Increasing HMO Fines
There have been radical increases to the powers of magistrates to levy fines from 12 March 2015. The maximum fine that the magistrates can levy has now been increased to an unlimited fine for some categories of offence. This includes everything within the Housing Act 2004.
This has occurred because s85 of the Legal Aid, Sentencing, and Punishment of Offenders Act 2012 allows the government to make regulations to remove the £5,000 cap on magistrates fines and to increase them generally. The regulations that bring those powers into effect came into force on 12 March. Initially the government was proposing an increase to all the fines under the standard scale of 300% and a raising of the level 5 fines to £100,000. They now seem to have changed this plan to one with no increase for the lesser fines but an increase to an unlimited fine in relation to the highest fine categories.
The fines previously for most Housing Act 2004 offences were limited at level 5 on the standard scale, being £5,000 and rose to £20,000 for a failure to have an HMO licence. In practice this usually meant fines of around £2,500 and £5,000 respectively with considerable variation depending on the Court concerned.
All of these fines will now be unlimited and only fettered by the magistrates discretion and an obligation to consider the means of the offender.
This will have several consequences. Previously the fine for a failure to licence was often less than the Rent Repayment Order that would follow. This is no longer likely to be the case. This may lead to some odd effects as it has been the case following the Upper Tribunal decision in Parker v Waller that the tribunal tends to discount the fine from the size of the RRO. This could mean that RROs, and the sum repaid to tenants drops. However, the decision in Parker did not actually require this discount to be applied in full even though it was in that case. Ultimately it is likely that the cost to landlords who find themselves in breach of the Act will be higher. There has also been a substantial variant between Courts over the fines applied in practice with sums ranging from under £1,000 to over £15,000 for a failure to licence for example. This variation is likely to become greater and the consequent uncertainty for landlords will increase. Coupled with the increase in prosecutions being taken by local authorities this will increase the pressure on HMO landlords.
These changes are of no effect on offences committed prior to 12 March but will apply to all offences after that date.
As an aside these increases will also apply to a wide variety of other offences which will also be of interest to landlords. These include fines for a range of health and safety and environmental offences, offences under various fire protection legislation, and planning offences. Therefore the impact of these changes will not be confined solely to HMO landlords. Either way, the regulatory environment for HMO and other landlords has just become a great deal more complex.