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Council wins appeals over reduction of penalties for unlicensed flat rentals

The London Borough of Waltham Forest has won two appeals over reductions made by the First-Tier Tribunal to penalty notices for unlicensed flat rentals.

In London Borough of Waltham Forest v Marshall [2020] UKUT 35 (LC) Judge Elizabeth Cooke ruled that the original penalties imposed on landlords Allan Marshall and Huseyin Ustek should be reinstated without a further FTT hearing.

Waltham Forest argued that the FTT had been wrong to depart from, or ignore, the council’s policy for determination of financial penalties, and that FTT’s decisions were based on inadequate or irrelevant considerations.

Judge Cooke said: “The two appeals raise an important issue about the respect to be paid by the FTT to a local housing authority’s policy in making a decision following a re-hearing of this kind.”

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Mr Marshall rented out one flat and once selective licensing was introduced sought to apply for licence but became frustrated with the online process.

In December 2017 Waltham Forest warned him to apply for a licence within 14 days or face either prosecution for an offence with an unlimited fine, or a civil penalty of up to £30,000.

He failed to, and the council imposed a £5,000 penalty, which it said was appropriate for a small landlord with no other aggravating features. The FTT reduced this on appeal to £1,500.

In Mr Ustek’s case he was warned he needed a licence and in September 2018 Waltham Forest said it would impose £15,000 penalty for failure to comply.

It regarded this as appropriate because he had experience in letting and managing property, held other licences and had a history of non-compliance with improvement notices.

Mr Ustek later applied for a licence and the council reduced the penalty to £12,000, and when he appealed the FTT further reduced it to £4,000.

Reinstating the original penalties, Judge Coke said: “The FTT paid little or no regard to the decision taken by the local authority. Had it sought to understand the [penalties] matrix it would have seen why the authority reached the conclusion it did.

“I bear in mind that the FTT is a specialist tribunal but [it should] start from the local authority’s policy, and to afford respect to its decision.”

She said that Mr Marshall had been given the lowest possible penalty and in Mr Uztek’s case the FTT had “paid lip-service to the policy…it has not considered the objectives of the policy before departing from it. It has not even understood the policy”.

The FTT had been wrong not to regard his failure to comply with improvement notices on other properties as an aggravating factor, she added.

Mark Smulian

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