Housing offences and increased penalties

At one time all housing offences were prosecuted in the Magistrates Courts. There was a degree of frustration on the part of local authorities who felt that the penalties levied by the courts were too low. The change to remove ceilings from Magistrates Court penalties and make them effectively unlimited did little to alter this dynamic. In addition the Magistrates also tended to make little award for the legal costs and effort incurred by prosecutors to bring these cases into the Court. So it all felt like a bit of a waste from their perspective. Even where penalties were more substantial the local authority retained none of the fine money, which went back to central funds controlled by HM Treasury.

In an effort to change this dynamic previous governments introduced the concept of the civil penalty. A curious hybrid which was not quite civil and not quite criminal and had elements of both. This allowed local authorities to issue penalties and allowed for them to be challenged by landlords and agents in the FTT. The penalty money could be retained by local authorities and used for housing enforcement activity. This is also a less than perfect system as the collection of penalty money is poor and so, in many local authority areas, failing to pay the fines actually leads to no further action. There have also been accusations that local authorities issue penalties which are excessive or avoid difficult and controversial matters by going after easy targets. As legal costs are not awarded in the FTT challenging penalties, even those which are unreasonable, is difficult for landlords and they are in a position of inequality of arms as local authorities will be represented by in-house legal teams while landlords will have to pay legal fees which they cannot get back, even if they are in the right.

Leaving aside these criticisms, the fact is that civil penalties have taken over from prosecutions. The number of prosecutions has dropped precipitately and civil penalties have risen hugely. I see little reason for this to drop with the maximum level of penalty being increased by the Renters' Rights Act to £40,000 and the possibility of banning orders being permitted without prosecutions.

But this may all be about to change again. The Sentencing Council recently finished a consultation on new, and massively uprated, penalties for housing offences. These are a lot higher. To give you an example for housing standards offences the maximum fine for an individual goes up to 700% of their relevant weekly income and for an organisation up to £2,400,000 (yes that is £2.4 million). Magistrates are required to follow these guidelines where they exist and have very limited scope to depart from them, so having a higher level of penalty is going to lead to much higher fines in the Magistrates.

However, what is unclear is whether this will tempt local authorities back through the door. They have become very used to civil penalties and, where the money is collected reliably, very used to the income stream. While being able to punish the worst landlords more effectively with higher penalties will be useful, I suspect that this will mean that local authorities will only prosecute the very worst cases.

David Smith is a partner at Spector Constant & Williams.