Councils recovering rent from Landlords under the Proceeds of Crime Act 2002

Large confiscation orders made against landlords under the Proceeds of Crime Act 2002 have been attracting a lot of media attention. Recent confiscation orders obtained by prosecutors have ranged from just over £100,000 to as a high as £1.5m.

It has been established law for some time that Councils may obtain a confiscation order where a landlord has let a property in breach of a planning enforcement notice. In such cases the entire rent collected over several years might be deemed the proceeds of crime and it is in this context that confiscation orders have exceeded a million pounds.

Enforcement bodies have had less success in obtaining confiscation orders against landlords and agents for other offences; the Court of Appeal ruled in Sumal & Sons (Properties) Ltd v London Borough of Newham [2012] EWCA Crim that rent was not the proceeds of crime where the offence committed was a failure to obtain a licence. However, prosecutors have been allowed to proceed with confiscation where landlords of agents have been convicted for breaches of the Management of Houses in Multiple Occupation (England) Regulations 2006 or for breaches of the conditions of a licence under the Housing Act 2004.

Confiscation under the Proceeds of Crime Act 2002 is an attractive enforcement option for local authorities not just because the confiscation orders are usually considerably higher than fines, but because they are allowed to retain part of the confiscated money. This does create an incentive for overreach from prosecutors and this underlines the need for defendants to be properly represented.

The application of the Proceeds of Crime Act to ‘regulatory offences’ is complex and this is particularly the case in prosecutions against landlords. Even if the landlord has committed an offence, it does not automatically follow that the rent is the benefit obtained as a result of or in connection with the landlord’s criminal conduct. Further, the potential for overlap between confiscation and a rent repayment order (which allows tenants to recover a year’s rent) may make confiscation an inappropriate punishment.

Anthony Gold can provide specialist advice and representation for landlords or agents facing all types of regulatory action including criminal prosecution. We recently acted in a Proceeds of Crime case arising out of a prosecution under the Housing Act 2004. The prosecution initially sought a benefit of over £1.5m but following a confiscation trial no confiscation order at all was made against our client.

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