Landlord and tenant – House in multiple occupation – Status of existing licence when property changed hands – Appellant tenant applying to First-tier Tribunal (FTT) for rent repayment order on basis that respondent landlord operated house in multiple occupation without licence – FTT dismissing application on basis that no power to make rent repayment order – Appellant appealing – Whether previous licence continuing until new owner obtaining licence – Appeal allowed
The appellant took a tenancy at Room 4, 14a Well Hall Parade, Eltham, London on 1 July 2016 and left on 14 August 2018; there were other tenants and it was not in dispute that the property was required to be licensed as a house in multiple occupation (HMO) under section 61 of the Housing Act 2004. The then owners had a licence which was issued in 2016 and would expire in 2021. The respondent purchased the property around October 2016. It applied for an HMO licence on 12 May 2017. A licence was granted to the respondent on 6 September 2018.
The respondent had not applied straight away for an HMO licence because of a misunderstanding that a licence ran with the land so that a new owner did not have to get another licence. That was not correct because, under section 68(6), a licence might not be transferred. Further, under section 63(4)(b) of the 2004 Act, the licensing authority had to be satisfied that the licence holder was a fit and proper person.
In November 2018, the appellant applied to the First-tier Tribunal (FTT) for a rent repayment order (RRO) on the basis that the respondent had committed an offence under section 72(1) of the 2004 Act which provided that: “A person commits an offence if he is a person having control of or managing an HMO which is required to be licensed under this Part … but is not so licensed”. The FTT noted that the licence granted in 2016 to the previous owner had not been revoked prior to the grant of the new licence to the respondent, so the property continued to be licensed throughout. Therefore, the FTT said it had no power to make a rent repayment order and dismissed the application. The appellant appealed. The appeal was determined on written representations.
Held: The appeal was allowed.
(1) It remained the law that where a property was sold and the new owner took over management and control from the seller, that new owner required a licence. The previous licence could not be transferred to the new owner and was of no assistance, whether or not expressly revoked, because the new owner did not have a licence.
The exception that proved the rule was where the licence holder died. Section 68(7) of the 2004 Act provided that the licence ceased to be in force on the death of the licence holder; but section 68(8) went on to say that for the following three months the house was to be treated as if it had the benefit of a temporary exemption notice. There was no such provision for the case where the licence holder ceased to be the owner, or the person in control, of the property. In that event the new owner had to take steps to comply with the Act, and section 72(4) provided a defence to a criminal charge provided that an application for a licence had been duly made.
(2) The respondent’s argument was rejected that, if the law was as the appellant said it was, it would be difficult if not impossible to sell a HMO property as a running business. That was not the case because the new owners could protect themselves by making an application promptly. There were numerous resources available for the assistance of “buy to let” purchasers and the legal point on which the present appeal turned appeared to be well known.
(3) The Upper Tribunal could not substitute its own decision about the RRO, because there was a dispute of fact as to when the respondent made a valid application for an HMO, and because the FTT would need to hear evidence in order to exercise its discretion as to the amount of the RRO. Section 44(4) of the Housing and Planning Act 2016 required it to take into account the conduct of the landlord and the tenant and the financial circumstances of the landlord. Therefore, the matter would be remitted to the FTT, which would give directions for a re-hearing.
Eileen O’Grady, barrister
