HMO licence fees under attack

I have recently found myself acting in a case against Oxford City Council in relation to the variation of HMO licences. This has resulted in Oxford losing a case before the RPT which has suggested that part of their fee structure for HMOs is unlawful. This will impact any local authority seeking to charge a landlord a fee to vary their HMO licence.

Oxford has been operating a fairly aggressive policy of requiring landlords to fit second sinks in kitchens. My client was given a licence on this basis but did not actually want to fit the second sink. Her tenants did not want a sink either. She sought a variation of her licence from Oxford. Importantly, there is a procedure for licence variations which requires a refusal to vary to be done by way of a notification to all parties of the intention to vary or to refuse the variation giving the reasons for the decision. There is then an opportunity for parties to make representations on the proposed action which must be considered before a final decision is made. There is also an abbreviated process where a licence holder requests a variation which the local authority is prepared to consent to and which is not material, ie it is a minor change or correction. The abbreviated process allows the local authority to bypass the notification rules. In my client’s case Oxford mixed the two procedures together. They decided that the variation request was not material because it was not one they would entertain and so they elected to bypass the notification and refusal process. In other words, they simply ignored the request. This is important because it is only after a proper refusal has taken place that a licence holder can appeal the decision to refuse to the First Tier Tribunal (Property Chamber).

Oxford also do something else which is an issue. They charge a fee for making licence variations. This was £100, although it has recently been increased. However, the Housing Act 2004 only allows the charging of fees for the licence application process, not the variation process. Oxford contended the meaning of the Act was that they could charge a fee for any aspect of the licence process provided it reflected the actual costs incurred.

This was all appealed to the FTT. The FTT pointed out that if the refusal had not been done properly and there was an unlawful fee then they could not hear the main appeal about whether a second sink should be required as Oxford would have acted unlawfully. Therefore they heard these two points as a preliminary issue. Shortly before the hearing Oxford conceded that they had no followed the correct procedure on variation but refused to accept that their fee structure was unlawful. Therefore the FTT made a decision on this point alone. The FTT ruled that Oxford could not charge a fee for licence variations and that this fee was indeed unlawful, precisely as we had argued.

This is a big deal for Oxford and probably for other councils too. I have seen a lot of local authorities failing to get to grips with the correct procedure for granting and refusing HMO licences and for making changes to them. Councils will have to sort this out and make sure they are following the correct procedures. While it may look like pointless bureaucracy the process is there to ensure that everyone with an interest in the property is made aware of the HMO licence status and what is being proposed. Where the procedures are not followed somebody always gets ignored, often the tenants.

However, much more seriously for Oxford, this decision severely damages their charging structure. They will find themselves unable to seek fees for variations and will need to adjust their entire HMO fee system or face a potential gap in their budget. In addition they face having to refund fees previously collected from other landlords for HMO licence variations. Any other council charging a fee for an HMO licence variation will have the same problem.

The Council may yet appeal this decision but if they do not this will create some light financial relief for landlords in Oxford.

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