Upper Tribunal issues ruling on HMOs and residential letting agents operating on ‘let only’ basis

Martin Rodger KC, Deputy Chamber President, heard an appeal against a decision of the First-Tier Tribunal (Property Chamber) lodged by letting agent Kartal Cetin against Epping Forest District Council.

Epping Forest had imposed a £7,064.32 penalty on Mr Cetin for his agency's alleged involvement in the control or management of an unlicensed HMO contrary to section 72(1) of the Act.   

The FTT reduced this to £3,532.16 but maintained the offence had been committed.

Mr Cetin was in October 2021 asked to let two vacant rooms above a shop in Loughton. 

The two tenants placed each paid a holding deposit and a month's rent in advance to his company.

Epping Forest said the flat became an HMO liable to licensing requirements as these lettings meant there were then five residents.

Mr Cetin's appeal argued that as a letting agent he was not a person managing the property and so could not be liable for the offence under section 72 since his company had never managed the property. 

Epping Forest put to the tribunal that a strictly literal approach to the construction of section 263(3) was required.

Mr Rodger said: “I am not attracted to an over-literal construction of section 263(3).  The importance of the definition of ‘person managing’ is not that it identifies an event or a transaction but that it describes a status to which certain responsibilities are attached, including responsibility for licensing, where it is required, and responsibility for compliance with the Management Regulations.”

He said a landlord receiving rent was a person managing within the definition and Parliament could not have intended that receipt of a single instalment of rent by an agent - who has no continuing management responsibilities - should be enough to place the agent under the same statutory obligations as a landlord or a managing agent.

“The fact that the purpose of the definition of person managing is to identify those who will be subject to continuing obligations, backed by criminal and civil sanctions, calls into question the intended breadth of the definition,” Mr Rodger said.

“Did Parliament mean to attribute that status to an agent with no involvement in management?  I would suggest not.”

Treating a letting agent as a ‘person managing’ could create ambiguity and leave tenants confused as to who was managing the property.

Mr Rodger added: “Secondly, simply as a matter of language, it would be surprising if the descriptor 'person managing’ was intended to apply to an agent who was not engaged to manage the property and who had no power to do so.”

He concluded: “A payment made to an agent of the landlord whose only function is to let the property in question and who thereafter has no involvement in the continuing management, is not a payment within the scope of section 263(3). 

“For that reason, the company was not a person managing the HMO and Mr Cetin did not commit an offence when the company received the payment of rent from [the tenant].”

Mark Smulian