‘A guide to the licensing and management provisions in Parts 2, 3 and 4 of the Housing Act 2004’ - Consultation response
The National HMO Network works to improve conditions within the private rented sector by educating private sector landlords and local authority practitioners in best practice and promoting high standards in rented accommodation.
The National HMO Network notes that CLG would encourage comments on the draft “Guide to the licensing and management provisions in Parts 2, 3 and 4 of the Housing Act 2004” and welcomes the opportunity to comment at this stage.
The National HMO Network is generally supportive of the need for guidance as it can help to improve consistency of approach among local authorities and provide clarity and confirmation to some of the more complex areas of the legislation. However, having been using the relevant Housing Act powers for nearly 4 years (and the Act being available for 6 years), most local authority officers are familiar with the legislation and how to use it and it seems as though this is an afterthought rather than a clearly planned intention to provide local authorities with suitable guidance.
The current format of the guidance is considered inappropriate for use by local authorities, landlords and tenants, as intended. The National HMO Network would support the production of separate guidance for landlords and tenants on such a complex issue, but the format and content would need to be re-considered. Further clarity and examples would also be a useful addition to the guidance for all users.
This response consists of general comments only, as there are no specific questions posed by the document. It is, however, broken down into 2 sections: General comments and comments on specific parts of the guidance.
General comments
This format of guidance document is not really what is required at this stage; what local authority officers would appreciate is practical guidance on how to deal with some of the situations that arise and have arisen, which aren’t specifically detailed in the legislation.
The introduction to the guidance states that the document is primarily aimed at local authority practitioners but may be a useful guide for landlords and tenants too. If that is the case, it would need to be significantly simplified and perhaps be less focused on the local authority perspective. Guidance for landlords and tenants would be particularly useful, as they are generally less able to interpret the Act than local authorities, but separate guidance for local authorities and other users may be more appropriate.
The guidance, as it stands, is very unwieldy and therefore not easy to use. It would benefit from an executive summary, or perhaps even be broken down into separate guidance documents for the different parts of the Act. Perhaps some flow charts and bullet point lists would be helpful for some of the processes (such as in Environmental Health Procedures – Bassett). There is no real need to regurgitate the legislation throughout and if this were reduced/removed, the guidance would be much easier to use, as it would be read in conjunction with the Act. The document would also benefit from the inclusion of some practical feedback from local authorities who have been involved with complex cases, such as Management Orders. However, it is considered that although RPT decisions should be considered in producing the guidance, individual decisions should not be specifically referred to in isolation. RPT decisions vary considerably, are not binding and merely represent the RPT’s interpretation of the Act. In addition, due to the frequency of decisions, the guidance would quickly become outdated.
In putting this guidance together, it would have been beneficial to have consulted key stakeholders at an early stage to establish what exactly was required and to shape the style and content of the document. This could have saved time during consultation and subsequent amendment stages. The National HMO Network would encourage this approach in future and is keen to participate in this type of consultation.Additionally, large parts of this guidance already exist, as produced by LACORS. Perhaps CLG could consider adopting and updating the LACORS guidance, rather than starting from scratch?
Had adequate guidance been provided at an earlier stage, many of the RPT cases taken under parts 2 – 4 of the Housing Act 2004 may not have been necessary, as local authorities would have been able to look to the guidance for confirmation that their approach was correct. For those cases that would have still gone to the RPT, it may have helped to ensure that reasonably consistent decisions were made by the panel, rather than the varying decisions noted across the country.
The RPT decision regarding Interim and Final Management Orders at 139 Fellows Road, London, NW3 3JJ (Ref: LON/00AG/HXV/2009/0001) and subsequent appeal papers have been attached with this response. This decision is referred to in the specific comments below, and it is thought to be an important document for consideration in the production of any guidance on the matter of management orders.
It is not considered appropriate to include Departmental opinions in this guidance document. These opinions appear to be making an interpretation of the legislation, which can really only be done by the Courts.
Comments on specific parts of the guidance
Paragraphs 20 & 21 – It is useful to clarify this, as s257 is particularly difficult, especially for LA officers to try and explain to landlords. However, the part about the Building Regulations would benefit from being shorter and simpler.
Paragraph 23 – EHPs will not be involved in assessing a building’s compliance with the Building Regulations, although it is helpful to know what colleagues in Building Control will be considering.
Paragraph 25 – The local authority would need to have access to all parts of the building, not just the common parts and could use s239 powers of entry.
