27^th Aug 2018

A recent High Court ruling could provide all lettings agents and private landlords with a potential refund, when signing up to local authorities' licensing schemes.

The case could cause landlords demanding refunds from their payments for council's licensing schemes.

Landlord Peter Gaskin took the Richmond on Thames Council's HMO's licensing scheme to the High Court, claiming that following an EU directive, the fee charged by the council should not cover the costs of the running and enforcing the scheme but just to cover the actual application cost.

The reason why Peter Gaskin decided to take the action was when upon renewing his HMO licence, the council demanded that he must contribute to the costs of their running the scheme and not just the charge for the application.

The landlord adamantly refused to pay the full amount that the council had 'requested', and instead offered it a lower amount which was immediately turned down.

The council prosecuted Gaskin in the Magistrate's Court for renting out his HMO without a licence the case was then referred to the High Court, where it was found that the renting out of the property to residing tenant's service fell under the EU Directive 2006/123/EC.

The Directive says that where a fee is imposed for a person to apply to have access to a providing a service activity, the charge cannot be higher than the actual the cost of council's application process.

The court ruled that the landlord was in fact providing a service that was relevant under the EU law.

The court's ruling held that Richmond on Thames was acting unlawfully when charging a fee to cover the running costs of the HMO licence scheme and not just for the application process alone, that it was not entitled to do so; it also said that just because the landlord was charged council tax and not business rates on the property, this made no difference to the ruling whatsoever.

Giles Peaker the editor of Nearly Legal covered the story and wrote: "There will no doubt be an appeal. No doubt at all.

"This does severe damage to the fee planning and setting of many, many council’s licensing schemes and effectively means that the licensing fees cannot assist in paying for enforcement costs.

"This is not to say that an appeal will be successful, just that it is inevitable.”

Andrew Turner, chief executive of a buy-to-let mortgage broker, said: “This is an interesting case which may set a precedent for some landlords and could have the potential to save HMO landlords hundreds of pounds, if some local authorities have been charging more than they were legally entitled to for HMO licences.

“This is a matter of law and I would urge any HMO landlords that believe they may have been overcharged, to seek professional legal advice.”

The High Court's ruling could not have come at a better time for landlords and agents as council's throughout the country are introducing licensing schemes.


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