A landlord who rents out an unlicensed house in multiple occupation (HMO) that is in an area where such licences are required commits a criminal offence and is liable to be stripped of all rent that they have received. As one case showed, however, there is such a thing as a reasonable excuse.
The case concerned a two-storey house that was leased by its owner to a lettings company, which in turn sublet it to multiple tenants. With the support of the local authority, five subtenants launched proceedings on the basis that the property was, for a period of about 10 months, not licensed as an HMO as it should have been.
Following a hearing, the First-tier Tribunal (FTT) found that the owner had committed an offence under Section 72 of the Housing Act 2004. Although the property was managed by the company, she was found to be in control of it. She was ordered to repay £16,000 in rent that she had received in respect of the property during the relevant period.
Upholding her appeal against that order, the Upper Tribunal (UT) noted that, prior to a change in the rules in October 2018, HMOs were defined as properties with three or more storeys occupied by five or more persons living in two or more households. The requirement for three or more storeys was, however, thereafter dropped, thus bringing the house within the ambit of the rules.
The owner testified that she had exchanged emails with a council officer who visited the property in 2017, asking him whether she could apply for an HMO licence. His response, she said, was that she could not do so because the house had only two storeys. She asserted that the officer reassured her that he would tell her if the position changed and the property needed a licence, but had not done so. She only became aware that she needed a licence following another officer’s visit to the property in 2019, and she applied for one the same day.
The UT noted that the FTT made no mention of the defence of reasonable excuse in its decision although the owner had expressly raised it. Remaking the decision on the basis of her evidence, the UT found that she had a reasonable excuse for not having licensed the property during the relevant period and that she had committed no offence. The rent repayment order was overturned.