Paragraph 26 – To be an owner occupier surely the guidance must clarify that any of the persons specified as owners must actually live in the premises.
Paragraph 38 –This item is under the heading ‘occupied as only or main residence’. It is felt that the point concerning asylum providers being the ones managing the tenancy and therefore being required to be the licence holder, should be under a section which relates to ‘who should be the licence holder’ and used as an example.
Paragraphs 41 to 47 – The purpose of HMO declarations is unclear and would benefit from further discussion.
Paragraph 52 – uses the word ‘mesne’ in relation to profit. This would not be a term widely understood by many local authority officers or others using the guidance. A plain English explanation of what this means would be useful.
Paragraph 59 – The example given of persons not forming a single household concludes that a great aunt is not included as a member of a family, although an ‘ordinary’ aunt is specifically included. Cousins are included in family and the legislation does not determine what level of cousin is considered as family (e.g. 1st or 2nd cousins), so perhaps should therefore not exclude a great aunt (or uncle) or great grandparents.
Paragraph 63 –When was the 2nd bullet point added, to be included as members of a single household? This is not in the Act.
Paragraph 66 – Since the EU Services Directive came in on 28th December 2009, how does this fit in? BIS have provided a standard licence application form for LAs to use for their EU online applications. LAs will not therefore be using a different form for the usual UKapplication process. It will therefore be very difficult for LAs to require landlords to provide additional information with their application, even if they consider it is relevant for the purpose of determining the application. If landlords refuse to provide anything that is over and above what is required by the legislation, what should LAs do? Using s235 powers to require additional information (as suggested in paragraph 82) seems a little over the top.
Paragraphs 66 to 68 – This section does not explain who is responsible for licensing, which would be helpful.
Paragraph 73 – Comments as for paragraph 66 above.
Paragraph 76 – This suggests that evidence must be gathered for each HMO rather than covering a whole portfolio. Surely a person’s fitness cannot just be in relation to the management of the property to which the application relates? This would potentially make housing prosecutions for other properties and other serious offences, as listed, irrelevant in the decision making process.
Paragraph 81 – Is there a recognised time limit for declaring old judgements and enforcement actions?
Paragraph 85 – The term “acting as a front” is used, which may be confusing and/or misleading to some users of the guidance. A property owner who is deemed ‘unfit’ will always need to use someone to act for them in order to licence the property. Reputable property management companies, who were involved with a landlord either prior to him being declared ‘unfit’ or afterwards, may be unfairly labelled in this way. However, they will be assessed as to their fitness to be the licence holder or to manage the property and therefore, also the likelihood of the excluded landlord’s influence upon them.
Paragraphs 90 & 91 – This appears to be a little contradictory. The guidance explains that this issue is about the proposed management structures, not the current situation, but then suggests that LAs should look at a person’s track record in managing property. A landlord could propose management systems which would ‘tick all the boxes’, but when looking at their current and past performance LA officers would find it hard to accept that the proposals would ever be realised. In addition, if there is no knowledge or history of the landlord, LAs won’t know their management skills or capabilities, so would be accepting that systems are suitable purely on face value.
Paragraph 93 – Comments as for paragraph 66 and 73.
Paragraph 94 – Some guidance on what to consider when trying to establish whether there is ‘sufficient funding’ would be helpful. Local authorities have experience of landlords saying that they don’t have enough money simply to try and make the authority take over the property management. In such cases, local authority officers have looked at the landlord’s portfolio and made a decision on that basis. However, without understanding their full financial arrangements, this is not possible.
Paragraphs 96 & 106 –This area would benefit from more detailed explanation, as the issue of companies based in the Channel Islands, Europe, etc, is confusing to local authorities. For example, lawyers in Jersey have advised that UK legislation can be enforced against a person/company domiciled there. However, local authorities will not accept them as licence holders for their own properties, even though they have a management company in England who deal with day to day issues arising. Further guidance is needed to cover the approach to be adopted where the applicant is not resident in the UK and how managers could be bound by licences and licence conditions enforced. It may be easier to provide this in a tabular format, showing the possibilities and providing scenarios in which they may occur. It would also be helpful to include model wording for where managers are bound by the licence, to ensure consistency.
Paragraph 102 – This is an opportunity to clarify that local authorities should not use licence conditions to enforce Part 1 matters.
Paragraph 107 – An element of selective licensing is about controlling anti social behaviour. As local authorities cannot ask landlords to include a clause on this in future tenancies, perhaps guidance could be given on how this should be approached in another way.
