Property Guardians and HMOs – guilty

For some reason that, quite frankly, escapes me, assorted ‘powers that be’ have been non-committal on whether the Housing Act 2004 provisions on HMOs, licensing etc., and also the Part 1 enforcement of conditions and HHSRS, apply to properties occupied by property guardians. Local authorities, the London Mayor’s office and even MHCLG have all been “well, maybe they do, but we’re not being categoric”. The MCHLG Factsheet for property guardians says, for example:

11. Local housing authorities have responsibility for enforcing housing standards in residential properties, using powers in the Housing Act 2004. Those powers do not usually apply to non-residential buildings but where a property is occupied or intended to be occupied as a separate dwelling and used for cooking and sleeping local authorities may have the right to inspect the property and take action if it contains hazards. If you are concerned about hazards in the property you occupy, you should contact your local housing authority, who can consider whether their enforcement powers apply in your particular case.

12. The property may also be subject to licensing requirements under mandatory house in multiple occupation (HMO) licensing or selective licensing schemes. You should check this with your local housing authority.

This is doubly odd, because lawyers (not just me) have been pretty certain that HA 2004 does apply. See, for example, the section on Housing Act 2004 here, by Prof Caroline Hunter.

We have previously noted Camden insisting that Camelot obtained an HMO licence for a property occupied by guardians, but now there is an actual prosecution for failure to licence.

Colchester Borough Council prosecuted Camelot Guardian Management Company Ltd (Camelot Europe) for failing to licence an HMO and for multiple breaches of HMO management regulations. On 28 March, Camelot pleaded guilty to 15 charges.

As well as the failure to licence the property, a former care home which at one point had 30 guardians living there, Camelot also pleaded guilty to charges relating to a faulty fire alarm system, blocked fire escapes and sealed doors. In addition, guardians only had one kitchen and shared bathrooms lacked hot water.

Sentencing will be in the summer, when we’ll see what levels of fine are imposed – the maximum fines are unlimited for these offences.

But I understand that a number of the former guardian occupants of the property had already brought applications for Rent Repayment Orders on the basis of the property being an unlicensed HMO, and that these applications were settled by Camelot before hearing at the FTT. (An RRO can be for up to 12 months rent, or as here, licence payments.)

Overall then, this is likely to be financially pretty painful for Camelot.

Granted, this was a guilty plea, so there was no legal argument on the application of HA 2004, but on the other hand, the guilty plea suggests (as has been my view) that there isn’t much in the way of legal argument to make on the non-application of HA 2004.

This will hopefully embolden local authorities to toughen up on licensing requirements for properties occupied by property guardians. Since October 2018, the ‘three stories’ requirement for mandatory licensing has gone, so it is now even more likely that a large number of properties occupied by guardians would fall under mandatory licensing (5 or more people in two or more separate households, and shared facilities).

The list of issues with the Colchester property suggests why this is important. HMO management regs and HHSRS hazard enforcement await…

 

 

 

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in Housing law - All, Licences and occupiers, Regulation and planning and tagged , , , .

11 Comments

  1. My favourite non committal quote from the government’s factsheet is “The government does not endorse or encourage the use of property guardianship schemes as a form of housing tenure.”

    In a somewhat less non committal tone it also goes on to say “If the guardian does not leave at the end of the notice period or when a fixed term agreement expires the property guardian company or building owner must apply to the court for a possession order,”……….something which guardian arrangements I get involved in is studiously ignored by the company and rigorously protested

  2. Thank you for this blog,I’m not a lawyer but am copying it to some property guardians. Wondering how guardians can get enforcement by local authorities when many guardian properties in terrible condition are in fact owned by local authorities. Including Labour ones, for which they should be utterly ashamed of themselves. I have seen dangerous, health-damaging,freezing, filthy disgustingly exploitative conditions in such buildings. The authorities should be employing caretakers, housed decently, or property security companies, not willfully exploiting the desperate.

  3. Pingback: Tessa Shepperson Newsround #94

  4. A property guardian company, Dot Dot Dot, has apparently sent out an email saying that Giles Peaker…and others…have written a White Paper commissioned by Dot Dot Dot and that one of your three key findings is that property guardians are licencees, not tenants. Quite surprised to hear that you have apparently settled this question on behalf of the courts,re all guardian situations, especially as this seems to contradict several earlier comments by you on your own blog here! Also, “a White Paper”? Seriously? Wondering if you could please provide a link to the document, which it seems is to be quoted to property guardians of several guardian companies citing you as giving definitive statements about their rights/lack of rights? You maybe aren’t aware of the conditions that the people renting from some of these companies are living in?

