Housing 35 Plus Limited v Nottingham City Council

For a co-operative society to obtain the HMO licensing exemption under paragraph 2B(2)(b) of Schedule 14 to the Housing Act 2004, its rules must secure that all management decisions are made by members, or a specified quorum, at a general meeting. A rule requiring members to discuss management decisions does not require them to decide those matters. Rules giving a management committee power to conduct the society’s business and to make significant decisions, including purchasing property and entering contracts, do not satisfy the condition. The court examines what the rules require, rather than the society’s practice.

Housing 35 Plus Limited, a fully mutual non-profit housing co-operative, was issued financial penalties by Nottingham City Council for controlling two unlicensed houses in multiple occupation. The First-tier Tribunal allowed Housing 35 Plus Limited’s appeal, holding that its rules satisfied the co-operative society exemption in Schedule 14 to the Housing Act 2004. The Upper Tribunal allowed the Council’s appeal in [2024] UKUT 349 (LC), concluding that the rules permitted a management committee to make management decisions and remitting the case to the First-tier Tribunal. The central issue before the Court of Appeal was whether the rules secured that all management decisions were made by members at a general meeting.

1. Appeal dismissed. The Court of Appeal unanimously agreed with the Upper Tribunal’s conclusion that the rules did not satisfy paragraph 2B(2)(b) of Schedule 14 to the Housing Act 2004.
2. The statutory requirement concerns what the society’s rules secure, not what is done in practice. The relevant question was whether the rules required all management decisions to be made by members, or a specified quorum, at a general meeting.
3. Rule 30 provided that ordinary general meetings were to discuss management decisions arising since the previous meeting. The ordinary meaning of “discuss” was to talk about or review matters. It did not require the general meeting to decide those matters, to the exclusion of the management committee. It might include discussion of issues not yet decided, but still did not confer exclusive decision-making authority on the members.
4. Rules 48 and 69 gave the committee power to control and direct the society’s business and to exercise powers not reserved to a general meeting. Rule 69 was not limited to implementing decisions already made by members. Its specific powers included purchasing property, entering contracts and appointing managing agents. Rules 12, 13 and 15 also gave the committee authority over significant membership and licence-related decisions. Those powers were naturally capable of involving management decisions.
5. Even assuming that members in general meeting could give binding directions to the committee, that did not establish that the rules required all management decisions to be made by the members. The properties were therefore not exempt from HMO licensing under Schedule 14, and the Upper Tribunal’s remittal of the remaining grounds to the First-tier Tribunal stood.
6. The Court considered that the apparent purpose of the exemption was to avoid regulating buildings managed by their occupiers themselves. That observation was unnecessary to the decision and was obiter.

• Court of Appeal (Civil Division): dismissed Housing 35 Plus Limited’s appeal from the Upper Tribunal.
• Upper Tribunal (Lands Chamber): in [2024] UKUT 349 (LC), allowed Nottingham City Council’s appeal from the First-tier Tribunal and remitted the remaining grounds concerning the financial penalties.
• First-tier Tribunal: allowed Housing 35 Plus Limited’s appeal on the preliminary issue, finding that its rules satisfied the statutory exemption.