A letting agent in Epping Forest has successfully argued his case, which provides greater clarity for letting agents across the country, after being issued with a fine by Epping Forest for an unlicensed house in multiple occupation (HMO).
Epping Forest had imposed a £7,064.32 penalty on Kartal Cetin for his agency’s alleged involvement in the control or management of an unlicensed HMO contrary to section 72(1) of the Act.
The fine related to the letting of two vacant rooms in a flat in Loughton in October 2021. Two tenants each paid a holding deposit and a month’s rent in advance to Cetin’s letting agent. Epping Forest said the flat then became an HMO liable to licensing requirements as these lettings meant there were five residents overall.
However, after Martin Rodger KC, Deputy Chamber President, heard an appeal against a decision of the First-Tier Tribunal (Property Chamber) lodged by letting agent Kartal Cetin against Epping Forest District Council, it was deemed that Cetin and his agency cannot be a ‘person managing’ a house in multiple occupation (HMO) within the meaning of section 263(3) of the Housing Act 2004, the Upper Tribunal (Lands Chamber) said.
Cetin’s appeal argued that as a letting agent he was not a person managing the property and so could not be liable for the offence under section 72 since his company had never managed the property.
Epping Forest argued that a strictly literal approach to the construction of section 263(3) was needed.
But Roger said he is not attracted to an “over-literal construction of section 263(3)”.
He explained: “The importance of the definition of ‘person managing’ is not that it identifies an event or a transaction but that it describes a status to which certain responsibilities are attached, including responsibility for licensing, where it is required, and responsibility for compliance with the Management Regulations.”
He said an agent receiving a single instalment of rent should be sufficient to place the agent under the same statutory obligations as a landlord or a managing agent.
“The fact that the purpose of the definition of person managing is to identify those who will be subject to continuing obligations, backed by criminal and civil sanctions, calls into question the intended breadth of the definition,” Rodger said.
“Did Parliament mean to attribute that status to an agent with no involvement in management? I would suggest not.”
Treating a letting agent as a ‘person managing’ could create ambiguity and leave tenants confused as to who was managing the property, according to Rodger.
He added: “Secondly, simply as a matter of language, it would be surprising if the descriptor ‘person managing’ was intended to apply to an agent who was not engaged to manage the property and who had no power to do so.”
Roger concluded: “A payment made to an agent of the landlord whose only function is to let the property in question and who thereafter has no involvement in the continuing management, is not a payment within the scope of section 263(3).
“For that reason, the company was not a person managing the HMO and Mr Cetin did not commit an offence when the company received the payment of rent from [the tenant].”
The FTT reduced the fine to £3,532.16 but maintained the offence had been committed.