Paragraph 119 – The Act does not state that the licence “…should normally be granted for five years unless the LHA is satisfied that in the circumstance of the particular property a shorter period is appropriate.” Should the licence fee for a shorter licence period be pro rata, as this has not been clarified before? The shorter licence period is normally given as a penalty of sorts, so a reduction in the fee takes away part of that. A pro rata fee could be considered if a short licence period is being issued only on the basis of lack of prior knowledge of a landlord/proposed licence holder, but not in other circumstances. In addition, it may be useful to clarify that local authorities cannot have a ‘blanket’ policy to issue licences for certain shorter terms and that each case should be considered individually. Presumably landlords can only challenge this through application to the RPT?
As all local authorities will have established their licence procedures based on the wording of the Act, this guidance may well create an additional burden on many authorities and their licensed landlords. This guidance would also be an opportunity to promote innovative approaches to licence periods utilised by some authorities, e.g. where licence periods are considered according to the level of compliance from landlords during the application process.
Paragraph 120 – last sentence: how would this work in reality? If the property has been sold to another person, how can the original licence holder be held responsible for the management of the licence? It is accepted that he should tell the LA of the change in ownership so that they can revoke the licence. However, if he does not notify the LA, what legal right does he have to do anything in connection with property owned by another person? It would also be helpful to discuss the issues that arise where a company, who are the managers and licence holders,goes into administration, as this is not detailed in the Act.E.g. a new licence holder must be found, but should they be expected to pay for a whole new licence application in this type of case?
Paragraph 123 – this states that the LA may not charge a fee for considering an application to vary a licence. Does this mean no fee just to consider the application, or no fee at all, even for processing it and issuing varied documents? This has not been advised previously, so some LAs may already be charging for variations.
Paragraph 135 – Comments as for paragraph 123 above, but for revocation.
Paragraph 153 – They would only commit an offence for an application after 6:7:06 if they owned/managed the property and it was licensable on or before 6:7:06. It would be helpful to clarify this further.
Paragraph 155 – What conduct of the LHA might constitute a defence of ‘reasonable excuse’ for operating an unlicensed HMO?
Paragraph 161 – It would be helpful to cross reference this with paragraph 195 so that explanation of the ‘steps’ is made clear.
Paragraph 162 – It would be helpful for CLG to ensure that better links are made between the courts and local authorities to ensure that this provision is workable.
Paragraph 167 – Given recent RPT decisions, it would be helpful to provide explicit guidance on who is the appropriate person to make an RRO against, i.e. the owner or the manager.
Paragraphs 168 to 179 – It would be helpful to provide guidance on how local authorities can best demonstrate that the property subject to an RRO was indeed licensable during the 12 month period preceding the application for the RRO. In many cases it is difficult, if not impossible to obtain retrospective evidence that the property was licensable, unless there are, and have been throughout, 5 or more claims for housing benefit for the property.
Paragraph 175 – 2nd bullet point re ‘exceptional circumstances’. Is this also in the RPT guidance? RPT decisions appear to have reduced payments for various reasons rather than purely in exceptional circumstances.
Paragraphs 186 to 190 – It would be helpful to explain how the provisions for occupier’s applications for an RRO can be utilised effectively, given that where occupiers move out of the unlicensed property, the 12 month period for their RRO can only start once the local authority has secured a prosecution. The period for a local authority to take a prosecution is often lengthy, and of course, can be extended by rogue landlords who can exploit the court process by seeking numerous adjournments, and hence reduce the potential period that an occupier’s application will cover.
Paragraphs 191 to 195 – It would be helpful to provide guidance on the spirit of the Act in relation to TENs. For example, was the intention that TENs would (with the exception of the death of a licence older) apply only to the period leading up to the commencement of a licensing scheme? It could be argued that it should not be possible for an unlicensed HMO to avoid the licensing legislation through applying for a TEN, when it has been operatingas an unlicensed HMO for a period of time prior to the date that the local authority has gathered evidence of a failure to license. Surely there must be consideration of why the property has not previously been the subject of a licence application in determining whether a TEN should be granted. TENs should not be used as a period to avoid licensing enforcement by local authorities, and hence limit the ability of occupiers to apply for RROs.
Agree with the suggested guidance in paragraph 193 and that the threshold for giving a TEN should be high. However, previous RPT cases have suggested that even a verbal comment should be taken as notification that the landlord wants to apply for a TEN. There appears to be no expectation from the RPT that a written notification request is provided or even necessary (as suggested in paragraph 196). Will RPTs be expected to have regard to this guidance in making their judgements in future?