HMO (“Houses in Multiple Occupation”) Licensing has been in place since 2006 and entitles local authorities to impose conditions when granting licences to Landlords. In addition, and as discussed in my related article on the subject, councils are also entitled to levy a fee for the granting of such licences.
In fact, the HMO Licensing rules are changing on 1st October 2018 due to the introduction of new legislation. However, another change to hit the HMO landscape comes in the form of a recent High Court ruling which has important implications for local authorities and Landlords alike.
The High Court’s decision was that the imposition of fees may in fact be unlawful.
The Case: Gaskin v Richmond upon Thames
Mr Gaskin, a Landlord with a portfolio of HMO properties, refused to pay the £1,799 HMO licensing fees charged by Richmond Council in London. The fee was charged by the council upon Mr Gaskin applying to renew his licence and the council justified the charge by stating that it included both a charge for running the council’s HMO scheme as well as the cost of processing his application.
Mr Gaskin took objection to the charge for the administration of the HMO scheme and due to his refusal to pay the fee charged his licence application was refused. He was then prosecuted under the Housing Act 2004 for controlling and managing a HMO without a licence.
Mr Gaskin judicially reviewed the council’s decision to refuse him a licence, upon which the criminal prosecution was stayed. The judicial review was mostly unsuccessful as far as Mr Gaskin was concerned but the issue of whether the council’s fee was valid was adjourned.
The High Court’s decision when considering the validity of the fee was that it was indeed unlawful. It found that the fee, including as it did an upfront charge for the administration of the scheme, breached European Union rules because Mr Gaskin, as someone engaged in a self-employed economic activity (i.e. controlling and managing the rental of properties), was a “service provider”. This meant that the fee for the administration of what amounted to an “authorisation” scheme was unlawful under the EU Services Directive (Directive 2006/123/EC).
The decision means that Richmond Council’s HMO licensing fee was unlawful because of the way in which it was levied. Naturally, this has huge implications for councils across the country and for Landlords also. However, it does not necessarily mean that all licensing fees will be unlawful.
Councils are believed to be currently reconsidering the way they structure their HMO licence fees, in the hope that charging a fee for the administration of a HMO scheme might be valid if it is imposed after a licence has been granted.
In the meantime, Landlords might wish to consider requesting details of the fee structure upon receipt of a demand for a HMO licence fee in order to consider whether the fee is potentially unlawful in light of the Gaskin case.