In this article, specialist in HMO licensing Dr Dan Jacklin raises a series of considerations relevant to prosecuting authorities and landlords on effectively managing HMO-related litigation from his experience of litigating such issues.
The Local Authority Housing Statistics for 2023-24 estimated there were 472,823 HMOs in England. 131,061 HMOs were subject to mandatory licensing and 93,319 were actually licensed (LAHS, 2023-24). A small minority of HMOs (2,334) were found upon inspection to have category 1 hazards present according to the Housing Health and Safety Rating System set out under the Housing Act 2004.
Lendlord’s Q4 2024 HMO statistics, which are based on 1,126 HMOs across the UK, showed the average gross yield for HMOs across regions ranged from £20k-£40k per annum (Lendlord, 2025). After tax and expenses are paid, a landlord’s net yield is likely to be in the region of £5k-£10k per annum. Whilst financial penalties for HMO licensing offences are limited to £30,000 per offence, most cases concern multiple breaches. Financial penalties can soon exceed £100,000 for properties which are in poor repair or where renovations have failed to meet the required regulations.
The First Tier Tribunal (Residential Property) (‘FTT’) rightly and frequently questions whether such lofty financial penalties are proportionate in light of the net yield of the activity and the social value that private landlords provide. It does not go unnoticed that local authorities receive the funds from such penalties and the inherent conflict that may create in setting them. Local authorities should remain mindful throughout the litigation that the penalties they seek to impose are proportionate or face significant reductions being made by the FTT upon appeal; especially considering the expense of defending appeals to the FTT is often not recovered.
Set out below are five suggestions for prosecuting authorities and five for landlords on managing HMO-related litigation more effectively.
For prosecuting authorities:
1. Know why the property is an HMO. It sounds like the obvious place to start, but this is a common cause of cases getting into difficulty at a late stage in the litigation. Section 254(1) of the Housing Act 2004 (‘2004 Act’) sets out five tests for what can constitute an HMO, each having multiple elements which need to be met. Local authorities would benefit from considering the status of the property at an early stage in the litigation (and preferably before commencing it!). HMO prosecutions are not straightforward and having counsel advise (in writing or in conference) at an early stage can save time and money through the early identification of legal issues and gaps in the evidence. This gives housing officers time to collect the evidence needed to close a case or encourage an early guilty plea.
Where the enforcement powers exercised depend on the property being an HMO, local authorities should clearly set out in any notice raised on that basis the relevant test applied to establish the property’s status as an HMO. HMO-related enforcement powers are derived from the property being an HMO at the time any notice is imposed, so this is important even where the HMO is licensed because several of the tests relate to occupancy-related factors which can fluctuate as tenants move into and out of the property. For non-licensed properties, illegal subletting is a serious risk to blocks of flats inadvertently becoming an HMO.
2. Use enforcement powers to compel the production of information and documents. Powers to request information and/or documents can help local authorities obtain the evidence they need to support the investigation process. Section 16 of the Local Government (Miscellaneous Provisions) Act 1976 and section 235 of the Housing Act 2004 are useful tools for local authorities to obtain information and documents, such as bank statements, invoices, letting contracts, architectural plans, building control documentation, compliance certificates, etc.
By working together with other local authority functions, powers such as those under the Environmental Protection Act 1990, the Health and Safety at Work Act 1974, and the Consumer Rights Act 2015 may be used where both authorities have jurisdiction. Norwich Pharmacal Orders are also an option to secure disclosure of account details, bookings and payment records from sites offering rooms for rent in HMO properties (see John Randall KC and Ali Tabari’s win against Airbnb in 2022 (RBKC v Airbnb).
3. Beware of an over-reliance on hearsay evidence. It is very difficult to obtain section 9 statements from tenants who justifiably fear repercussions from their landlords and/or can do without the inconvenience of attending a trial. One of the most helpful sources of evidence tenants can provide is correspondence or documents sent by the landlord as these are likely to be admissible notwithstanding the absence of a section 9 statement from the tenant. Prioritise seeking documentary evidence from tenants above oral testimony for better results in bringing HMO prosecutions. Ensure to document tenant refusals to provide a statement, as this can help get any hearsay evidence adduced when the application is heard.
4. Use s.10 admissions to help narrow the issues and the costs of litigation. Seeking admissions from the defendant is a much under-utilised tool with several advantages. There will invariably be aspects of a case which the defendant does not dispute and which are amenable to s.10 admissions. An admission that the property is an HMO would narrow the issues significantly reducing trial length and the complexity of the litigation. Securing an admission of the rack-rent for a property is normally achievable without too much fuss. The number and quantity of payments received is another typically uncontroversial area once bank statements have been disclosed.
These may seem like small points, but in HMO licensing cases, it is not unusual for the court to need to make legal and factual findings on 20 or more issues, so any areas of agreement helps to reduce the burden on all involved. Reducing the complexity of the litigation helps both parties re-evaluate their case with greater clarity, which can lead to changes in plea by defendants or earlier discontinuances by prosecuting authorities.
