A local authority is taking legal advice after issuing licences for Houses in Multiple Occupation, and where landlords are demanding refunds.

Newcastle Council may have to pay back over £750,000.

It follows a case last year between Bristol Council and student letting agency DIGS (Bristol) over the licensing of a maisonette.

No licence had been sought for this property, which Bristol said was a three-storey HMO. Entry to the maisonette was via a ground-floor lobby and staircase, up to the accommodation.

The High Court ruled that the lobby did not constitute a storey, meaning that the property was only two storeys and did not require an HMO licence.

The National Landlords Association said the case means that a number of councils have wrongly charged landlords for similar maisonette-type properties.

Newcastle Council has issued some 700 licences for 700 maisonette HMOs, according to the NLA, which has written to Pat Ritchie, the authority’s chief executive, to ask what process is in place to apply for refunds.

A Newcastle Council spokesperson said: “Licensing of HMOs was introduced to ensure that tenants are protected by adequate health and safety standards and the proper management of properties.

“A recent High Court case involving Bristol Council deemed that a particular three-storey property in Bristol was not a licensable HMO. We are obtaining legal advice in respect of the position of some licensed properties in Newcastle and whether they are affected by the Bristol decision.”

Bruce Haagensen, the Tyne and Wear representative of the NLA, said: “Newcastle charged one of the highest fees in the country.

“The implication of this ruling is that we should be refunded the fees. In Newcastle we have one of the biggest student fees in the country and that means this ruling is particularly important here.

“It also means that landlords have had to spend money on bringing their properties up to licensing standards and there’s a question of whether they should be able to recover the cost of carrying out those changes.

“In the current climate, the council simply do not have the money.”