A new case just in. A new slant on property investment:

Here we have a landlord with a 6 Bed HMO in the Northern Home Counties. 

Hi case is a cookie-cutter duplicate based on a pattern we are seeing on a week in, week out, basis.

It starts with a Council realising that there is a property on their patch which might be an unlicensed HMO. They then go into overdrive.

The format is usually a suspicion (sometimes following a tenant complaint, but increasingly from sophisticated ‘profiling’ of landlords).  The Council then undertakes a property inspection unknown to the landlord. They find or at least claim to have found that the property to indeed be an HMO and then it seems to be: “Great, we can destroy this landlord.”

They ‘invite the landlord in for an ‘interview’ – this is actually a PACE interview which is the same as a police interview under caution (find out more here ) they make out this interview is ‘to discuss the situation’ but the true intent, just like the police, is to get you to incriminate yourself.

Landlords, not realising the danger they are in, sing like canaries – thinking they can ‘explain’ their way out of it. Instead, every little bit of explanation give the council inquisitors more and more evidence to prove you guilt. (Be in no doubt, council environmental health and housing officers are trained in police-style interview techniques).

So now they’ve got you.

You’ve admitted guilt and you’d have been far better off not going to the PACE interview. No Landlord should ever go to a PACE interview without expert representation. 

And here’s what happened to today’s unfortunate Landlord (exactly the same as is happening to landlords daily across the country):

He was awarded Civil Financial Penalties, in lieu of criminal prosecution, for the following criminal offences under the Housing Act 2004:

  • Housing Act 2004 Section 71 ~ No HMO Licence when required 
  • Housing Act 2004 Section 30 ~ Failing to Comply with an Improvement Notice
  • Housing Act 2004 Section 234 ~ Breach of HMO Management Regulations as follows:
    • HMO Regs 3 ~ Failing to ensure that the manager’s name, address and telephone contact number were clearly displayed in a prominent position in the HMO. 
    • HMO Regs 4 ~ Failing to keep all means of fires escape in the HMO free from obstruction and maintained in good order and repair 
    • HMO Regs 5 ~ Permitting the water supply to be interrupted 
    • HMO Regs 7 ~ Failing to ensure all the common parts were maintained in god and clean decorative order and maintained in a safe and working condition 
    • HMO Regs 8 ~ Failing to keep the internal structure and windows in good repair to provide proper ventilation 

This is the emerging pattern. They raise a Civil Financial Penalty fine for each and every one of those line items.

This landlord was hit with Civil Penalty Fines totalling  £71,591.00 equating to 26% of the value of the property.

But that is not all…..

As well as raising these punitive fines, Councils across the patch are now declaring any such Landlord as a “Not Fit and Proper” person to hold a licence. Which means his or her entire business is in tatters because they can no longer be a landlord at all – unless they can find a creative solution with professional help and professional mediation with their prosecutor, the Council..

Running HMOs is a business, and you must have adequate resources and finances to operate, otherwise, you will find that improvement notices for disrepair under the Housing Health and Safety Rating System (HHSRS) will follow and then civil penalties and rent repayment orders.

And now, because of this, not only is the landlord disbarred from removing tenants under section 21, the fact that he has operated an unlicensed HMO gives the tenants the right to reclaim up to 12 months’ rent. So that could be another £30,000 or so they will lose. And even though the council gains no direct benefit from a Rent Repayment Order, many are actually advising tenants to make a claim and helping them to fill in the forms purely so that they can see the landlord ‘punished to the full extent possible’.

The stupid thing is that with many of the cases like this, this situation and outcome was completely avoidable, if only the landlord had understood and taken seriously their obligations to comply with the law. 

In cases where the council has been over zealous we frequently broker a deal where the Civil Penalty Fines are significantly reduced and a plan for ongoing compliance with a different license holder put in place.

But in many of the cases we see, the landlord has brought this upon themselves by believing that the law of the land does not apply to them. It does!  Many seem to believe that they can apply the much more relaxed and dangerous customs and practices of other countries here in England. They cannot!

Unfortunately, if these landlords continue to evade and ignore the law then these landlords need to be removed from the market.

Most of this is not new law or new regulation by the way. The entire list of criminal offences listed above were introduced in the Housing Act 2004 so you’ve had seventeen years to get it right!

So here’s the simple message. If you don’t want to get fines in the region of £70,000 per property, be declared a Not Fit and Proper Person and see your entire business in tatters:

  1. Do not speak to the council – you’re probably guilty just like the landlord above, and they will get you to self incriminate
  2. Get your property fully HHSRS compliant as an emergency measure.
  3. If it needs licensing, get it licensed the second it is compliant but get professional help to avoid incriminating yourself