Summary: Mr C complained the Council charged him the wrong fee for a licence to rent out a house in multiple occupation and then delayed in processing his licence application. We find the Council was at fault for the delay. But we do not consider this caused Mr C an injustice and have therefore completed our investigation without asking it to provide a remedy.

The complaint

1. I have called the complainant ‘Mr C’. He works as a letting agent. He complains the Council charged him the wrong fee for a licence he needed to rent out a house in multiple occupation (HMO) on behalf of its owner. Mr C says the Council should not have charged him an element of the fee known as the ‘less compliant’ fee. Mr C also says the Council delayed in issuing the HMO licence, taking six months to process his application.
2. Mr C says as a result the licence cost an extra £390 which he should not have been charged. He also considers charging the fee has left him unfairly labelled with potential implications for future applications. Mr C says the delay potentially cost him other work managing properties with the owner of the HMO.

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The Ombudsman’s role and powers

3. We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word fault to refer to these. We consider whether there was fault in the way an organisation made its decision. If there was no fault in the decision making, we cannot question the outcome. (Local Government Act 1974, section 34(3), as amended)
4. We must also consider whether any fault has had an adverse impact on the person making the complaint, which we call ‘injustice’. We provide a free service, but must use public money carefully. We do not start or may decide not to continue with an investigation if we decide any fault has not caused injustice to the person who complained. (Local Government Act 1974, section 24A(6))
5. If we are satisfied with an organisation’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

6. Before issuing this decision statement I considered the papers provided to us by Mr C which comprised his communications with the Council about this complaint. I also considered the Council’s published Housing Licensing – Licence Fee Policy which is available via its website. I later made enquiries of the Council and considered further evidence it provided in reply.
7. Mr C and the Council were both invited to comment on a draft decision statement and to provide any further evidence they considered relevant to the case. I took account of any information they provided in response.

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What I found

Relevant Council policy & Government guidance

8. The Council operates three housing licensing schemes. The first is a mandatory scheme required for HMOs. The second is a discretionary scheme which provides for additional licensing for HMOs that are not covered by the mandatory scheme. The third is a selective licensing scheme for other privately rented properties. The Government introduced mandatory HMO licensing in the Housing Act 2004. The scope of properties caught by the scheme was significantly widened following changes in 2018.
9. For the mandatory HMO scheme, the Council charges fees in two parts. On application it charges a fee of £890. If the Council is minded to approve the application it will tell the applicant and they can complete the application, paying the second part of the fee. The standard fee for this second part is £440. But in certain circumstances it will also charge a ‘less compliant’ fee. This increases the cost to £830.
10. The Council says it ‘may’ apply the less compliant fee if one of 14 specific circumstances apply. Of relevance to this complaint, this includes where:

• the Council has had to chase an application and/or an application has not been forthcoming and has only been made due to an intervention by the Council prompting the application.

11. The law does not place any legal time limit on how long the Council has to process a HMO license application. However, Government guidance recommends the Council process such applications in a ‘reasonable timescale’.
12. The Council has over 4,000 HMOs in its area. In 2021 it took an average of ten months to issue new applicants with licences. The Council says it is working on a plan to reduce this timescale, aiming to complete the processing of applications to five months in the future.

The key facts

13. Mr C acts as a letting agent for a rented house in the Council’s area, owned by a third party. It is not disputed the house is a HMO and falls under the mandatory licensing scheme. It is also not disputed that before May 2021 the house had been used as a HMO for some years without a licence.
14. Mr C provides an email chain between himself and the owner of the house, from April 2021. In this email chain Mr C explained he had taken over the letting business and would be applying for a HMO licence from the Council. The owner had previously paid Mr C’s business a fee for such an application.
15. That application followed at the end of May 2021. The Council began processing the application in October, having completed a land registry search the previous month. It asked Mr C for further information and after considering his reply, it told Mr C in November that it was minded to approve a licence. It then asked Mr C for the second payment to complete the application process. It billed Mr C the higher amount including the less compliant fee. After Mr C paid this fee the Council issued him a final HMO licence in mid-December 2021.
16. The Council charged the less compliant fee as before Mr C applied for the licence, in early May 2021, it had sent a notice to his business address under Section 16 of the Local Government (miscellaneous provisions) Act 1976. The notice identified the property as one the Council believed should be licensed, although it did not specify under which licensing scheme. It also sent a reminder later in May 2021 that Mr C needed to act on the Section 16 notice. As a result of sending these notices the Council considered Mr C’s application was only “secured through [the actions of its] pro-active enforcement team”.
17. While Mr C paid the less compliant fee, he complained about the Council charging it. Over the course of his correspondence with the Council he contested the charge because:

• he did not consider the Council should have been sending letters to business addresses during the COVID-19 pandemic knowing many people were working from home;
• the email chain referred to in paragraph 14 showed that before the Council served the Section 16 notice he knew of the need to apply for a licence; so enforcement action had no bearing on his decision to apply;
• that in addition, the notice did not in any event specify what type of licence he needed to apply for (Mr C noted this after he was sent a copy of the notice subsequently);
• that his business was not responsible for managing the letting of the property throughout the time it had been used as a HMO;
• that any ‘less compliant fee’ was discretionary and not mandatory;
• that there was in any event significant delay by the Council in processing the HMO licence application, meaning he paid for a poor service.