5. Previous civil penalties are likely not bad character. Several prosecuting authorities have sought in my own practice to use previous civil penalties paid by a defendant as evidence of bad character. Under s.249A(1) of the 2004 Act, the local housing authority may impose a financial penalty on a person if satisfied, beyond reasonable doubt, that the person’s conduct amounts to a relevant housing offence in respect of premises in England. There must be a nexus between the evidence concerned and the offence charged, and one way in which that may be established by showing a connection in time between offences of the same type (R v Andrew Griggs [2022] EWCA Crim 1115; R v McNeill[2007] EWCA Crim 2927 and R v Sule [2012] EWCA Crim 1130).
The decision in Gore v Maher [2009] EWCA Crim 1424 and R v Hamer [2010] EWCA Crim 2053 is that the settlement of a fixed penalty notice does not constitute evidence of bad character if in doing so, there is no acceptance of wrongdoing. For example, notices may be paid because of a desire to avoid costly litigation. However, this can work to the advantage of local authorities because if such evidence is not bad character, this makes it easier to adduce into evidence. Particularly useful for prosecuting authorities are any similarities in the circumstances in which the civil penalty was raised, as these are likely to be persuasive in the mind of the tribunal.
For defendant landlords:
1. Do not ignore a notice of intent to serve a financial penalty. Landlords often wait until they are issued with the final notice before seeking legal advice. Do not waste the opportunity to submit mitigation after receiving the notice of intent, which occurs before you receive the final notice. Licensing barristers spend a great proportion of their time advancing mitigation for clients in the courts. Have a lawyer help shape your mitigation in a way which maximises your chances of a reduction in any financial penalty subsequently imposed whilst protecting your position if there is a later need to appeal the final notice.
2. Promptly remedy defects with the property. Do not allow issues raised by the local authority with the property go unaddressed. Dealing with issues promptly will, in almost all cases, reduce any financial penalty you later receive. Where health and safety breaches are alleged in a housing context, it helps to bring in a barrister whose practice covers housing and health and safety. Ask the local authority for clarification on the specific requirements breached so you can read the relevant guidance and know what issues you need to address. You may need the help of an architect, surveyor, or safety specialist to understand more complex safety issues, such as those concerning fire safety. Keep the local authority updated with the progress of the works to show you are addressing the issues.
3. Get back on your feet, one flat at a time. When an HMO is hit with a prohibition or emergency prohibition notice, the financial shock bites much sooner than landlords think. Many landlords face a triple threat of trying to make mortgage payments, funding the litigation, and without receiving any income from their property. The investigation is invariably unexpected and landlords find the situation overwhelming. Those whose only property is an HMO are often the worst affected from a financial perspective. Owners of multiple properties may see the local authority begin to inspect their other properties, compounding the problems a landlord is facing.
Get back on your feet by completing the required works one flat at a time, getting the restrictions removed, and the flat re-tenanted as soon as possible. This helps ease your financial burden. Easier said than done, but landlords should keep 12-18 months of HMO-related expenses on hand at all times to fund legal assistance with the litigation and any work needed on the property. Landlord insurance can help to bridge the financial gap by compensating lost rental payments, but check carefully the list of exclusions when you take out your policy. Always check the terms of any legal expenses cover included under your landlord insurance policy as this can help fund your defence.
4. Leases survive a sale of the property. By the operation of section 3 of the Landlord and Tenant (Covenants) Act 1995, the new HMO-owner becomes bound by the landlord covenants in the related tenancy agreements signed by the previous owner. The lease survives the sale of the property along with any obligations for the managing agent contained therein. Agents managing HMOs sometimes forget this and terminate their agency agreement with the previous owner thinking that brings their obligations concerning the property to an end. It may not have that effect, so landlords and agents should check the terms of the tenancy agreements carefully.
If you need to include information about the managing agent in the lease, then the agent needs the necessary rights to terminate their obligations in the event the property is sold or the management of the property is transferred to a different agent. This is also important for the new owner of an HMO to know, because if the investigation is brought against the landlord shortly after the sale, they may be able to argue that the managing agent remained in control of the property until the new agent was appointed.
5. The fallout beyond the financial penalty. Clients often ask whether paying the financial penalty and/or pleading guilty to HMO-related charges will bring an end to the matter. For most landlords, it does mark the end of a very unsettling period, but for a minority the difficulties do not end there. Some clients have experienced workplace investigations and even dismissal because of the enforcement action taken against them. Lenders have initiated re-evaluations of financial circumstances which has resulted in the property needing to be urgently refinanced. Housing investigations also take a toll physically and emotionally on landlords, impacting on sleep and mental health.
My experience has been that the majority of landlords swept up in HMO licensing-related proceedings knew less than they should about the requirements that apply to the licensing and management of HMOs. The NRLA offers a number of short and affordable courses that landlords can take to help them understand the relevant requirements (NRLA, 2025). Landlords reading this article would be wise to enrol voluntarily rather than risk becoming embroiled in costly HMO-related litigation. Better awareness of the requirements and a conscientious approach is the key to avoiding HMO licensing-related issues.
Whilst every effort has been taken to ensure that the law in this article is correct, it is intended to give a general overview of the law for educational and/or informational purposes. It is not intended to be a substitute for specific legal advice and should not be relied upon for this purpose.
This article represents the opinion of the author and does not necessarily reflect the view of any other member of St Philips Chambers.
