The Ombudsman's final decision:
Summary: Mr B complains the Council has acted with fault in its communications with him about a property that he rents in its area. We uphold the complaint as the Council accepts giving Mr B unclear advice in January 2018. In recognition of this, the Council refunded Mr B around £700 he paid for a license to rent his house as one in multiple occupation. We consider this a fair remedy for any injustice caused by the Council’s actions.
- I have called the complainant ‘Mr B’. He is a landlord who lets out a property in the Council’s area. Mr B complains the Council has acted with fault in communications with him since May 2019. In particular, he says the Council:
- Required him to carry out improvements to his property in 2018 but did not tell him he also needed a license to let it as a house in multiple occupancy (HMO).
- Gave advice to his tenants which led them to stop paying rent. One tenant was also abusive to Mr B and three have refused to leave the property when asked.
- Unreasonably made him apply for a HMO license costing around £700.
- Mr B says as a result he has experienced distress. This arises from both the Council’s actions and those of his tenants. Mr B says the Council’s actions have also prevented him recovering possession of his property from his tenants.
The Ombudsman’s role and powers
- 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 an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
- If we are satisfied with a council’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)
How I considered this complaint
- Before issuing this decision statement I considered:
- Mr B’s written complaint to the Ombudsman and supporting information he provided in email communications.
- Correspondence between Mr B and the Council which pre-dated our decision to investigate Mr B’s complaint.
- Further information provided by the Council in response to written enquiries.
- Relevant law and government guidance.
- Comments made by both Mr B and the Council in response to a draft decision statement where I set out my thinking about the complaint.
What I found
Background & Key Facts
- Mr B rents a property in the Council’s area. It is a two storey property. The Council first became aware of Mr B renting the property in December 2017. It discovered eight people living there. This made it a House in Multiple Occupation (HMO), which is defined as one where:
- At least three tenants live there, forming more than one household. A household being either a single-person or members of the same family who live together including couples.
- They share toilet, bathroom or kitchen facilities with other tenants.
- The Council considered the property overcrowded. But it did not need a license. This was because only HMOs of more than two storeys needed a license.
- During its inspection, the Council also identified various hazards in the property. It used the Housing Health and Safety Ratings System (HHSRS) to assess these. The HHSRS is a risk-based approach for assessing different hazards associated with poor quality housing. A qualified Environmental Health officer inspects premises and rates any hazard they find as category 1 or 2. Category 1 hazards are the most serious. Councils have legal powers to require landlords or property owners take immediate action to remedy these.
- In January 2018 Mr B wrote to the Council and said he intended regaining possession of the property. His letter said once he had done this “we intend to let our house to one family”.
- The Council then wrote to Mr B telling it of the various improvements needed to his property. It did not identify if these were category 1 or 2 hazards but marked some repairs and improvements as needed urgently. The Council says it based the list of works needed on the understanding Mr B would rent the property to a single household. Mr B says he went on to complete various improvements to the property requested by the Council.
- In September 2018 the law changed. It became compulsory for all ‘large HMOs’ to become licensed. A large HMO is one:
- Rented to five or more people who form more than one household;
- Where some or all tenants share toilet, bathroom or kitchen facilities; and
- Where at least one tenant pays rent (or their employer pays it for them)
- The Council says it ran a publicity campaign to make landlords aware of this change in the law. This included issuing a press release, social media postings, updating its website, meetings with landlord associations and letting agents as well as targeted mailing. It says as it had contact with Mr B in 2017 he should have received notice of the change.
- However, Mr B was unaware of the change in law. He did not apply for a HMO license.
- In May 2019 the Council received contact from one of Mr B’s tenants. It visited his rental property. It found he had six tenants. The Council considered Mr B therefore rented an unlicensed HMO.
- The Council wrote to Mr B’s tenants and explained that where a landlord rents an unlicensed HMO they lose the right to serve a ‘Section 21’ notice on a tenant. This is a notice issued under the Housing Act 1988 which gives landlords the right to repossess rented property on service of the notice. They do not need to rely on any other reasons for repossession.
- In June 2019 the Council met with Mr B. It says that it advised him to apply for a HMO license within two weeks. The following day the Council sent an email to Mr B giving him further information on what he must provide as part of the licensing scheme. The letter also told Mr B of the criminal prosecution which might result from renting an unlicensed HMO.
- The Council later gave Mr B an extra two weeks to complete the license application. This followed Mr B telling the Council of a visit he made to the property where a tenant confronted him and led to Mr B calling the police. Mr B said the remaining tenants in the property refused to pay ongoing rent referring to the letters sent to them by the Council.
- Mr B completed his license application in July 2019. He paid the fee for the license which is around £700.
- Around a week later Mr B advised the Council he had only three tenants remaining in his house (a couple and single person). The Council arranged an inspection in August 2019 and confirmed this. Later the single tenant moved out leaving only the couple living there.
- By October 2019 Mr B had made a complaint to the Council for reasons summarised in paragraph one. By now, Mr B no longer needed a HMO license as the number of occupiers in the property had fallen to three. The Council initially declined to refund to Mr B his license application fee, which he asked for. But it later reconsidered after Mr B withdrew his license application. The Council told me it took this action as while it had no legal duty to refund the fee it considered it could have given Mr B clearer advice in early 2018. It did not make clear its advice to improve the property (referred to in paragraph 10) assumed Mr B would rent the property to a single household as he had said.
