The Upper Tribunal (UT) has upheld a company’s appeal against a £10,000 fine for managing or being in control of a house in multiple occupation (HMO), finding that there was no evidence that it was a person managing the property.
The local authority had visited the property after receiving complaints about pest infestation and overcrowding. It served notices under Section 16 of the Local Government (Miscellaneous Provisions) Act 1976 on the freeholders, the managing agent and the company, requiring information about the property. The managing agent said in its reply that the company was the freeholders’ agent and also acted as managing agent. The local authority subsequently imposed a financial penalty of £10,000 each on the managing agent and the company for the offence of managing an HMO without a licence.
Appealing to the First-tier Tribunal (FTT), the company said that it had let the property to the managing agent and was not a person managing it. The FTT noted that the company was stated in the letting agreement to be both the landlord and the landlord’s agent. While the company had no contract with the tenants and was not their landlord, it had acted in the capacity of managing agent and had benefited from its collection of rent from the managing agent. Finding that the company had been managing the property, the FTT dismissed the appeal. The company made a further appeal to the UT on the basis that the FTT’s finding that it was managing the property was unexplained.
The UT noted that the concept of ‘managing’ a property is defined in the Housing Act 2004. The definition is not satisfied merely by being a party to a management agreement or doing something that could be described as management. Section 263(3) of the Act requires that the person concerned be an owner or lessee of the premises, and there was no evidence that the company was either.
Section 263(3) also states that if payment by the occupiers is received through an agent, then the agent is also a person managing the property. On the facts found by the FTT, however, neither the company nor the freeholders was receiving rent from the occupiers. The company could be seen as benefiting indirectly from the occupiers’ payments, but that is not what Section 263(3) requires. The company received rent from the managing agent, which would have remained payable whether or not the occupiers paid rent.
Allowing the appeal and setting aside the FTT’s decision, the UT concluded that the finding that the company was a person managing the property was unexplained, and indeed could not be explained on the basis of the evidence before the FTT.