Landlords are facing fines exceeding £5,000 after councils reject House in Multiple Occupation (HMO) licence applications due to administrative errors, according to property licensing specialists Landlord Licensing & Defence.
The firm reports that an increasing number of local authorities are penalising landlords for selecting incorrect options on application forms, including choosing an ‘additional’ licensing form instead of a ‘mandatory’ one, despite both forms covering identical licence conditions.
In one case involving a Midlands authority, a landlord was fined more than £5,000 after the council refunded their licence fee on the grounds they had applied for the wrong type of HMO licence. By rejecting the application and refunding the fee, the council removed the statutory protection granted under the Housing Act 2004 for an ‘application duly made’, immediately exposing the landlord to Civil Penalty Fines for operating an unlicensed HMO.
Legal framework under scrutiny
Phil Turtle, compliance director at Landlord Licensing & Defence, stated that councils have no legal right to refuse an HMO licence application simply because it was the ‘wrong sort’ of HMO application. ‘Whilst we achieved a reduction in this case, the council refused to accept they had created the situation,’ he said.
The Housing Act 2004 does not provide legal justification for a local authority to refuse or refund an HMO licence application that has otherwise been duly made because the landlord did not understand the difference between two identical schemes.
Turtle added that the landlord in the case was not prepared to take the matter to the First-tier Tribunal due to concerns about reputational damage to their business. ‘Effectively, a landlord was bullied into accepting the council’s unlawful action as their own guilt,’ he said.
Implications for landlords
The issue adds to growing regulatory complexity for landlords, who are navigating multiple compliance requirements. The enforcement tactic differs from other recent regulatory developments, such as Edinburgh’s suspended second homes tax, in that it centres on administrative procedure rather than policy changes.
Turtle noted that licences for most councils are identical and rarely state whether they are mandatory or additional on the final document. ‘By acting in this manner, councils are acting unlawfully,’ he said. ‘They are using pure bureaucracy as a weapon to generate enforcement revenue rather than to improve housing standards.’
The firm advises landlords to seek professional guidance when submitting HMO licence applications to avoid potential penalties. The issue highlights the financial risks landlords face from administrative errors in an increasingly complex regulatory environment, particularly as property taxation and compliance costs continue to rise across the sector.