Michelle Dawn Edith Ball v Sefton Metropolitan Borough Council

Where a landlord has been convicted of a relevant housing offence, a rent repayment order in favour of a local housing authority must ordinarily require repayment of the statutory maximum. Under section 46(1) of the Housing and Planning Act 2016, the tribunal must disregard the landlord’s financial circumstances when calculating that maximum.

Section 46(5) nevertheless permits financial circumstances to be considered when deciding whether exceptional circumstances make full repayment unreasonable. Ordinary operating and finance costs will not normally suffice. Whether circumstances are exceptional is primarily an evaluative judgment for the First-tier Tribunal, and an appellate tribunal will intervene only for legal error or failure to consider a relevant matter.

The appellant owned and operated premises used as an unlicensed house in multiple occupation. She pleaded guilty to an offence under the Housing Act 2004.

The First-tier Tribunal (Property Chamber) made a rent repayment order requiring her to repay £13,293.27, being all universal credit received towards rent during the relevant 12-month period. She appealed, relying principally on the local authority’s referral of tenants, her trading losses, utility and finance costs, and lack of representation.

The central issue was whether those matters disclosed exceptional circumstances making it unreasonable to order full repayment under section 46(5) of the Housing and Planning Act 2016.

1. Appeal dismissed. The First-tier Tribunal was entitled to require repayment in full of the universal credit received during the 12 months in which the appellant committed the offence.

2. Section 46(1) of the Housing and Planning Act 2016 required the tribunal, following conviction and an application by a local housing authority, to order the statutory maximum available under section 45. In calculating that maximum it had to disregard section 45(4), including the landlord’s financial circumstances. The approach in Vadamalayan v Stewart [2020] UKUT 183 (LC), concerning deduction of utility costs, did not apply in that statutory setting.

3. Section 46(5) remained available after the maximum had been calculated. It allowed the tribunal to consider whether exceptional circumstances made full repayment unreasonable, including the landlord’s financial position. The First-tier Tribunal’s reference to a very high threshold, and to financial circumstances not normally meeting it, did not wrongly exclude financial hardship from consideration.

4. Utility bills, running costs and finance costs are ordinary incidents of operating an HMO and could not, without more, be exceptional. A loss caused by exceptionally high running costs relative to publicly funded rent might potentially be exceptional, but that assessment was for the First-tier Tribunal. It had considered the evidence and its conclusion was open to it.

5. A local authority’s referral of homeless tenants to accommodation neither waives licensing law nor relieves the landlord of responsibility for obtaining an HMO licence. The appellant’s lack of representation did not make the proceedings unfair or amount to an exceptional circumstance.

• Upper Tribunal (Lands Chamber): dismissed the landlord’s appeal and upheld the full rent repayment order.
• First-tier Tribunal (Property Chamber): on 29 January 2020 ordered repayment of £13,293.27 to the local housing authority.