Landlords who fail to license houses in multiple occupation (HMOs) commit a serious criminal offence and can expect to be hit hard in the pocket. In making that point, the Upper Tribunal (UT) emphasised that stiff financial penalties are generally required in such cases as a deterrent to others.

The case concerned a landlord who let six bedrooms in his former family home as bed sitting rooms. There was no dispute that the property was an HMO and, after discovering that it was unlicensed, the local authority notified him that he had committed an offence under Section 72 of the Housing Act 2004. As an alternative to prosecution, the council imposed on the landlord a civil financial penalty of £10,000.

In upholding the landlord’s appeal against that penalty, the First-tier Tribunal (FTT) accepted that he was unaware of the licensing regime and had no knowledge of the term HMO. On being notified that a licence was required, he had applied for one immediately. He had also spent considerable sums on swiftly making safety improvements to the property.

Noting that the landlord’s wife was suffering from cancer and that he was under considerable stress, the FTT expressed surprise that the council had seen fit to impose a penalty. It was also unimpressed by the council’s delay in processing his licence application. Overall, it found that the threat of prosecution had served its purpose and that a financial penalty was unnecessary and unreasonable.

In upholding the council’s appeal against that decision, the UT noted that prudent landlords make inquiries to ascertain their legal obligations and that ignorance of the licensing regime is no defence. The landlord had no reasonable excuse for not having a licence and, in deciding that no penalty should be imposed, the FTT had taken an exceptional course in what was an unexceptional case.

Parliament intended that the offence should be treated as serious and there was a need to impose deterrent penalties, even on non-professional landlords with only one or two properties. The landlord’s belated licence application afforded him only limited mitigation. In the light of his personal circumstances, however, the UT reduced his penalty to £4,000.