City council hails Court of Appeal ruling as strengthening enforcement of HMO licensing laws

The case concerned Housing 35 Plus Limited (H35), an accommodation provider operating between 75 and 80 shared housing properties with about 500 bed spaces in Nottingham.

The council’s Safer Housing team investigated H35 for failing to license HMOs under Part 2 of the Housing Act 2004.

H35 claimed it was exempt from HMO licensing because it is a mutual benefit co-operative society registered with and regulated by the Financial Conduct Authority.

The city council disputed this interpretation, arguing that the exemption did not apply.

Nottingham issued financial penalties of £15,000 over two properties, which H35 appealed to the First-tier Tribunal.

It claimed that the properties were not HMOs as defined because they fell within paragraph 2B of schedule 14 to the 2004 Act.

The FTT heard that as a preliminary issue and decided it in H35’s favour.

Nottingham City Council successfully challenged the decision, with Upper Tribunal Judge Elizabeth Cooke finding that the buildings were HMOs.

She found that the management committee, “as its name implies”, is empowered to make management decisions. “They might be described as day-to-day management decisions, but they are management nonetheless.“

Upper Tribunal Judge Cooke concluded that “the respondent's rules do not ‘secure’ that ‘all management decisions of the society are made by the members (or a specified quorum of members) at a general meeting which all members are entitled to, and invited to, attend’ as paragraph 2B(2)(b) [of Schedule 14] requires. The FTT was wrong about that…”

H35 appealed to the Court of Appeal.

Lady Justice King, Lord Justice Nugee and Lord Justice Miles dismissed the appeal at the end of a hearing on 14 January 2025, agreeing with Judge Cooke that H35’s rules did not ensure that all management decisions were taken by members at a general meeting, as required by Schedule 14 of the Housing Act 2004.

The question before the court was said to be “not what is done in practice, but what the rules provide”.

The case will now return to the First-tier Tribunal to consider the remaining grounds of appeal, including whether there was a reasonable excuse for non-compliance and whether the penalty amounts were appropriate.

The council said: “Regardless of the outcome of those proceedings, H35 is now required to take steps to license all of its HMOs. Nottingham City Council believes this could involve at least 70 properties across the city.”

Cllor Jay Hayes, Executive Member for Housing and Planning at Nottingham City Council, said: “This is a hugely significant ruling, not just for Nottingham but for councils across the country. The Court of Appeal has provided vital clarity on how the law applies, and it confirms that organisations cannot avoid their responsibilities through technical interpretations that don’t reflect how properties are actually managed.

“This case shows our commitment to standing firm, even when enforcement action is complex and time-consuming. Licensing exists to protect residents and improve housing standards, and we will continue to use all available powers to hold landlords to account.”