HMO Prosecutions- What Can I Expect to Get?
One of the most important questions I am asked when assisting someone being prosecuted for an HMO offence is what they are likely to get in terms of fines. This is not an easy question to answer as it can be hard to obtain comparative figures for prosecutions. In addition, any figures given are somewhat speculative as magistrates courts can be very inconsistent in their application of sentencing policy, from court to court and even within the same court from bench to bench. However, some cases have been reported and certain themes can be drawn out.
There are several components which make up the sum which a guilty landlord or property manager will have to pay. There is a fine for failing to hold an HMO licence (if applicable), a fine for each breach of licence conditions or of the HMO Management Regulations, the prosecution costs, and the victim surcharge which goes into a fund to provide compensation to victims of crime.
Taking these in reverse order we can begin with the easiest one first. The victims surcharge is a fixed figure which is set at £15. It is not ordered in all cases but is in the overwhelming majority. Given that it is usually a small figure in relation to other components it is not normally of huge concern.
The next component is the prosecution costs. The prosecutor is entitled to recover the costs of their efforts in pursuing the prosecution. There is a difference in the amounts sought depending on how local authorities charge their legal services out. In general these sums are increasing and are being increased further by the increasing use of law firms in the private sector to carry out prosecution work on behalf of the local authority. They will also be higher where the case has been complex or hard fought. In general you should expect to pay prosecution costs of about £1500-2500 although costs as high as £10,000 have been reported.
The actual fines are, of course, the real meat of what will be paid. These have a degree of variability to allow for different levels of disposable income but this variation is pretty limited. For an offence involving breach of the management regulations or a licence condition the maximum fine is £5,000 but a fine of around £2,000-3,500 is more usual. However, the maximum fine has been reported and it should also be remembered that each breach is a separate offence and therefore attracts a fine of its own. It is rare for a single breach to be prosecuted alone and most defendants find themselves facing prosecution for 5-10 breaches of the management regulations, each with a potential maximum fine of £5,000.
The final area is the offence of failing to hold a property licence. Not every prosecution involves this offence and local authorities have shown themselves as increasingly willing to prosecute solely on the basis of the management regulations. The maximum fine for failing to have a property licence is £20,000. In the past the actual fine levied was in the region of £5,000-7,000 but this now seems to be creeping up towards £8,000-10,000. Lower fines of around £3,000 are more usual where an individual has not been directly involved in the offence and has fallen under the influence of another or been deceived by them. However, this leniency cannot be relied on.
In summary then this means that a prosecution for a failure to hold an HMO licence along with 5 management regulations breaches will carry a total financial penalty in the region of £20,015-£27515. Skilled representation and management of the situation can see substantial reductions in this by knocking out some offences and agreeing a managed guilty plea to parts of the charge.
It should not be forgotten that if there is a successful prosecution for a failure to licence then the tenants are also entitled to claim rent back by way of a Rent Repayment Order. Increasingly local authorities are also looking at making confiscation orders under the Proceeds of Crime Act to claim all rent paid for a period where a property was not licensed.