    • Hi Chris

      You can find the paper here. I believe it is available on the sites of all the Guardian Companies that instructed us. Two barristers and I were asked to write an advice on the legal position on the status of guardians and the relevant law on property conditions and regulation. (The ‘white paper’ title was not, of course, our idea). If you care to read the document you will see that it does not ‘settle the question’, it sets out the legal position in case law as of November 2017, with all the uncertainties. It does not include Camelot v Khoo, as that post-dated the advice. You might also find it of interest in setting out that in our view, the Housing Act 2004 definitely does apply to guardian properties.

      I have no idea what Dot Dot Dot may have put in an email. I haven’t seen it. Apparently neither have you.

      I’m well aware of the conditions in some guardian properties. You’ll find the paper sets out why such conditions would be a breach of the guardian company’s legal obligations. (The law on when a HMO is subject to mandatory licensing has changed since Nov 2017, removing the three storey requirement, so it is even more likely that a guardian property will be a licensable HMO.)

      Have you got any more unsubstantiated accusations to make?

  5. I find your blog very helpful and would not be so foolish as to want to get into an argument with a distinguished lawyer. I just thought you might want to be aware of these issues.

    My first post was questioning whether you had really said what you are quoted as saying and also the use of “White Paper” !

    The email forwarded to me contains a link to the following post on the Dot Dot Dot site: “The Law of Property Guardianship: Dot Dot Dot help to publish white paper regarding safety.” It goes on to say; ” The 40-page paper is freely available now. Three key points emerging from it are: iii) Property guardians sign up as licensees, not tenants: two of the key differences include non-exclusive occupation of the premises and shorter notices to leave. In return, guardians live in low-cost accommodation.”

    It has seemed to me that their “key point” iii) there misrepresents what you say in the actual 40 page document. As I read your document, and it is a clear document that appears to be understandable even for the lay person, it says that guardians could be held to be tenants. You refer in detail to situations such as a guardian occupying a self contained flat for a near market rent, and how actual attendance / access arrangements by the guardian company would be relevant in determining whether there is “exclusive occupation”.

    I suppose the guardian companies could argue that guardians “sign up” as licensees but as I have understood you, you also state that is not the point – it is the reality of the arrangement and how it operates in practice, not what, as other comments note, “the desperate” have signed to. Especially I understand when the desperate person is an unadvised consumer and the guardian company is a profit making company (whatever gloss it chooses to put on that, e.g. “social enterprise”).

    The use (as you say, by the guardian companies) of the term ‘White Paper’ also seems to be trying to give the impression of what would be perceived by the layperson as “official status” and so also, I think, misleading.

    As to whether the listed group of guardian companies in reality adhere to the standards they claim, you would have to speak to real property guardians currently living in their properties to find out the truth of that. Are expensive repairs really being carried out? What do readers think?

    Do the guardian companies really have the ability to meet those standards in any case, because as I understand it, they can’t do repairs to buildings where for example, repair to a damaged structure is needed, those repairs would have to be done by the owner they are in turn leasing it from?

    Also noting that the Dot Dot Dot company on its website invites local authorities to divert local authority housing applicants to Dot Dot Dot. There is only going to be one reason for an LA to do that, which is to get those people off their housing waiting list, and save themselves money.

    So what is going on when a local authority has large numbers of LA flats that they lease to guardian companies, and then divert LA housing applicants to? And the guardian company then claims the guardians are licensees, not tenants? .The LA is saving themselves money by not doing repairs that local authority (old-style) tenants could, albeit with great persistence, get done or get some kind of redress for. Is that what the courts would call a sham or a pretence? I’m just asking, please don’t shoot me. Not a lawyer. Apologies that this is so long. Possibly I should not be intruding on a website meant for lawyers but hope you will not be too cross with me.

    • Chris
      On ‘signing up as a licensee’, see the High Court judgment in Camelot v Khoo ( https://nearlylegal.co.uk/2018/10/property-guardians-licence-not-tenancy-in-office-building/ ), where what both parties are to be taken to understand when entering into the agreement was a factor, as well as the actual terms of the agreement. See paras 20-36 of the judgment.

      The direction the High Court took was that the agreement would need to be a ‘sham device’ – with the intent of disguising the grant of a tenancy – in order to find that a tenancy existed as per Street v Mountford.

      People in temporary accommodation following homeless applications to the council are already, generally, licensees, by the way.

  6. The Surrey Heath Borough Council confirmed that no HMO licence had been issued in regard to the Pinehurst Resource Centre, a former care home, the property owned by the Surrey County Council, while property guardians occupied the premises via the contractual arrangements between the latter council and Camelot. The HMO licence issue was revealed via an FOI request that can be accessed online at ‘Whatdotheyknow.”

    Having discovered that Camelot had been informed in or about October 2018 that the contract with Surrey County Council was to be terminated, property guardians had been kept in the dark and were only informed on 28 December 2018 that they needed to vacate the building by 29 January 2019. Investigating further revealed that the HMO licencing rules had changed. A further FOI request has been made to obtain confirmation that one of the primary reasons why the Surrey County Council had decided to terminate property guardianship was because of the HMO issue.

