The administrative court has ruled that local authorities’ upfront HMO license fees can’t cover the cost of enforcing the licensing scheme.
The court case may set a precedent for landlords who have unsuccessfully applied for a HMO license to reclaim application fees from their local authorities.
In the case between HMO landlord Peter Gaskin and The London Borough of Richmond Upon Thames, the court ruled that the upfront HMO licensing fees can only cover the cost of obtaining authorisation under the scheme.
The remaining fee to cover the administration and enforcement of the licensing scheme can only be levied on successful applicants
The London Borough of Richmond Upon Thames unsuccessfully argued that the upfront fee could include both the cost of processing the HMO application and that of enforcing it.
Gaskin was prosecuted for operating an HMO without a licence after failing to pay the full fee to renew his HMO licence fee on a property in Richmond Upon Thames.
His prosecution resulted in a judicial review. The first part dealt with domestic law, which Gaskin mostly lost.
This second hearing was called to establish whether the private letting of accommodation amounted to a service under EU Directive 2006/123/EC.
The court found that under the directive the private letting of accommodation is a service. The upfront HMO license fee is therefore restricted to covering the cost of processing the application only.
Andrew Turner, chief executive at Commercial Trust, 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 licenses.
‘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 ruling comes as landlords prepare themselves for the new HMO licensing rules that take effect from 1st October. A further 177,000 more landlords are expected to need to obtain a licence before the rules come into place.
The London Borough of Richmond Upon Thames is expected to appeal the decision.