18. In correspondence defending the charge the Council pointed out:

• that before sending the Section 16 notice its officers had undertaken research via land registry and council tax records which led it to believe the house was rented as a HMO;
• that even though the notice did not specify under which licensing scheme a licence was required it did say clearly that the property was “required to be licensed”;
• the evidence suggested the property had been in use as a HMO for many years.

19. The Council also defended the time taken to process Mr C’s application saying that it was adapting to new ways of working arising from the pandemic. It said in this context it was reasonable that it took nearly six months to process the application.

My findings

The complaint about the fee charged

20. I do not find the Council at fault for charging Mr C the less compliant fee. I consider the relevant extract from the clause in its charging policy is that which says the Council may charge a fee if it “has had to chase an application”. The second part of the clause is an ‘and/or’ clause. So, if the Council did, as a matter of fact, have to ‘chase’ an application, then consideration of what constitutes an intervention does not apply.
21. I consider that on an everyday reading of the word ‘chase’ this would encompass circumstances where the Council knows a property requires a housing licence but has received no application. It therefore sends a notice to the owner or agent to prompt an application. Because it is in the first instance the responsibility of the owner or agent to know they need such a licence and make the application, unprompted. By sending a notice to the owner and/or agent, the Council is reminding that person of their responsibility. I see no reason in this context why the word chase cannot be used instead of the word remind.
22. I take Mr C’s point that in this instance he knew of his responsibility to apply for a licence before the Council got in touch – his emails prove this. I also have no reason to doubt he did not receive the notice, although he does not dispute it was properly served. But that makes no difference to my finding. Because for the reasons set out above, I consider it a finding of fact the Council did ‘chase’ him for an application before it received one. That is all its policy requires.
23. I put no weight on the lack of specificity in the notice about exactly what licence the property required. This could not be known to the Council until Mr C responded to the notice to clarify certain details. However, it clearly foresaw the property required a housing licence and this would encompass the mandatory HMO scheme.
24. I consider it irrelevant Mr C has not managed the property for all the time it has been used as a HMO. Because the facts show Mr C was the agent at the time the Council served its notice and had responsibility to apply for the licence. So, this provides no argument the less compliant fee cannot be charged.
25. That said, the Council power to charge the less compliant fee, is as Mr C notes, a discretionary one. So, the length of time an owner or agent has managed a property may be relevant to how the Council exercises its discretion. But clearly in this instance the Council does not consider this factor should lead it not to charge the fee.
26. The Council has wide discretion here. And where this is the case we have little room to find fault with its decision. Because we can only criticise the process followed by the Council. We are not an appeal body. This means we do not take a second look at a decision to decide if it was wrong. Instead, we look at the processes an organisation followed to make its decision. If we consider it followed those processes correctly, we cannot question whether the decision was right or wrong, even though a complainant may understandably disagree with the decision made by the organisation.
27. In this case I find the Council’s responses to Mr C have considered relevant points he has made. I also cannot see the Council has taken anything irrelevant into account. So, I cannot fault it for not using its discretion to waive the fee.

The delay in processing the application

28. I considered separately the time taken by the Council to process Mr C’s application. I did not consider this delay could be linked to the decision to charge the less compliant fee which I considered the Council entitled to charge.
29. The law did not place the Council under any time limit to process Mr C’s HMO application. And I found the enquiries made of Mr C in October 2021 justifiable. Thereafter, I considered there was no significant delay before it issued the HMO licence in December 2021.
30. However, it was poor administrative practice that it took four months for the Council to complete its initial scrutiny of the application and make those enquiries. I note the Council made land registry checks earlier, but no action followed these until October 2021 when the Council contacted Mr C in respect of several matters. That initial delay was a fault or service failing therefore.
31. I recognise the Council must process many HMO licence applications and while it has not expanded on the point, I accept the Council’s pandemic response may have affected the processing time for such applications. I also note that Mr C appears to have secured his licence in approximately half the time taken for the average applicant in 2021.
32. But none of this offers mitigation for the fault or service failing. As a benchmark we consider that for routine administrative processes, requiring the Council to check applications or forms, it should always aspire to do so within four weeks unless the law places a higher burden on it. So, while I am pleased to note the Council is working to reduce delays in processing applications, I do not consider its aspirations currently go far enough. I would ask it to note this finding when carrying out further work in this area.
33. But I stop short of making recommendations in this case as I am not persuaded the delay here has resulted in any injustice to Mr C. I note that Mr C considers his business suffered for the delay. He has provided an email from the owner of the property which suggests they may have put more properties under his management but for the delay.
34. However, I note there was also a delay in Mr C applying for the licence as well as the Council processing it. It would appear from the emails exchanged with the owner in April 2021 there had been previous discussions between the owner and Mr C’s business about the need for a licence (although not Mr C personally). Certainly Mr C knew of the need to apply at that time, although he waited several more weeks to do so.
35. Second, I reiterate I considered the Council’s handling of the application satisfactory from October 2021 onward. So even if the Council had not delayed, the application would have taken in the region of three months to complete.
36. Third, I note Mr C made no contact with the Council once he submitted his application. While there was no onus on Mr C to have to chase the Council to ensure it processed the application in reasonable time, had he done so and made the Council aware of possible urgency this might have led it to progress the application more quickly.
37. The factors set out in paragraphs 34 to 36 lead me to my conclusion summarised in paragraph 33 therefore.

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Final decision

38. For reasons set out above, I have completed my investigation finding no fault by the Council or else no fault causing an injustice to Mr C.

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Investigator's decision on behalf of the Ombudsman