A case in the High Court could have major implications for landlords, letting agents and for every single local authority licensing scheme.
It could also trigger demands from landlords for refunds for payments to local authority licensing schemes.
In the case the landlord Peter Gaskin challenged the cost of the HMO licensing scheme run by the London borough of Richmond on Thames.
He claimed that under a EU directive, the fee could only cover the cost of processing the actual application, and not the cost of running and enforcing the scheme.
Gaskin was renewing his HMO licence, when the council asked him to pay a fee covering not only the costs of processing his application, but also contributing towards the authority’s costs of running the HMO licensing scheme.
Gaskin refused to pay the amount requested for the HMO licence, offering the authority a lower amount, which was rejected.
The landlord was subsequently prosecuted in the Magistrates’ Court for operating an HMO without a licence, before the issue went before the High Court.
This found that the letting of private accommodation was provision of a service that would fall under EU Directive 2006/123/EC.
This says that that where a charge is imposed for a person to apply to have access to a service activity, the charge must not exceed the cost of the authorisation procedures.
In this case, the question of whether the private letting of accommodation amounted to a service, would determine whether the London Borough of Richmond Upon Thames would be allowed to charge an application fee covering both authorisation procedures and the costs of managing their HMO licensing scheme.
The court handed down judgment stating that Gaskin was providing a service within the meaning of EU law.
The court therefore held that the London Borough of Richmond Upon Thames’s fee for an HMO licence was unlawful because the charge covered costs that extended beyond the cost of processing the licence application.
It was ruled that the council had therefore not been entitled to demand the fee which it had demanded.
It was irrelevant that council tax and not business rates were paid on the property.
The fact that social housing was expressly excluded from the directive also indicated that other types of housing were included.
Writing about the case in Nearly Legal, Giles Peaker says: “There will no doubt be an appeal. No doubt at all.
“This does severe damage to the fee planning and setting of many, many council’s licensing schemes and effectively means that the licensing fees cannot assist in paying for enforcement costs.
“This is not to say that an appeal will be successful, just that it is inevitable.”
Andrew Turner, chief executive at buy-to-let mortgage broker Commercial Trust, said: “This is an interesting case which may set a precedent for some landlords and could have the potential to save HMO landlords hundreds of pounds, if some local authorities have been charging more than they were legally entitled to for HMO licences.
“This is a matter of law and I would urge any HMO landlords that believe they may have been overcharged, to seek professional legal advice.”
The case has come as more and more local authorities seek to introduce their own licensing schemes.
It also comes shortly before new HMO rules come into effect on October 1, when properties of any height with five or more sharers must be mandatorily licensed.
Well done Mr Gaskin
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Hear hear!
And the same, no doubt, should apply to Selective Licensing Fees – where councils are forcing responsible Landlords to cover the costs of enforcing Rogue landlords – who DON’T register and remain under the radar.
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If that happens, and I hope it does, borough wide schemes like Croydon’s could cost them dearly. Could be like PPI all over again!
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worst case, Government will amend EU legislation when we leave..
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Not sure we are going to leave, and this article is exactly why we shouldn’t leave. You can’t trust the elected Government to make the laws. Populism (or democracy as it used to be called) is so last century, the future belongs to the new age socialists (or communists as they used to be called) and the future is bright, with free housing for everyone!! So if you’re against it, then it means you hate the homeless and don’t want them to be given free housing, you monster!
Said a moron!
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Will there be an appeal? You would think that the Local Authority would weigh up the costs of the appeal against the potential loss of income. Where are the funds for the appeal coming from? Council Tax? Council Tax is for the provision of services to the CT payers, this appeal would only seek to line the pockets of the Council at a cost to the CT payers. When was the last time any court in this country ruled against an EU Directive? Richmond may well have bitten off far more than they can chew and in doing so opened the floodgates to claims against every other LA in the country for unlawful charges in their licensing schemes………..very well done Mr Gaskin I applaud you.
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parasites. nothing other than generating income
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