London Borough of Waltham Forest v Khan [2017] UKUT 153 (LC)

It has always been generally assumed that local authorities have a fairly limited discretion when granting a licence under a selective licensing scheme created under Part 3, Housing Act 2004. Section 88 of the Act sets out the requirements which focus on the suitability of the licence holder, the manager, and the management arrangements. These requirements are a little different from those for HMO licensing under Part 2 which has all the same requirements but adds the requirement that the house must be suitable for occupation by the number of persons sought by the applicant or can be made suitable by imposing reasonable licence conditions.

However this appeal concerns selective licensing and specifically the question of whether a local authority can consider the planning status of a property when considering an application for a selective (Part 3) licence.

Mr Khan had converted a property into a series of flats without planning permission. Waltham Forest granted a licence for all of them but only for a year rather than the maximum 5 years permitted by the Act. The intention was that during the year Mr Khan would make appropriate planning applications to regularise the planning status of the flats.

Mr Khan appealed to the FTT who, following the conventional wisdom that planning was not a relevant consideration, it not being mentioned in the Act or elsewhere, changed all the licences to full 5 year licences. Waltham Forest appealed to the UT.

The UT took the opposite view and decided that planning was a relevant consideration. It accepted the view of the FTT that planning was a separate and free-standing system and that breach of planning control could be dealt with entirely through the planning system. However, it did not accept that this meant that it could not also be dealt with through property licensing.

The UT reasoned that selective licensing schemes are permitted where there is an area of low housing demand or that there is a combination of anti-social behaviour in the area, that landlords are not doing enough to combat it, and that a selective licensing designation will lead to improvements. It was this second group of three factors that Waltham Forest relied on.

The UT also noted that the legislation does not require a local authority to grant a Part 3 licence if the factors set out in s88 are met, it only says they “may” do so. Therefore a landlord might meet all of the requirements in s88 and still not be granted a licence.
The UT characterised conversion of a property without planning into a more intensive use and then its occupation on a basis covered by Part 3 licensing as a factor which contributed to anti-social behaviour and one which, clearly, landlords were not combating as it was a landlord who had carried out the conversion.

The UT held therefore that Waltham Forest’s appeal should be allowed and that the licences should continue for just two further months to allow Mr Khan to apply for fresh licences and a new decision made with more information now available.

Comment
This overturns previous thinking in this area. It is also the case that this decision is readily extensible to HMOs licensing under Part 2. Some local authorities restrict planning permission for HMO’s through the use of Article 4 directions. It seems reasonable to conclude that these can be enforced by refusing HMO licences to landlords who have not obtained planning consent or have not shown they do not need it.

The UT also commented on the long-running saga of how much deference an FTT should show to the views of the local authority. This issue was first raised by the UT in Clark v Manchester City Council [2015] UKUT 129 (LC) (our brief report here). There the UT gave short shrift to the views of the council in dismissing its guidance as to room size and held that the FTT was not bound by it. In this case the UT stated that the older case of London Borough of
Brent v Reynolds [2001] EWCA Civ 1843 still applied and that although the FTT was a specialist tribunal and could have much greater confidence than a County Court in departing from local authority guidance they should still consider it and it must be a factor in their decision-making. This will cause a degree of confusion as the two decisions appear slightly at odds. I am not sure it is quite as bad as all that however. In Clark the UT was unhappy with the manner in which Manchester had applied its guidance and the fact that the FTT had copied it directly and considered itself entirely bound by it. In this case the FTT was being criticised for entirely ignoring the guidance. A more middle path seems appropriate with the FTT acknowledging the existence of local authority guidance, considering it, and then departing from it with reasons.