Summary: The Council was at fault because of a lengthy delay in making a decision the complainant had applied for the wrong type of landlord licence, and then threatening him with a significant fine for not holding the correct licence, without considering the fact the complainant had followed the Council’s own advice in making his application in the first place. The Council had already offered an appropriate remedy, but it has now also agreed to formally apologise to the complainant for this.

The complaint

1. I will refer to the complainant as Mr W.
2. Mr W complains the Council gave him incorrect advice about the type of licence he needed to let out his property; and then, after a lengthy delay while his application remained pending, threatened him with a large fine for not having the right type of licence. Mr W says this caused him significant distress.

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The Ombudsman’s role and powers

3. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused significant injustice, or that could cause injustice to others in the future we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)

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How I considered this complaint

4. I considered evidence provided by Mr W and the Council as well as relevant law, policy and guidance.
5. I also shared a draft copy of this decision with each party for their comments.

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What I found

6. The following is a summary of the key events relevant to this complaint. It is not intended to provide a detailed chronology of everything that happened.
7. Mr W is, jointly with his father, the owner of a building in the Council’s area. Previously one property, some years ago the Council gave planning permission for it to be converted into eight small separate flats. Mr W and his father have been letting the flats to tenants since then.
8. Mr W says the Council told him the property was a house in multiple occupation (HMO) in 2021, and that he therefore needed an HMO licence to let it out. Mr W duly applied for a licence. He says that, while the licence was still pending, in 2021 and 2023 the Council inspected the property.
9. In 2024, the Council decided the property was not an HMO, as it was made up of self-contained flats with individual facilities. This meant Mr W instead needed to licence each property separately, under its selective licensing scheme.
10. In April the Council wrote to Mr W to confirm he was not licensed to let the property out, and was therefore doing so unlawfully. It also wrote to each of the tenants of the property to explain this, and to inform them they may be entitled to a repayment of rent.
11. Mr W responded to the Council. He said he was seeking advice about making some small changes to the internal layout of the property, to bring it under the formal definition of an HMO. Mr W says the Council agreed to suspend any enforcement action while it considered his proposal.
12. However, in May the Council sent Mr W eight notices of intent to serve fixed penalty notices (FPNs) for each unlicensed property. This meant Mr W and his father were facing a possible total of £120,000 in fines.
13. Mr W replied the following day to ask why the Council had done this, after agreeing to suspend enforcement action. After twice chasing the Council for a response, it replied to say the planning permission it had given Mr W was to convert the property into separate flats.
14. At the end of May Mr W submitted licensing applications for each of the eight properties. A few days later the Council closed its enforcement case and cancelled the FPN notices of intent.
15. In August the Council’s selective licensing scheme came to an end. As it had not processed and issued the licences for Mr W’s property yet, it refunded him the administration fees he had paid.
16. Mr W later submitted a formal complaint to the Council about its handling of this matter. The Council conceded it had delayed dealing with it and offered Mr W £100 as a remedy for this. It later increased its offer to £1000, after acknowledging the significance of the delay. Mr W asked the Council to suspend its offer for the time being, and then referred his complaint to the Ombudsman in January 2025.

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Legal background

Selective licensing

17. Councils have the power to introduce selective licensing of privately rented homes to tackle particular problems in their areas. Landlords renting out properties in a selective licensing area must obtain a licence from the council for each of their properties. A selective licence contains conditions which landlords must meet.
18. When the legislation was initially introduced councils could introduce SLAs where there were issues with low housing demand and significant problems caused by anti-social behaviour related to tenants of, or visitors to, rented properties.
19. In 2015, the government widened the criteria for designating SLAs to include poor housing conditions and high levels of deprivation, crime and migration.
20. Councils can charge a licence fee to applicants to cover the costs of managing the scheme.

Houses in multiple occupation

21. Unlike the selective licensing scheme, which is introduced at the relevant local authority’s discretion, all HMOs must, by law, have a licence.
22. An HMO is:

• a building or flat in which more than one household shares a basic amenity;
• a converted building that is not entirely self-contained flats;
• a building which a local authority declares is an HMO; or
• a converted block of flats where the conversion does not meet building standards, when less than two-thirds of the flats are owner-occupied. The flats in these blocks are usually self-contained.

