Appeal Against Penalty for Managing Unlicensed HMO Succeeds

A landlord has successfully appealed to the Upper Tribunal (UT) against a civil penalty issued for managing an unlicensed House in Multiple Occupation (HMO).

The property in question contained five bedrooms, let to unrelated individuals. It met the criteria of an HMO under Section 254 of the Housing Act 2004 and required a licence when occupied by five or more people. The local authority imposed a £15,000 civil penalty, alleging that on 7 July 2022 the landlord was managing or in control of an unlicensed HMO, contrary to Section 72(1) of the Act.

The landlord challenged the penalty before the First-tier Tribunal (FTT), arguing that only four people were residing at the property on the relevant date, and that one of the occupants was not using the property as her only or main residence. However, the FTT found that five people were indeed living there as their main residence and reduced the penalty to £7,500.

The landlord then appealed to the UT, contending there was insufficient evidence to support the FTT’s conclusion that the fifth person lived at the property as her only or main residence on 7 July 2022.

The UT acknowledged that tribunals can rely on inferences when direct evidence is lacking but emphasised that such inferences must be based on some substantiating evidence. In this case, the council officers had not seen the fifth occupant or her room, and the only tenant who gave relevant evidence had only lived at the property for a month.

The UT found that the FTT’s conclusion about the fifth occupant’s residency could not be supported by the available evidence. As a result, it determined that only four people were occupying the property as their only or main residence on the relevant date—meaning it did not meet the threshold for mandatory licensing.

The UT therefore set aside the FTT’s decision, ruling that no offence under Section 72(1) had occurred, and the financial penalty could not be upheld.