Property firm to repay £19,000 in rent over unlicensed HMO

A London property business has been ordered to repay £19,000 in rent to three tenants because it failed to register the property as an HMO.

The contravention came to light after the company repeatedly failed to carry out adequate repairs to a leaking roof that forced one of the tenants to move out temporarily.

The house in Fordwych Road, West Hampstead (pictured) was an HMO in the borough of Camden and, as such, subject to the council’s HMO licensing scheme.

At a hearing before the First-Tier Tribunal, counsel for City & Suburban Properties Ltd accepted the company had no reasonable excuse for not having an HMO licence for the property for a roughly three-year period from 2021 to February 2024.

HMO licence

Laurence Bellman, director of City & Suburban Properties, and Darren Yanover, director of Cedar Estates, the managing agent, appeared before the tribunal as witnesses.

Mr Yanover accepted full responsibility for the offence, and expressed his sincere apologies for not picking up earlier that the property had no HMO licence.

The tribunal found that the directors of both City & Suburban Properties and Cedar Estates were experienced property managers, and fully aware of the various regimes for HMO licensing in London.

“The offence of no HMO licence started before Cedar Estates took over the management of the property. A reasonable expectation of professional landlords and managing agents is that they should have systems in place for checking the regulatory requirements in respect of a property,” the tribunal noted.

‘Not onerous’

“Such arrangements for ensuring compliance with HMO licensing are not onerous and akin to those for checking that a property has electrical and gas-safety certificates.”

The tribunal said it was satisfied that City & Suburban and its managing agent knew the legal requirements for HMO licensing and their failure to check that the property had an HMO licence, which happened over a period of time, including several new tenancies, “amounted to an act of recklessness”.

It emerged during the hearing that the tenants of the property had complained about water leaking through a skylight in one of the bedrooms at the beginning of August 2023. It was repaired on 21 August, but the contractor warned that further leaks were possible because the roof was in poor condition.

Mould build-up

In November 2023 there was another leak, together with a build-up of mould, and the occupant had to move out for a week until the leak was repaired.

In January 2024 the skylight was replaced, but in February the tenants reported a further leak, which was not resolved by the time the tenancy ended.

City & Suburban argued it had done its best to resolve the water leaks. It said the problem was complicated by the need to consult with the other freeholder who owned the ground floor flat, and the difficulties of finding competent roofing contractors in London.

However, the tribunal found that the problems with the water ingress and the roof outweighed the company’s assertion that the property was in good condition.

‘Serious incident’

In summary, the tribunal ruled that the failure to register the property as an HMO fell within the “upper range of seriousness” for an offence.

In addition, the problems with the water ingress and the roof amounted to a “serious incident of disrepair” that persisted for eight months of the tenancy.

The tribunal decided that an order of 75% would be appropriate to reflect the seriousness of the offence. However, a deduction of 10% was made to reflect the company’s previous good character as a landlord.

The tenancy agreement required the tenants to pay rent of £2,816.67 per calendar month, split equally between the applicants, who each paid £938.89 per calendar month. The total amount of rent paid during the relevant period was £30,389.

The tribunal issued a rent repayment order for City & Suburban Properties to pay its former tenants £19,753 and reimburse the application and hearing fees of £300 within 28 days.

Read the Tribunal decisuon in full.

Read more about rent repayment orders.