Last month, the Upper Tribunal (Property Chamber) made an interesting decision on a new case, Taylor v Mina An Ltd (2019), about a House in Multiple Occupation (“HMO”). We therefore thought it would be useful to revisit what an HMO is, the ramifications for failing to license an HMO and to consider the decision in the Taylor case.
What is an HMO?
Since the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 came into force last October, an HMO is defined as:
1. A property occupied by five or more persons
2. Who live as two or more separate households
3. Who share a bathroom and/or kitchen facilities
Every property occupied in this way requires a licence from the local council unless it is the subject of a temporary exemption order, or an interim or final management order under the Housing Act 2004.
What happens if an HMO is unlicensed?
A tenant or licensee who pays rent or a licence fee in respect of an unlicensed HMO may apply to the First-Tier Tribunal (Property Chamber) (“FTT”) for a rent repayment order.
The Taylor case
On 1 July 2016, Ms Taylor became the tenant of a room in an HMO. Her landlord held an HMO licence for the property which was not due to expire until 2021. In October 2016, the property was sold to Mina An Ltd, who also became Ms Taylor’s landlord. Mina An Ltd did not obtain an HMO licence until September 2018. When Ms Taylor left the property in August 2018, she applied to the FTT for a rent repayment order for the period during which she had been the tenant of an unlicensed property.
The FTT dismissed Ms Taylor’s application and said that, because the licence granted to the previous owner was valid until 2021, the property remained licensed, even though the licence holder was no longer the owner of the HMO property.
The Upper Tribunal allowed an appeal by Ms Taylor and overturned the FTT’s decision on the basis that: ‘where a property is sold and the new owner takes over management and control from the seller, that new owner requires a licence. The previous licence cannot be transferred to the new owner and is of no assistance, whether or not expressly revoked, because the new owner does not have a licence.’
There is some discussion that Mina An Ltd may appeal the Upper Tribunal’s decision to the Court of Appeal, though there is no news as of yet. Prospective purchasers and owners of an HMO must therefore continue to take prompt steps to ensure a licence, or a temporary exemption if appropriate, is in place to avoid committing an offence under the Housing Act 2004.
If you have any queries about HMO licensing, please get in touch.