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02/03/2022

Property Guardians and HMOs – they are, you know.

Global 100 Ltd v Jimenez & Ors (HOUSING – HOUSE IN MULTIPLE OCCUPATION – RENT REPAYMENT ORDER – “property guardians”) (2022) UKUT 50 (LC)

In which Global 100, flushed by their win in the Court of Appeal in Global 100 Ltd v Laleva (2021) EWCA Civ 1835 (our note), appealed a First Tier Tribunal decision that a commercial office building, in which 10-12 guardians were living, was an unlicensed HMO and rent repayment orders followed.

At issue was whether s.254(2)(d) of the Housing Act 2004 was satisfied. This makes one of the conditions for a property being an HMO

(d) their occupation of the living accommodation constitutes the only use of that accommodation;

Global 100 argued that the guardians’ occupation of the building was not the only use. Citing the Court of Appeal in Laleva and the terms of its licence agreements, Global argued that

The guardians’ purpose in residing in the premises and the purpose of the guardian company in placing them there were “complementary and mutually reinforcing”; the presence of the guardians, and their performance of their duties facilitated the company’s performance of its contract with the building owner to provide guardianship services.

and

The terms of the agreement in this appeal are the same as those considered by the Court of Appeal in Laleva where it had been found unequivocally that Ms Laleva occupied the property in question in order to provide services as a guardian. That purpose was the very reason for her occupation and not, Mr Pettit submitted, merely a side-effect of it, and the same was true of the respondents’ occupation of the Addison Lee Building. 

The Upper Tribunal was distinctly not impressed.

Mr Pettit’s objective in equating “use” with “purpose” was to enable him to appropriate dicta from Lewison LJ’s judgments in Ludgate House and Laleva and to deploy them in support of his argument.  I did not find these linguistic gymnastics persuasive.  In ordinary parlance “use” and “purpose” may sometimes be synonyms but the question in this case is whether the respondents’ occupation of their living accommodation at the property constituted its only “use”. Reframing the question to ask whether the respondents’ occupation of the living accommodation was the only “purpose” for which it was being used does not advance the appellant’s argument. 

The Guardian’s use of the property was to live there. Indeed Global’s licence agreements prevented the Guardians from making any other use of the building.

I do not think it can be said that the licence agreement provides for more than one use of the living accommodation occupied by the respondents.  As guardians, they were required to sleep on the premises for at least five out of seven nights, they were not permitted to leave the property empty, and they were to inform the appellant of any damage or unauthorised access.  But they were not permitted to conduct a business or hold meetings on the premises, and the only thing the respondents were entitled to do with the living accommodation was to use it as their main residence.  The agreement did not provide for anyone else to be able to do anything in the living accommodation, except that other guardians could be permitted to share its use for the same purpose.

The guardians living there may have served another purpose, but that other purpose was not another use of the building.

I do not think the building itself can be said to have been put to more than one use.  If the Addison Lee Building had been empty, and the question had been asked, what is the building’s current use, the only possible answer would have been that it had no use, it was unused.  If the building owner had contracted with a security company for them to supply a team of non-resident security guards at least one of whom would be present in the building at any one time, and who would patrol the premises and report anything untoward they discovered, and the question had again been asked, what is the building’s use, the answer would have been the same, it would remain unused.  Nobody would say that the provision of a security service by the security company constituted a use of the building.  The arrival of the property guardians in the building would prompt a different answer.  The building would now have a use, but the answer to the question, what is the use of the building, would, I suggest, be the limited one that the use of the building is as living accommodation for the ten or twelve guardians.  As a matter of ordinary language, one would not say that the function of the guardians in deterring damage or trespass was a second use, additional to their use of the building as living accommodation. 

To a very large extent the services performed by the guardians were the consequence or by-product of their use of the building as living accommodation.  It was their presence in the building which was intended to deter vandalism and theft, and which made it a criminal offence for squatters to enter.  They were not expected to take any action to prevent entry, other than by their own or their fellow guardians’ occupation of the living accommodation.  They did have a responsibility to report damage, or risks of damage, and unauthorised entry, and to ensure that doors and windows were closed and any to which the guardian has keys were locked when the property was empty, but the requirement to perform those obligations was not a use of the property different from its use for residential occupation.     

The statutory purpose of Housing Act 2004 gave a presumption that sole use condition was satisfied unless the contrary was demonstrated.

The purpose of the statute is to provide protection to the residents of converted buildings with shared facilities by bringing them within a scheme of local authority oversight of their housing conditions.  That purpose is for the public good as well as for the protection of the individual occupiers and one would expect Parliament to have intended that the property sector to which Part 2 of the 2004 Act applies should be defined by the character and use of the property in question and not by the terms of the relationship between the parties to the relevant occupational contract.  A policy of extending protection widely rather than confining it narrowly is also consistent with the statutory presumption that the sole use condition is to be taken to be satisfied unless the contrary is demonstrated. 

Global had not demonstrated that the sole use presumption was rebutted. Appeal dismissed.

 

 

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.

6 Comments

  1. Al Mcclenahan - Justice For Tenants

    Thank goodness. The reality for those acting as Guardians is that it is often the cheapest accommodation option. It is not a preferred living option it is usually a financial necessity.

    There can be a distinct lack of basic standards as the building were rarely designed to be used as residential accommodation and little work is done to convert the building to make it fit for purpose.

    If a loophole was created that allowed the poorest tenants to be subject to the worst conditions by not affording them the protections afforded to HMO residents it would, as the UT said, defeat the legislative purpose of Part 2 HA 2004. At the bottom of the PRS, once a perceived loophole is discovered, it can tend to spread as a business model.

    If this UT decision had gone the other way, we may have seen landlords giving their properties to Rent-2-Rent companies who, on the face of it, appear to be Guardianship companies, even though the properties they are managing are residential houses and flats.

    This will have the effect of making it easier for standards to be enforced in these Guardianship properties, which would help prevent Guardianship companies undercutting law-abiding landlords. With the exception of those operating Guardianship companies, I believe this decision is helpful for all involved in the PRS, landlord and tenant alike.

    Reply
  2. Sean Pettit

    The Upper Tribunal has granted permission to appeal to the Court of Appeal

    Reply
    • J

      Thanks Sean – very kind of you.

      Reply
  3. Chris

    Does anyone worry that the occupants/guardians in this case are unrepresented?

    Not unusual for an FTT, and they have ‘survived’ the UT in similar fashion – but can’t help but think at the higher courts this becomes an increasing disfavour? Or do the judges have to make similar overt consideration to the fact one party is unrepresented (and presumably this only goes so far…).

    Would justice not be best served by deep or complex legal arguments advanced on both sides versus essentially a one-sided exercise where the occupants defending against arguments from barrister (and via translator no less)? Especially in a higher court where presumably the actual experience or evidence of the parties is established already/less relevant and primarily points of law being argued..?

    Is there any systematic offer of representation to such parties facing Court of Appeal level hearings (perhaps pro bono)?

    Reply
    • Giles Peaker

      There is no legal aid for this. So no. And yes, obviously this is a problem in the higher courts/on appeal.

      Reply
      • J

        The UT(LC) is trying to get a pro bono scheme off the ground. There are some details in the minutes of the UT Users Group (which are available via judiciary.gov). But obviously legal aid would be a good idea.

        Reply

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