in relation to the whole building in order to find out whether it could grant a valid licence in response to the application; and it would be impracticable to do so.
(3) If there was only ever one Part 3 house for an individual, it would be necessary for local authorities to take decisions about prosecution and financial penalties when they did not know the extent of the Part 3 house. More generally, the statute did not enable or require a local housing authority to prosecute a landlord, or to impose a civil penalty, in relation to a Part 3 house the extent of which was not known to the local housing authority or to the court or the FTT as the case might be. All those persons needed to be able to consider and respond to the Part 3 house to which the evidence related (without considering whether any different house could have been the subject of a licence if one had been applied for); it made no sense for their decisions to have an unknown impact upon unknown components of a Part 3 house of whose extent they were unaware.
Inevitably, the local housing authority had a discretion in deciding what offences to prosecute. If it made an irrational decision, it could be challenged. But it had to have discretion and flexibility because it had to respond to individual circumstances and had to be able to act on the information available to it, as it did when granting a licence and imposing financial penalties in this case. The flexibility inherent in the scheme was crucial and the decision to impose five financial penalties would stand.
Tom Morris (instructed by Winckworth Sherwood LLP) appeared for the appellant; Ranjit Bhose QC (instructed by Thanet District Council) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Northumberland Mews Ltd v Thanet District Council
