Under section 61 of the Housing Act 2004 (the 2004 Act), certain houses in multiple occupation (HMOs) are required to be licensed. Sub-section 68(6) of the 2004 Act prohibits a licence from being transferred to another person. If a licensing requirement ceases to be met after the grant of a licence, the licence can be revoked by the licensing authority.
In Georgie Kathleen Taylor v Mina An Ltd [2019] UKUT 249 (LC), the Upper Tribunal (UT) was asked to determine whether a landlord who purchased an HMO was notionally covered by the licence of their predecessor-in-title until such time as that licence was revoked or a new licence obtained.
A landlord who is in control of or manages an unlicensed HMO commits an offence under section 72 of the 2004 Act. Breach of that section carries the potential penalty of a rent repayment order (RRO), whereby a landlord must repay a tenant all or part of their rent during the period the HMO was unlicensed. Pursuant to sections 40 and 41 of the Housing and Planning Act 2016 (the 2016 Act), a tenant can apply to the First-tier Tribunal (FTT) for an RRO within 12 months of their landlord committing the offence.
In Taylor, the appellant tenant had applied to the FTT for an RRO under the 2016 Act, alleging that her new landlord had failed to obtain a licence when it purchased the HMO. The FFT refused the tenant’s application. It found that the landlord retained the benefit of the licence held by the previous owner because that licence had not been revoked by the licensing authority. The tenant appealed.
In allowing the appeal, the UT confirmed that an HMO licence did not run with the land. The FTT was correct to find that the transfer of ownership of an HMO did not automatically terminate the previous owner’s licence, which had to be expressly revoked; however, the benefit of that licence could not be transferred to the new owner. A purchaser was statutorily obliged to obtain a new licence. The only exception was upon the death of a licence holder. Pursuant to sub-sections 68(7) and 68(8) of the 2004 Act, the deceased’s licence would cease to be in force and the HMO would be treated as having the benefit of a temporary exemption notice. No such exemption applied upon the sale of an HMO by a licence holder.
The UT paid short shrift to the landlord’s argument that its decision would “make it difficult if not impossible to sell an HMO property as a running business”. The decision serves as a warning to potential investors to properly appraise themselves of the law regarding the licensing of HMOs.
Elizabeth Dwomoh is a barrister at Lamb Chambers
