Upper Tribunal remits rent repayment order case for fresh hearing amid claims of misinformation on council website about HMOs

The Upper Tribunal (Lands Chamber) has held that potentially inaccurate information on a local authority’s website about houses in multiple occupation (HMO) might give a landlord a reasonable excuse for not having a license in defending a rent repayment order application.

The case arose in an appeal against a decision of the First-Tier Tribunal (Property Chamber) by a landlord in an action brought by her tenant.

Upper Tribunal Judge Elizabeth Cooke was told the landlord holds a long lease on a two-storey, three-bedroom maisonette in which she let rooms on assured shorthold tenancies, thereby becoming the landlord of an HMO.

The home was not occupied by five or more persons in more than one household and so has never had to be licensed pursuant to the 2018 regulations.

But in January 2018 the London Borough of Newham designated the area as one of additional licensing, which meant HMOs occupied by three or four persons in two or more households were now subject to the additional licensing requirement.

Judge Cooke said: “The effect of the designation would not be apparent to a landlord reading it without legal advice, but the local housing authority provided information about the effect of the additional licensing designation on its website.”

By the summer of 2020 the property was occupied by the tenant and his daughter and by two other tenants and the landlord's cousin.

In January 2023 the tenant applied to the FTT for a rent repayment order on the ground that the landlord had committed the offence under section 72(1) of the 2004 Act. He claimed 12 months' rent equivalent to £8,640.

The FTT found, on the basis of the criminal standard of proof, that the landlord did not have a defence of reasonable excuse since she had not taken steps to inform herself about the law, and it decided a rent repayment order should be made.

Permission to appeal to the Upper Tribunal was given on two grounds.

These were that the landlord had a reasonable excuse and that the amount she was ordered to pay was too high because the FTT failed to take into account mitigating circumstances.

The landlord told the tribunal she was misled by the information on Newham’s website into thinking that she did not require a licence. 

The website defined an HMO as comprising more than three separate households who share facilities such as kitchen or bathroom, or who do not have exclusive occupation of the whole property.

Judge Cooke said the FTT had sought out its own information on Newham’s website.

She said: “The appeal turns on that information because, inherently unlikely or not, the advice on the website as recorded by the FTT did contradict the designation for additional licensing, although the FTT did not spot the problem: a property falls within the additional licensing designation if it has three or more occupiers, not tenants, in two or more households.”

From June 2021 the property had two tenants not three, “and a landlord looking at the website would conclude that the property did not need a licence”.

Judge Cooke noted the FTT hearing took place in July 2023, two years after the landlord was said to have looked at the website and she may have misremembered the wording, while recalling correctly that she thought she did not need a licence.

“Again: the tribunal is hampered because it does not know what the appellant's evidence was,” Judge Cooke said.

“At the very least the FTT's decision has to be set aside because it does not explain why, having asserted at the hearing that she had been misled by the website, the appellant did not have the defence of reasonable excuse from the point when [one tenant] left.

“In addition, the FTT made an error of law in reading the local housing authority's website as a correct explanation of the legal position when it was not.”

Judge Cooke said it was impossible for the Upper Tribunal to substitute its own decision because the FTT neglected to make a finding of fact about when the tenant left and because it is not known what the landlord’s evidence was about the website.

The case, including the rent repayment order, was remitted to a different FTT panel.

Mark Smulian