Why are the fines imposed on landlords so erratic?

Fines imposed by courts against so called ‘rogue landlords’ are often criticised by commentators for being pathetically small. Despite changes to the law in 2015 gave magistrates the power to impose unlimited fines on landlord for many offences but despite this, fines are still sometimes surprisingly low.

Low fines have little deterrent effect and can leave council enforcement officers wondering why they bothered to bring a criminal prosecution at all. Some recent fines which criticised for being very low were imposed against landlords who had breached a ‘prohibition order’. Prohibition orders are made by councils where there are serious hazards in a property. The effect of the order is to place restrictions on the use of the property, often preventing it from being occupied at all until it has been made safe. This means that it is difficult to even imagine a situation where breaching a prohibition order would be a trivial offence deserving only a nominal fine.

Many people have called for tougher penalties for criminal landlords, and this is not just tenants and campaigners – private landlords often argue that those landlords who flout the law should face tougher penalties, noting that landlords who obey regulations and prioritise tenant safety have to compete in the market against those who do not.

But the punishment must also fit the crime, and landlords do occasionally face penalties which appear to be excessive. For example, Landlords who breach planning enforcement notices can face a confiscation order requiring them to pay back over a million pounds.

The overall effect is that fines imposed on landlords appear to be applied some what randomly. Breach of planning enforcement notices result in huge confiscation orders, whereas illegal eviction can attract trivial fines.

There are several factors which contribute to this confused picture:

      1. No sentencing guidelines. There is no specific sentencing guideline for ‘landlord and tenant crime’ and no guidance from the Court of Appeal. This means that magistrates are left to work it out for themselves. A general guideline for sentencing offences which do not have a specific guideline is coming soon, and this will apply to ‘landlord offences’ including those relating to HMOs, but this is likely to set out general principles rather than set specific amounts.

      2. The Proceeds of Crime Act 2002. The Crown Court can make a confiscation order which requires the financial benefit from criminal activity to be paid back. Where ‘POCA’ applies (such as breach of planning enforcement notice cases) very large confiscation orders can be made because the gross rent can be deemed to be a benefit obtained of criminal activity. But POCA is notoriously complicated and often it does not apply at all to landlord offences. This is a developing area – housing enforcement teams could be using POCA in more innovative ways, but this does require specialist skills and a willingness to push boundaries.

      3. Quantifying financial benefit. Courts often seek to make sure that where a crime is committed in the context of business it is not cheaper to break the law than to comply with it. This can result in courts attempting to conduct an informal confiscation process when setting the fine, but this unsatisfactory because ‘financial benefit’ is sometimes very difficult to quantify. The rent paid by tenants will only form part of the benefits of a crime for particular offences, and it is difficult for a judge or magistrates to assess this quickly without going through the full confiscation process under POCA.

      4. Not all landlords are that rich. A fine has to be proportionate to the offender’s means and wealth; it has to reflect the assets and income the defendant actually has as well as the offence. Many landlords can afford to pay a substantial fine, but a buy-to-let landlord might have very little equity, and someone who has been involved in rent-to-rent might not own any properties. Where the landlord has no means to pay a substantial fine the courts have to impose a realistic fine.

      5. Media reports can be misleading. Councils want to publicise their successes and try to make sure landlords know that they could face prosecution if they break the law. This leaves little room for nuance; a triumphant press release from the council might not tell the whole story. There might be compelling reasons why the court was sympathetic to a particular defendant. Some offences are minor, committed carelessly rather than deliberately. If the defendant has learned their lesson and no harm was suffered, sometimes a modest fine is the just outcome. Limited resources can tempt journalists to rely heavily on the prosecutor’s press release, which might leave out important details about the defendant or the offence.

The general sentencing guideline will give the courts a clearer structure to apply, but unless a specific guideline for ‘housing crime’ is published it is inevitable that fines will continue to be applied somewhat erratically. The general guideline (which has been published in draft) will encourage courts to remove any economic benefit which an offender derives through committing an offence, and this is quite likely to result in higher fines in case where the benefit can be shown. However, this will not remove the pressure on cash-strapped enforcement teams as they will bear the burden of proving that an offender has made a financial benefit through their criminal activity.

Local authorities are increasingly relying on their powers to impose financial penalties directly, without prosecuting landlords and agents through the courts. Financial penalties are attractive to councils because less administrative work is required, and also they can keep the money and use this money for further enforcement work. The penalties can be appealed, but relatively few appeals are heard by the tribunal, and these fines are not publicised as often as criminal convictions. Transparency has been sacrificed for the sake of a more efficient system, but this make even more difficult to assess whether the fines being imposed are being set at appropriate levels.

While large fines might make headlines, research by criminologists suggests that large fines actually have relatively little deterrent effect, as offenders assume that this will not happen to them. Instead, the most effective way to deter would-be-criminals is an effective enforcement system which makes believe that they are likely to be caught if they break the law. This is likely to be as true for ‘rogue landlords’ as it is for any other type of offender, but the limited resources of local authorities mean that it is likely that they will have to continue to rely on the deterrent effect of publicising large fines for the time being.