    In the Colchester case, the decision to prosecute Camelot for not having the required HMO licence, one needs to ask who was the landlord of the property? The reason is, that according to my investigation, none of the buildings owned by a council requires an HMO licence. The logic, I assume, is that when operating a residential care home, the authority itself would ensure that all conditions are met as the council itself is the enforcer of HMO licences – the council self-regulates.

    A dilemma arises when a council owned property is handed over to a property guardian provider company. If in such scenario no licence is required, then surely it would be the responsibility of the council to comply to the law by ensuring that the living conditions meet the requirements of the HMO rules? If a licence is required then surely the property guardian provider company is required to apply for such licence?

    It would stand to reason that if a council was aware that no HMO licence had been applied for, and that as single-story buildings would require HMO stipulated conditions, but allowed the property guardian provider company to continue housing property guardians without a licence, the council authority would not be in a position to prosecute the property guardian provider as they would have compromised their position.

    I am reminded of the words of Lord Denning:

    “… ​even​ ​if​ ​chaos​ should result [it is not conceded that it would],​ ​still​ ​the​ ​law​ ​must​ ​be obeyed”

    (Bradbury​ ​v​ ​London​ ​Borough​ ​of​ ​Enfield​ ​(1967)​ ​3​ ​ER​ ​434,​ ​(1967)​ ​1 WLR​ ​1311​).

    • No HMO licence is required where the property is owned by a local authority.

      The local authority should make sure that the property is safe, etc. But, I’m afraid, there is nothing that the guardians can do about it if the local authority doesn’t.

  7. In your article it stated:

    ‘Local housing authorities have responsibility for enforcing housing standards in residential properties, using powers in the Housing Act 2004.’

    According to the Colchester Borough Council website, accessed at https://www.colchester.gov.uk/info/cbc-article/?catid=latest-news-march&id=KA-02604
    it states:

    ‘Property guardian company, Camelot Guardian Management Company Ltd, also known as Camelot Europe, yesterday (28 March 2019), pleaded guilty to 15 offences at Chelmsford Magistrates’ Court, including failure to licence a House in Multiple Occupation (HMO), and 14 breaches of HMO management regulations in relation to the Old Rectory in Lexden, Colchester.’

    The article further informs the public that ‘the council’s Private Sector Housing Team’ did an investigation, thereby indicating that the Old Rectory falls under private ownership.

    According to the Residential Landlords Association accessed at https://www.rla.org.uk/landlord/guides/mandatory-hmo-licensing.shtml
    the public are informed that:

    ‘As part of the government’s wider commitment to improving standards in the private rented sector they consulted on extending the scope of mandatory licensing. On 1 October 2018, The Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 will come into force which extends mandatory licensing by revoking the existing regulations and creating a broader description of HMOs to which mandatory licensing applies. It is estimated that the extension will bring around 160,000 properties within the scope of the mandatory licensing regime.’

    According to the Shelter organisation,

    ‘HMOs don’t need to be licensed if they are managed or owned by a housing association or co-operative, a council, a health service or a police or fire authority.’ https://england.shelter.org.uk/housing_advice/private_renting/houses_in_multiple_occupation_hmo

    Knowing that various councils have outsourced the management of unoccupied or vacant council-owned properties to property guardian provider companies, including former residential care homes, the amendments to the HMO rules would apply to single-story buildings having multiple family occupants as defined by the new rules.

    It is evident that a local authority does not need to licence itself as it is bound to operate within the parameters of the HMO rules (It would be ridiculous to prosecute itself for HMO license transgressions). It begs the question of whether an outside private company placed in charge of the management of a council-owned property be required to obtain such a licence. The scenario is that before 1 October 2018, councils allowed property guardian occupation without the requisite checks required to “pass” for a HMO licence to be granted. It is a known fact that in several cases property guardian occupation continued without implementing the necessary inspections and checks as per required by law. In other words, neither the council nor the property guardian provider company took responsibility to ensure the duty of care towards property guardians occupying the property. The situation becomes even more complicated if the council had full knowledge that the property did not comply to the requirements that had to be met under the amended law, but permitted the property guardian provider to continue operating. Under such circumstances, a council itself would be breaking the law and would not be in a position to institute legal proceedings as demonstrated by the Colchester Borough Council.

    I have been most impressed by your knowledge and insight into the property guardianship industry and hope that the points highlighted above will provide further food for thought. In the case of private property under the scheme of property guardianship, it is clear that the Colchester Borough Council aimed at Camelot. It would, therefore, in my opinion, appear that when both a council and the property guardian provider company has failed i.r.o. HMO compliance, both parties could find themselves in front of a magistrates court.

    • That seems to be a hell of a long winded way of asking ‘do council owned properties which have property guardians in have to be licensed as HMOs?’ And the short answer is no.

      So no, they won’t be in front of a Magistrates Court. In any event, the council is the prosecuting body. And they can’t prosecute themselves.

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