Company wins Upper Tribunal appeal against penalty imposed over management of house in multiple occupation

That decision has come from Judge Elizabeth Cooke in the Upper Tribunal (Lands Chamber) on an appeal against a decision of the First-Tier Tribunal (Property Chamber).

Next Location Company (NLC) appealed against the penalty, which was imposed in April 2023 on both it and a company named Come to London (CTL) for the offence of managing an HMO without a licence.

CTL made a compromise agreement with the respondent and took no further part in the FTT proceedings.

A Haringey officer  said in a witness statement for the FTT that she received a complaint about pest infestation and overcrowding at the property, and when she visited occupants said the managing agent for the property was CTL, to which they also paid rent.

NLC was involved as a managing agent for the freeholders and had tenants in the property.

It then told Haringey it was not managing the property but had let it from August 2022 to CTL for one year, at a rent of £2,000 per month, and that it was CTL's responsibility to apply for an HMO licence if necessary.

The FTT though found that the property was a house in multiple occupation that required a licence and no representations had been made as to why the £10,000 penalty should be reduced.

Judge Cooke said: “The difficulty with the finding that the appellant was a person managing the property is that the basis on which the FTT made its finding was that it had a management agreement with the freeholder, that it had some involvement in a repair at the property but had not visited regularly, and that it benefited from the rent paid to it by CTL.

“As I said above, the concept of ‘managing' property is defined in the 2004 Act; it is not a commonsense concept and the definition is not satisfied merely by being a party to a management agreement or doing something that could be described as management.”

She said s263(3) of the Housing Act 2004 requires that the person concerned be an owner or lessee of the premises.

“There is no evidence that [NLC] was either,” the judge said.”There is no suggestion anywhere that its agreement with the freeholder was a lease, and the freeholders' reply to the section 16 enquiry stated that the appellant was its managing agent, and did not refer to it as a tenant. If the FTT regarded the appellant as an owner or lessee of the property, it did not say why.”

Judge Cooke said s263(3) also said that if payment by the occupiers is received through an agent, then that agent is also a person managing the property.

“To bring [NLC]  within the definition the FTT would have had to find that the freeholders were receiving rent from the occupiers through the agency of [NLC and it made no such finding.”

She said the FTT’s finding that NLC was a person managing the property “is unexplained, and indeed could not be explained on the basis of the evidence before the FTT”.

Judge Cooke set aside the penalty on NLC and noted there was no adequate explanation of its imposition by Haringey and “a cursory reference to the respondent's reasons will not do”.

Mark Smulian