- Since October 2019 Mr B has again said he wants to rent his property in future to a single household. But he has also asked the Council if he can rent individual rooms. In emails sent to Mr B the Council has explained the circumstances where he would need a license as summarised in paragraph 11. It has also told Mr B that if he again rents out individual rooms “and there are three persons living in a property forming more than two households” the property would still be a HMO (see paragraph 6). It would therefore “need to meet the Council’s standards for HMO accommodation”. The Council has implied the property does not currently meet those standards. I have seen no explanation for why not. Although, the Council has also said it would need to carry out a full HHSRS assessment to establish the work needed to bring the property to the HMO standards. The Council has offered to meet with Mr B to go over these matters. This is so he understands the requirements he must meet if he continues to let the property as a HMO.
- As well as communications around the license I noted various other communications between Mr B and Council officers in its private housing service. Mr B has asked it more than once for support in regaining possession of his property, which the Council says it cannot provide. It advised him to seek professional advice. For example, from a solicitor or advice bureau. It also contacted Mr B when a tenant in the property reported a plumbing disrepair. Mr B attended promptly to arrange repair.
- I can understand why Mr B has found the events of recent months distressing. My role is to consider whether the Council has caused any of that distress because of any fault. I find there is little evidence for this.
- First, I do not consider the Council at fault for failing to ensure Mr B knew of the need to license his property by September 2018. It is unfortunate that Mr B did not know of the law change which resulted in him needing a HMO license. But the Council made reasonable efforts to publicise the change.
- Second, I find the Council took a reasonable and proportionate approach when it learnt of Mr B renting an unlicensed HMO in May 2019. It did not seek any prosecution of Mr B but instead gave him opportunity to put right the breach and obtain the necessary license. I recognise Mr B found this stressful, but the Council could not prevent any stress associated with the application procedure.
- Third, I find no fault in the letters sent to Mr B’s tenants. They advised correctly on the consequences of a landlord renting out an unlicensed HMO. Mr B’s tenants may have interpreted the Council’s letter as saying they did not need to continue paying him rent, but this is not what the letters said. I understand the stress caused to Mr B by his tenant’s actions in not paying rent and in the confrontation with a tenant that he described in June 2019. But this stress results from the tenants’ actions, not those of the Council.
- Fourth, I find the Council has consistently and reasonably sought to advise Mr B of his responsibilities as a landlord. The Council has clearly explained to Mr B the circumstances where he must obtain a HMO license. It has further explained that even if Mr B does not need a HMO license the house must still meet housing standards whether rented to a family or as a HMO. Mr B may find these requirements challenging. But they are inevitable, flowing from his decision to rent out his property. The Council has suggested ways Mr B may find it easier to manage his property; for example, through employing an experienced and knowledgeable letting agent. It has also offered to meet with him to discuss these matters. I could not reasonably expect it to do more.
- Fifth, I also consider the Council was under no requirement to refund Mr B’s license application fee. Clearly he needed a HMO license at the time the Council asked him to apply and had needed such a license for several months. While I understand the requirement for a license lapsed shortly after the application I cannot see the Council had any legal duty to refund the fee.
- I therefore consider it to the Council’s credit it has done so. The Council has done this in recognition that in January 2018 it should have given clearer advice to Mr B on the improvements needed to his property. That advice rested on the understanding Mr B no longer intended renting the property as a HMO but it did not make this clear. I find that understandable as Mr B had said this was his intention. However, at the time the Council gave the advice he was still renting the property as a HMO.
- The Council considers its failure to qualify its advice, while a learning point, was a matter of best practice and not a fault. However, I disagree. I consider the qualification crucial for Mr B to understand his responsibilities as a landlord. The Council not only had his interests to think of in giving its advice, but also that of his tenants. The lack of qualified advice resulted in Mr B renting out the property as a HMO for around two extra years, during which time key repairs or improvements may not have been undertaken. So, while an understandable error, I am still obliged to find fault.
- I consider the Council’s decision to refund Mr B’s license application fee, when it did not need to do so, a fair remedy for any injustice arising from the fault. I do not think it likely Mr B has spent money making improvements to the property which he would not have had to spend to continue renting it as a HMO. Having seen the list of repairs I consider most probably needed whether renting as a HMO or to a single family. And as Mr B has now again expressed his preference to rent to a single family then I could not say these were wasted expenses. So, I find no quantifiable loss to Mr B.
- Any injustice caused to Mr B is therefore that of uncertainty resulting from the unqualified advice. The usual recommendation we would make for this would be a modest financial remedy. The Council’s remedy, in financial terms, exceeds that and so no further action is needed on its part.
- It is also to the Council’s credit that it has shown itself willing to learn from this complaint. Officers have received advice to ensure in future they qualify advice given on repairs needed to rental property, where there may be doubt about its future occupancy. I could not ask it to do more.
- For reasons set out above I uphold this complaint finding evidence of fault by the Council causing an injustice to Mr B. However, I consider the Council has acted in way that provides a fair remedy for any injustice caused to Mr B. So I have completed my investigation satisfied with its actions.
Investigator's decision on behalf of the Ombudsman