A landlord who had not instructed its conveyancing solicitors to make enquiries and advise whether properties it had bought at auction were required to be licensed because they were situated in an area subject to selective licensing could not rely on the defence of reasonable excuse.
In Gateshead Borough Council v City Estate Holdings Ltd [2023] EWHC 315 (Ch); [2023] PLSCS 34 the respondent landlord was a company. In April 2020 the respondent bought two properties at auction and subsequently let the same in July and August 2020.
The appellant council was the relevant housing authority for the area in which the properties were situated. In October 2018, it designated the area in which the properties were situated as being subject to selective licensing. In November 2020, the council discovered that the properties were being let without a licence and notified the respondent of the need to license the properties. The respondent obtained a licence in December 2020.
In July 2021, the council imposed financial penalties on the respondent for the offence of having control of or managing a house which was required to be licensed under part 3, but was not so licensed, contrary to section 95(1) of the Housing Act 2004. The respondent appealed the imposition of the penalties to the First-tier Tribunal. It argued that it had the defence of reasonable excuse under section 95(4).
The respondent’s director submitted that he did not know the properties were required to be licensed. When the properties were purchased at auction, the seller’s conveyancing solicitors had failed to detail in the information pack that the properties were in an area subject to selective licensing. Further, the director argued that the respondent’s own solicitors had also failed to advise it of the same.
The FTT determined that the respondent had established the defence of reasonable excuse. It was “entirely reasonable” for the respondent to rely on its professional advisers to report on the properties that it was purchasing and the need for them to be licensed. The council appealed.
In allowing the appeal, the Upper Tribunal (Lands Chamber) underscored that ignorance was not itself a defence. It was necessary for a landlord to take reasonable steps to keep informed of the regulatory landscape. In the present case there was no evidence before the FTT that the respondent’s conveyancing solicitors had been instructed to advise the respondent on the regulatory position in relation to letting the properties. Further the respondent had not taken steps to research the position for itself. Consequently the respondent could not establish the defence of reasonable excuse.
Elizabeth Dwomoh is a barrister at Lamb Chambers