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Analysis

23. In his correspondence with the Council, Mr W provided a copy of an email it had sent to him in 2021. This appears to confirm the Council had advised him to apply for an HMO licence, in the apparent belief the property fell into this category.
24. I do not know why it took the Council some three years to consider this application. Although it has now acknowledged this delay was unreasonable, I cannot see that it has given any explanation for it.
25. But, although this is unquestionably fault, I do not consider the delay, in isolation, to represent any significant injustice to Mr W. He was, in the meantime, able to continue operating as a landlord without hindrance, and so the fact he was doing so without a current licence for so long does not appear to have affected his situation.
26. Rather, the potential injustice to Mr W in this case is the fact he was suddenly faced with the possibility of a very large fine for operating without a licence, when the Council finally decided the property was not an HMO.
27. Despite the fact Mr W raised it specifically in his complaint, the Council has not actually answered the point he made, that it was the Council’s own advice he should apply for an HMO licence.
28. This being so, I note with intrigue the Council’s email to Mr W of May 2024, where it highlighted that the planning permission it had given him was to convert the property into separate flats. Although not stated explicitly, I infer the Council’s point here was that Mr W should have been aware the property was not an HMO, because of the nature of the planning permission.
29. I do not consider this to be a fair criticism. Again, it does not in any way acknowledge that it was the Council itself which advised Mr W to apply for an HMO licence. In fact, I consider this is more rightly a criticism of the Council than Mr W; if Mr W should have known the property was not an HMO because its planning permission was for separate flats, then the Council – as the authority which gave the permission – should definitely have known this.
30. In its response to his complaint, the Council told Mr W it had issued with him the notices of intent because he had missed the deadline to apply for selective licences, after it refused his HMO licence application. In the very narrow sense I acknowledge the Council’s point here, as this appears to be a normal progression of the Council’s enforcement powers.
31. However, given the extraordinary delay in considering his application, and the fact Mr W had only applied for the wrong licence in the first place at the Council’s advice, I am not satisfied this was proportionate in the circumstances. The Council told Mr W to apply for an HMO licence, then took three years to tell him this was wrong; but within a few weeks of correcting itself, it had threatened him with a fine of £120,000 for not having the appropriate licences. Again, I cannot see any point in its correspondence with Mr W where the Council has acknowledged this.
32. In addition to this, Mr W also says the Council had agreed to suspend any progression of enforcement, while considering the changes he had suggested making to the property, to bring it under the definition of an HMO. But it then reneged on this agreement by issuing the notices of intent.
33. I cannot confirm exactly what, if any, agreement the Council made with Mr W. Once again though, I am not satisfied the Council actually addressed this point in its response to Mr W’s complaint – rather, the Council’s response simply repeated its previous comment about the planning permission being for separate flats, which was not relevant to this issue. It said nothing at all about any agreement to suspend enforcement action.
34. Taking these points together, I find the Council to be at fault. Despite the length of time the Council took to decide the property was not an HMO, it very quickly threatened him with a significant fine because he did not have the appropriate licences – and seemingly without considering the fact the Council itself had told Mr W it was an HMO in the first place.
35. I will not make a judgement, even on the balance of probabilities, about whether the Council agreed to suspend enforcement action. But, either way, the Council failed to give a meaningful answer to this in response to Mr W’s complaint, and also failed to address two other important points. This is also fault.
36. These faults caused Mr W an injustice, in that he experienced significant distress and frustration as a result of them. I am satisfied the Council should take steps to remedy this injustice.
37. I am conscious the Council has already offered Mr W a remedy of £1000, although it says this is to recognise the delay he experienced, rather than anything more specific. Either way, I consider this to be an appropriate offer by the Council, and in fact is likely more than the Ombudsman would normally recommend in a case like this. I will formalise the Council’s offer by making a recommendation to the same effect.
38. I also consider the Council should write a formal letter of apology to Mr W, acknowledging the faults I have described here and their impact on him.
39. Separately, Mr W says he obtained legal advice as part of his dispute with the Council, and considers the Council should reimburse his costs for this. Mr W has clarified the advice he sought was on two points: first, to verify the Council was correct in its assessment the property was not an HMO; and second, because the Council had initially refused to refund his HMO licence application fee.
40. At part 2.4, our published guidance on remedies says:

“There may be circumstances where it is reasonable for a complainant to have engaged legal help in a matter, particularly where it is complex. In such cases, we may consider recommending a remedy to reimburse costs which directly and necessarily flow from the fault identified.”

41. In this case, although I consider the Council to be at fault in the wider sense, I do not consider either of the two points Mr W sought advice on was particularly complex. Whether the property was an HMO was a matter for the Council to judge (and, in fact, the Council’s decision it was not an HMO has ultimately been to Mr W’s benefit, because if it were he would still need a licence); and the Council did eventually refund Mr W’s HMO licence application fee, alongside all the other fees he paid, without any apparent intervention by his solicitor. This being so, I do not consider it appropriate to recommend the Council reimburse Mr W these costs.

Conclusions

42. The Council is at fault because it significantly delayed making a decision on Mr W’s HMO licence application, and then acted disproportionately by quickly threatening him with a significant fine, without considering the fact Mr W had applied for the wrong licence on the Council’s own advice.
43. The Council is also at fault because it did not address some key points in its response to Mr W’s complaint.
44. These faults caused Mr W distress and frustration. However, I consider the Council’s offer to pay Mr W £1000 is an appropriate remedy. I make a recommendation to this effect.
45. I also recommend the Council write a formal letter of apology to Mr W, acknowledging its faults and the impact on him.
46. I do not consider the Council should reimburse Mr W his legal costs.

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Action

47. Within one month of the date of my final decision, the Council has agreed to:

• offer to pay Mr W £1000 to reflect the impact on him of its faults; and
• write a formal letter of apology to Mr W, acknowledging the same. We publish guidance on remedies which sets out our expectations for how organisations should apologise effectively to remedy injustice. The Council should consider this guidance in making the apology I have recommended in my findings.

48. The Council should provide us with evidence it has complied with the above actions.

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Decision

49. I find fault causing injustice.

Investigator’s decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman