Legal case: why should landlords fear Civil Penalties?

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Following the enactment of the Housing and Planning Act in 2016, the government introduced a range of new penalties for the use of local authorities, aimed at speeding up justice when dealing with rogue landlords. One such measure is an alternative to court action known as the civil penalty, a fine issued to landlords, and in some cases agents, depending where the responsibility for breaches of the regulations lies.

Those responsible for the management of HMOs need to be critically aware of their responsibilities under the The Management of Houses in Multiple Occupation (England) Regulations 2006 or face fines of up to £30,000.

What’s so alarming about this is a civil penalty fine can be issued for each individual management regulation breached – a feature of the law that means fines can escalate out of control to amount to very considerable sums.

Councils now have these considerable civil penalty powers as an alternative to prosecution for a variety of offences under the Housing Act 2004. These measures are designed to avoid the time consuming process of a criminal prosecution against the landlord or letting agent for offences.

These offences might include: not complying with improvement notices, failure to licence an HMO or failure to comply with a selective licencing scheme notice, an overcrowding notice or notices under the HMO management regulations, breaching a banning order or the right-to-rent regulations.

The landlord or agent subject to such a fine or fines has a right of appeal to the Property Tribunal, the onus being on the local authority to establish that the standard of proof is “beyond reasonable doubt”.

One such case was an Upper Tribunal appeal, that of Sheffield City Council v Hussain (2020) involving breaches of Management of Houses in Multiple Occupation (England) Regulations 2006 and the application by the local authority policy of civil penalties totalling £75,000 for several offences.

In this case the landlord was appealing the amount of the fine and whether his speedy carrying out of remedial action and generally complying with improvement notices amounted to mitigation of the offences, offences he did not deny.

Sheffield Council had served improvement notices on Mr Hussain in 2018 to remedy hazards which were breaches of the regulations. The civil penalties were issued for breaches of the regulations relating to: fire safety, defective heating, electrical safety, poorly fitted windows and defective handrails on staircases. These individual penalties came to a total of £75,000.

Mr. Hussain had put forward the argument that he was not the responsible person, not the manager of his HMOs which were two adjoining properties. But the council had determined his liability using its civil penalties policy published on its website.

The policy, the council claimed, followed the statutory guidance, a four-stage assessment:

1. The culpability and track record of the offender

2. The level of potential harm occupiers

3. Any mitigating circumstances to be considered

4. Proportionate adjustments to ensure fairness.

Taking into account the number of defects present, the council had put the level of potential harm at medium. But despite Mr Hussein giving assurances that the property would be brought up to standard without delay, these assurances were not considered enough to overcome the seriousness of the offences.

Mr. Hussein’s had claimed that he had been unaware of the breaches of the regulations in the properties and had never received copies of the notices issued by the council. The Tribunal rejected Mr. Hussein’s claims he had been unaware of the defects or that he had not received the notices. It considered he was liable for each of the offences. but by the time of the first hearing the breaches had been remedied.

After considering the facts, the First Tear Tribunal took the view that there were mitigating factors and reduced the overall penalty total.

The council was not satisfied with this outcome and appealed to the Upper Tribunal which concluded the most important fact was that Mr Hussein was in breach at the date of the service of the improvement notices.

His compliance, thought the Tribunal, was no more than his legal obligation, speedy or not. However, the appeal Tribunal held that a 10% mitigation reduction was justified. The notices had treated the building as two separate HMOs, but the properties were joined and breaches were the same in each, so the Tribunal reduced the overall penalty to £50,000 to reflect this.

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