A magistrate court has fined 2 lettings agents for ‘managing’ properties which should have had HMO licenses. One of the agents defended the claim on the basis that they were not managing the property but had in fact only accepted the first month’s rent and deposit.
The local authority that commenced the prosecution argued that by accepting rent and a deposit the agent was ‘managing’ the property within the scope of the Housing Act 2004. Under the 2004 Act s.263 a person is ‘managing’ a property if they directly or through an agent receive rents or other payments from tenants in an HMO property. The argument therefore concentrated on whether the payments accepted by the agent were indeed ‘rents or other payment’ within the scope of the legislation.
The Local Authority became aware of the properties when Tenants made a number of complaints about the living conditions including a rat infestation. However, we do not know whether the council referred these complaints to the agents and whether they in turn referred them to the landlords. However, the Local Authority appeared to be under the impression that the agents were managing them hence these prosecutions.
The magistrates agreed with the Local Authority and held that the receipt of the first month’s rent made the agent a person managing for the duration of the initial fixed term. Accordingly, the agent was liable for the failure to obtain an HMO license.
These are unreported cases, so we do not know the exact nature of the arguments bought forward by either side. It is often the case that agents are instructed to find a tenant and upon completing the ordinary paperwork and taking the initial monies they have no further involvement in the running of the tenancy. In the case where the agent only accepted the first month’s rent and deposit it certainly appears that the agent was indeed only instructed to find and secure a tenant on behalf of a landlord. This decision therefore seems somewhat harsh and we understand could be appealed.
In the meantime, agents who find themselves in a similar position should seek advice because this decision could pose problems for agents instructed on a tenancy find basis. Agents should also ensure that any landlords who may require an HMO license are advised to obtain professional advice.