HMO licensing appeals: to re-hear, or not to re-hear?
Angela Piears considers a First-tier Tribunal (FTT) case about HMO licences: How should the FTT approach the hearing of an HMO licensing appeal? Who can challenge the decision to grant an HMO licence? How should a local authority serve notices on a freehold company?
What was the case about?
I represented a local authority, successfully defending a statutory appeal about HMO licensing in the FTT.
G was the leasehold owner of a single flat in a residential block. For years he had 3 sub-tenants, with no need for an HMO licence. Then the LA changed its licensing criteria, extending the licensing requirement to 3 people. G duly applied for a licence.
Paragraph 1 of Schedule 5 to the Housing Act 2004 requires notices to be sent to ‘each relevant person’. That phrase is defined at paragraph 13(2)(a)(i) of the same schedule as including “any person… who, to the knowledge of the local housing authority concerned, is a person having an estate or interest in the HMO… in question”.
The LA sent information about G’s licence application to the property’s freehold company at the address recorded in the Land Register, and to G’s mortgage company. No response was received and the LA granted the licence.
JS was another leasehold owner in the block. She owned a share of the freehold and was a Director of the freehold company.
The appeal to the FTT
JS brought an FTT appeal against the LA, arguing she was a ‘relevant person’; alleging the LA had not complied with paragraphs 1, 7 and 13 of Schedule 5 to the Housing Act 2004; and alleging that she should have received a Notice of Intention and would have opposed the licence (partly on the basis that G’s lease did not allow it to be used as an HMO). She relied on statements from 2 other leaseholders who also owned a share of the freehold.
In her Witness Statement, JS also argued that the managing agents had not been notified about the application, and that an HMO would mean increased noise, increased visitors, pressure on amenities like parking, higher insurance premiums, and a negative impact on property values.
The LA defended the appeal on its merits, and also challenged the legal standing of JS to bring the appeal arguing she was not a ‘relevant person’.
JS did not attend the final hearing but did not seek an adjournment. She sent further written submissions, including a Companies House record showing the current address for the freehold company – which differed to the address on the Land Register.
G had not responded to the FTT’s invitation to join proceedings.
The conduct of the appeal
The FTT dealt with the appeal by way of a re-hearing of the LA’s decision to grant a licence, using its powers under paragraph 34 of Schedule 5 to the Housing Act 2004 – which also enabled it to have regard to matters of which the LA were unaware. The FTT could have confirmed, reversed or varied the LA’s decision, including directing the terms of the licence.
It is for an appellant to establish a basis on which the FTT can be satisfied that a different outcome is justified. The FTT does not have the power to conduct a review of the LA’s decision-making.
The FTT considered that the appeal comprised 3 substantial issues: (1) whether JS had standing to appeal, as a ‘relevant person’; (2) whether the LA had complied with the requirements for service of the notices proposing to grant and granting the licence; and (3) whether the FTT should give weight to the representations of JS against the grant of the HMO licence, when determining the appeal.
The FTT’s decision
The FTT decided that JS was not a ‘relevant person’ as defined by paragraph 13(2) of Schedule 5: although she was a leaseholder and a shareholder in the freehold company, she did not have an estate or interest in the HMO, and she did not manage or have control of the HMO. Crucially, she had not brought the appeal in her capacity as a Director of the freehold company.
The FTT also decided the other 2 issues, in case it was wrong about the issue of standing.
Regarding service of notices, the FTT was satisfied notices had been served. It held that the LA’s service on the freehold company’s address in the Land Register complied with s.233 of the Local Government Act 1972 and that the LA met its requirement of due diligence by referring to that address. The LA did not need to make further enquiries. The FTT referred to Oldham MBC v Tanna [2017] EWCA Civ 50, where Lewison LJ said it is “the responsibility of the registered proprietor to keep his address up to date”.
On the weight to be given to the representations made by JS, the FTT held that it could take into consideration new information at the re-hearing, but that JS’ representations were not supported by evidence; and the issues relating to the terms of the lease were private law matters between the freeholder and G.
Overall, the FTT held that JS had failed to establish a basis on which it could be satisfied that a different outcome to the HMO licensing decision was justified.
The appeal was dismissed.
Comment
Perhaps the most interesting aspect of this appeal was how the FTT dealt with the submission, made by JS, that the loss of the opportunity to make representations amounted to a material procedural irregularity which could only be remedied by the decision to grant an HMO licence being set aside, and requiring the LA to start the process again.
The FTT held that following that proposed route would amount to a public law review of the LA’s decision-making, and such a review is not within the FTT’s remit when hearing appeals against LA decisions to grant or refuse an HMO licence.
Instead, any potential unfairness to an appellant who has been denied the opportunity to make representations is cured by the FTT’s appeal power to have regard to matters about which the LA was unaware, when it made its decision.
Appellants usually value an appeal by way of re-hearing over a mere review, but this case was an example of a situation where that approach disadvantaged an appellant, who had failed to provide sufficient or persuasive evidence.
LAs will be comforted by this decision for other reasons: when serving notices for HMO licensing applications, it is sufficient to check the freeholder’s address on the Land Register; and the LA is not required to take into consideration any possible breaches of lease by the licence applicant – those matters are not necessarily relevant to the grant of an HMO licence.
For freehold companies, this decision is a salutary reminder: a corporate landowner (whether freehold or long leasehold) is responsible for making sure it updates the Land Register of a change of address. If it fails to do so, it may well miss notices which have been validly served.
For appellants, the decision is a reminder that those bringing an appeal must make sure that they have the standing to do so.
Angela Piears is a barrister at 42BR.
