HMO Prosecutions- What to Do
An increasing number of agents and landlords are being threatened with prosecution by local authorities for failing to licence an HMO properly or for a breach of the HMO Management Regulations. Local Authorities are becoming very aggressive in pursuing these matters and will move to prosecution in a lot of cases. A prosecution can be very damaging in the long term as it will make it very hard for the agent or landlord to obtain an HMO licence in future.
This post contains some useful tips to avoid becoming one of the less fortunate ones.
Know your areas Make sure you know about current and proposed licensing schemes in you area. While local authorities are under an obligation to consult on these schemes and notify stakeholders of their introduction they are often lax about doing so. It is important to be engaged with appropriate local authority user groups and to attend meetings of these groups as they will often get informed first of planned licensing schemes. Advance knowledge can also help with investment decisions as the value of properties targeted at an investment landlord will rise and fall in response to the introduction of a licensing scheme.
Recognise the liability Do not try to avoid the liability for HMOs. There is little point, as some agents and landlords still do, in ignoring the situation or, even worse, deciding to take the risk or not worry about licensing. The chances are that you will get caught eventually. Take it seriously and develop procedures to manage these properties or make a clear decision not to let to anyone other than a family.
Are you managing enough? Make sure you are actually managing the properties enough. The standard quarterly management visit used across the industry may be insufficient for some HMOs, especially those with difficult tenants or large numbers of individuals who are unconnected with one another. Local authorities certainly appear to expect far more regular visits. Where a property is let as a series of bedsits with the common parts being shared on a licence then the landlord has a right to enter the common parts at any time and a local authority will expect there to be visited regularly and kept in good condition.
Take robust and prompt action with difficult tenants Where tenants are not complying with their tenancy obligations and are frustrating your compliance with the management regulations you should act robustly and promptly. This should include clear letters explaining what is wrong, scheduling extra management visits, serving notices under section 8 of the Housing Act 1988, and in the worst cases, taking action to recover possession.
Have the right terms of business and tenancy agreements It is important that the landlord/agent relationship is well managed. The agent should reserve the necessary authority to themselves in their terms of business. This should certainly include the right to spend money to comply with any statutory requirement or notice from the local authority and also an indemnity from the landlord against any prosecution or associated costs. Landlords dealing with agents who take a casual approach to these issues should question whether they have the skills and expertise to deal with this type of property. The landlord/tenant relationship should be equally well structured. In the tenancy agreement there should be specific clauses requiring the tenants not to exceed the number of occupiers approved and an obligation to adhere to the terms of the Management Regulations and any obligations under any HMO licence.
Reply to statutory information requests Local authorities have a substantial power under s235 of the Act to demand information about the management, occupancy, and ownership of any property. It is a criminal offence not to provide this information promptly. It is not a breach of the Data Protection Act to comply with these requests and the only justification for withholding any document is that it is subject to legal professional privilege. If you have any documents that you believe fall into this category then you should seek expert advice. In short, answer the questions fully and promptly.
Keep good records It is important to keep excellent records when dealing with an HMO. In particular, detailed records should be kept as to who is present in the property, when this has changed, the findings of property inspections, and any actions taken as a result of them. Often landlord and agents are not able to rebut presumptions made by local authorities or untruths told by tenants because they do not have sufficient solid evidence. Where there are dealings with the Council then officers should be dealt with in writing or by email and notes kept of telephone conversations. Advice and comments made by a local authority officer are not usually much of a defence to a prosecution but they can be helpful in embarrassing authorities into not prosecuting or in reducing fines levied on a guilty verdict. Certainly a statement that a prosecution will not be carried out is very powerful and important if the local authority then changes its mind.
Take quality advice early Too often, landlords and agents delay in taking quality advice as they do not want to incur the costs involved. However, they then take actions which make their position worse. You should remember that there are tight timelines for appeals to the Residential Property Tribunal and when prosecution is threatened. Do not make the false economy of avoiding taking advice now and ending up having to pay for more detailed help later. There is also a danger in following advice found on the Internet from unreliable sources (this blog post excepted of course!). This is a complex area of law and cheap or free advice is often as good as the price implies. Most lawyers who understand this area can provide basic advice on how to act at a modest cost and often on a fixed fee basis.
Don’t be bullied by Council officers It is always best to be courteous and cooperative with council officers but this should not mean that they should be allowed to dictate to agents and landlords. The powers granted to a local authority are limited. In addition many officers have a very limited understanding of the relevant law, particularly of the Housing Act 1988 and of industry standards. They often find it difficult to understand why a landlord or agent faced with a tenant who has damaged the property has not simply walked in and fixed the damage. Many officers will overstep their bounds through ignorance or due to a desire to achieve an outcome they see as desirable. Their advice as to how to proceed is also often doubtful for the same reasons. However, it is important to be cooperative. There is nothing worse than responding to a council officer with abuse or a letter suggesting that they should pursue “real criminals”. This leads to a hardening of attitudes and may well be produced later to justify a refusal to grant a licence.
Conclusions There is a lot of money to be made in managing a quality HMO and they will increasingly be a key part of our housing requirements in the UK. However, this importance means that they will also be given close scrutiny by those responsible for ensuring housing conditions. Landlords and agents must recognise that this scrutiny exists and ensure they do not do anything to become an object of particular interest.