Landlord wins appeal over penalty for letting of flat without licence as Upper Tribunal says matter should have been dealt with informally

A landlord has won an Upper Tribunal appeal over the imposition of a £2,500 financial penalty by a council for letting a flat without a licence.

The First-tier Tribunal (Property Chamber) had previously dismissed Irene Ekweozoh’s appeal and confirmed the penalty for letting without a licence of the flat in Ilford contrary to section 95, Housing Act 2004. 

Ms Ekweozoh, who lives in Canada, was granted permission to appeal on two grounds:

1. The suggested failure of the FTT and of the London Borough of Redbridge to follow the council’s own enforcement policy which required informal action to resolve non-compliance with licensing requirements before resort could be had to formal enforcement action including the imposition of a financial penalty. 
2. A challenge to the FTT’s acceptance of the amount of the penalty as having failed properly to apply the financial penalty matrix adopted by the respondent in its enforcement policy document.

In Ekweozoh v London Borough of Redbridge (HOUSING - CIVIL PENALTY - selective licencing) [2021] UKUT 180 (LC) Deputy Chamber President Martin Rodger QC allowed the appeal on the first ground (making it unnecessary to consider the second).

The appellant landlord submitted that she had taken immediate action to apply for a licence as soon as she had been informed about the licensing obligation and had returned a completed selective licensing application to her agent on the same day as it had been sent to her.

This was not a case in which she had failed to engage with the respondent council, she said. Moreover, the flat had been found to be in good condition and no prejudice had been identified to her tenants. 

The application of paragraph 4.2 of Redbridge's private sector housing enforcement policy – concerning officers trying to resolve issues informally in the first instance – ought therefore to have resulted in an informal resolution of the case.

The council argued that his ground of appeal was without merit. It said it had taken informal action by sending a letter on 6 June 2018 to the known addresses for the appellant, by visiting the property in July and October and by writing to the occupiers on 31 October. Counsel also suggested that, as the FTT had held, the fact that none of these steps had appraised the appellant of the need to license the property was not an outcome for which the respondent could be criticised.  It was the appellant’s fault that she had not provided the respondent with an address when she moved to Canada in 2007 and had made no reliable arrangements for the forwarding of her post.

Rejecting the council’s submissions, Judge Rodger said the FTT ought to have addressed its mind to the respondent’s policy on informal resolution and to whether it applied in this case. 

He said it was clear to him that the FTT did not address the substance of the policy issue. “Instead, the FTT began by considering the amount of the penalty, rather than the prior question of whether there should be a penalty at all, and having reached that prior question only at the end of its decision, it dismissed it on grounds which did not examine the policy or consider its application.”

Judge Rodger added: “In doing so the FTT failed to deal with a significant part of the appellant’s case; it also omitted to consider a material factor and thus its evaluation of the case and its exercise of its discretion were flawed.

“For both of those reasons, the FTT’s decision to uphold the penalty must be set aside.  It is no answer to those omissions for the respondent now to say that the imposition of the penalty was nevertheless appropriate.  That was a question for the FTT to address, and it did not do so.  For that reason, its decision to uphold the penalty must be set aside.”

In terms of remaking the decision, the Deputy Chamber President said it seemed to him to be case in which the appropriate disposal in accordance with the respondent’s policy was to deal with the matter informally, without the imposition of any financial penalty. “The objective of the financial penalty regime, as explained in the MHCLG Guidance, to support good landlords who provide decent well-maintained homes and crack down on a small number of rogue or criminal landlords knowingly letting out unsafe and substandard accommodation, is not advanced by the imposition of a financial penalty in this case.

“On the contrary, it seems to me to be consistent with both the policy and the Guidance to encourage more landlords, especially those who live abroad, to engage professional agents to act on their behalf.”

The UT judge said the appellant’s case was not presented to the FTT on the basis that, having appointed an agent to manage her property and that agent having failed to alert her to the need for a licence, she had a reasonable excuse for the property having been unlicensed which provided her with a statutory defence under section 95(4), 2004 Act.  “Nevertheless, the fact that she engaged the services of an agent, as a responsible landlord in her circumstances would have done, is a highly relevant consideration.”

Judge Rodger noted however that the appellant’s failure to license her flat had not been cost free, as she would have paid tribunal fees at each stage of her appeal in addition to any charges incurred for the services of her solicitor.  “Secondly, the disposal of the appeal without the imposition of a penalty is not free of potential consequences; the respondent’s policy treats any prior history of non-compliance, even if resolved informally, as a relevant consideration when determining the punishment appropriate to a future offence.”