Local councils told to hand back over-charged HMO licence money

A letter demanding that HMO licence fee refunds should be paid to all landlords who have been overcharged has been sent to all local authorities in England.

The National Landlords Association believes that “many” landlords have been wrongly charged and are entitled to refunds.

The NLA’s demand follows three recent judgements.

These have clarified issues over the licensing of HMOs and how local licensing fees should be determined.

In one case, Hemming v Westminster City Council, the court ruled on whether licence fees it charged to sex shops complied with the European Services Directive 2009.

It was ruled that licence fees can only be used to cover costs, and not to make a profit or deter new service providers from entering the market. This case has wider implications for other forms of local authority licensing.

In a second case, Crompton v Oxford City Council, the court found that the council had tried to charge a fee for the variation of an HMO licence. The Residential Property Tribunal ruled that the fee was unlawful and that it could not be charged.

In the third case, Bristol City Council v Digs (Bristol) Ltd, the defendant was the private landlord of a maisonette in multiple occupation. The council brought a prosecution for failure to obtain an HMO licence and for breaches of the HMO regulations.

A District Judge at Bristol Magistrates Court tried the preliminary issue of whether the maisonette was a licensable HMO. It extended over two storeys of a building with a further entrance corridor and hallway on a lower storey. The council included the lower storey in deciding that the HMO extended to three storeys.

The Judge held that having regard to Article 3 of the HMO (Prescribed Description) (England) (Order) the maisonette was not an HMO. The council had been wrong to include the lower storey. In the light of that ruling, the council offered no evidence and the defendant was acquitted.

In the wake of all three rulings, the NLA is asking all local authorities in England to contact affected landlords, informing them of their right to appropriate refunds and providing details of how they may make a claim.

Richard Lambert, CEO of the NLA, said: “The private rented sector is a valuable and growing part of local housing provision and it is essential that landlords are able to work with their local authorities constructively to meet housing need.

“However, this has been made difficult by some councils’ obfuscations concerning licensing fees.

“In light of these recent rulings, we have asked local authorities to come clean about the level of fees they have charged private landlords, if they were entitled to make these charges, and when they will refund any money unjustly demanded.

“In writing to all local authorities in England, we are acknowledging the good working partnership many private landlords have with town halls, but making clear they should not be absorbing the costs of overcharging to support other council functions.”

A copy of the NLA’s letter to local authorities can be found here:

www.landlords.org.uk/node/8726