Global 100 Ltd v Carlos Jimenez & Ors

For the standard HMO test under the Housing Act 2004, “use” concerns what occupiers do with living accommodation, while “purpose” concerns why that use is made. Property guardians who occupy accommodation as their main residence make the only use of it where their only guardian responsibility is to live there. The protective effect of their presence does not create a separate use. A tenancy may arise despite service-agreement or licence wording where the substance and reality show exclusive possession for a term at a rent. Actual occupation fees and letting arrangements may evidence a rack-rent without expert valuation where the tribunal can infer market value from the circumstances.

These were two conjoined appeals from decisions of the Upper Tribunal (Lands Chamber) in cases LC-2021-452 and LC-2022-000030. The First-tier Tribunal had found that the William Road and Stamford Brook properties were houses in multiple occupation. It made rent repayment orders in the first case and financial penalty decisions in the second.

The appellants argued that property guardians used their accommodation both as residences and to protect vacant buildings. The Stamford Brook appeal also concerned whether Global Guardians had a tenancy, whether an issue estoppel arose from earlier possession proceedings, and whether Global Guardians and Global 100 were persons managing or controlling the property. The central issue was whether the guardians’ occupation constituted the only use of their living accommodation.

The judgment of Lord Justice Dingemans was agreed by Lord Justices Singh and Lewison. Both appeals were dismissed.

1. Sole use. Section 254(2)(d) of the Housing Act 2004 focuses on the use made by occupiers of their living accommodation. “Use” describes what is done with the accommodation, whereas “purpose” describes the reason for that use. The purpose of Global Guardians or Global 100 in placing guardians at the properties did not alter the use made by the guardians themselves.
2. On the FTT’s findings, the guardians used the accommodation as their main residences and had no responsibilities beyond living there. Their presence might deter trespass or damage, but that did not create a second use. The sole-use condition was therefore satisfied in both cases. The court reached that conclusion without relying on the presumption in section 260.
3. Tenancy. There was no issue estoppel arising from the earlier possession proceedings. The earlier judge had decided only that a defence was arguable, had not heard the relevant evidence, and had made no specific finding necessary to the decision capable of binding the parties in these proceedings. Applying the substance-and-reality approach in Street v Mountford [1985] 1 AC 810, the agreement between NHS Property Services and Global Guardians granted exclusive possession of the Stamford Brook property for a term at a rent. Its service-agreement or licence language did not prevent it being a tenancy.
4. Because Global Guardians was a lessee and a person managing the property, it was unnecessary to decide separately whether it was also a person having control.
5. Rack-rent. The licence fees paid by the guardians, together with the arrangements for letting the rooms, were evidence of the market value of the accommodation. The tribunals were entitled to find that the sums represented a rack-rent without expert valuation evidence. Global 100 was also the person who would receive the rack-rent if the property were let at that rent, and was therefore a person having control under section 263(1) of the Housing Act 2004.

1. Court of Appeal (Civil Division): Dismissed both appeals on 27 October 2023.
2. Upper Tribunal (Lands Chamber): In decisions dated 2 February 2022 and 28 September 2022, dismissed the challenges to the First-tier Tribunal’s HMO findings and addressed the Stamford Brook tenancy and control issues.
3. First-tier Tribunal (Property Chamber): Found both properties to be HMOs, made rent repayment orders concerning William Road, and determined financial penalty appeals concerning Stamford Brook.