The next Goliath in the additional HMO licensing battle?

Coventry City Council continues to implement a new HMO Additional Licensing Scheme on 4^th May 2020 – even though it has a backlog of more than 700 applications to process for normal HMO licences. Yet still it intends soliciting for thousands more applications.

The  council’s head of licensing must really be behind on budget, having already received fees for the 700 outstanding applications, 341 of them outstanding for over a year!  Yet it is taking on more work and administration and putting pressure on good landlords to prepare properties to higher standards for compliance at a time when labour, materials and availability of resources are in extremely short supply.

Also most of the properties that need to be licensed under this new scheme are occupied and therefore, the works that need to be done are not essential – yet they become essential and tenants must be disturbed or re-housed in order for landlords to undertake the works if the Council continues to insist in implementing the scheme on 4^th May 2020 – or the landlords will face prosecution and massive fines. But maybe that’s their plan?

Central Government has advised a pragmatic approach, and a number of councils have heeded this.  But not Coventry City Council, well known for its predatory and heavy-handed enforcement plus its stated intention to run the harshest penalties possible under the law. With no regard for landlords (and one suspects little for tenants either), Coventry City Council continues to create enforcement opportunities for itself and to abuse its dominant market position.  They have no competition, they are unregulated, therefore they continue with consideration for absolutely no one but themselves.

It would be well advised to get its current applications processed before introducing a new scheme.

Given this backlog, why would they introduce a new scheme you ask?  That is an interesting question and to answer it, one has to look at where the money is.

The money for the applications pending is already in the Council’s bank account and this can only be used for the application process.  By implementing a new scheme, it opens up another area of income: ‘Enforcement’ which is punishable by fines called Financial Civil Penalties the money they receive can be used to carry out more enforcement. (Well that’s the legal position – but who can tell what they’ve actually used this £700,000 or so for).

New applications, for a new scheme, will give them funds to process the backlog and the new applications. (although they’ve already had the funds to process the backlog. Strange they now need more… )

But the covert reason for implementing a new scheme, is that it opens up a much larger source of income called Financial Civil Penalties (landlord fines) from which the money they received can be used to carry out more enforcement.

Applications and licence fees produce income of £640-£1250 or so per property.

Financial Civil Penalties from enforcement, on the other hand, produce fees (which generally are issued with little or no substantial evidence) and range generally from £1,000 to £30,000 per ‘breach of regulations’,  And strangely most councils manage to find at least five or six such ‘breaches’ per property before sending out financial penalty invoices for £25,000 to £60,000.

Therefore, you understand where they will keep working, that will be one of the most likely reasons why the backlog of applications, they are more likely to be spending their time chasing the big money, and the ‘heroic recognition’ of being a revenue-target-meeting enforcer.  Why do you think crime thriller TV Series get such big audiences?

Certain housing officers chose to target specific types of landlord for revenue creation. For example they can easily identify landlord companies with healthy balance sheets on companies house and ‘out of area landlords’ whose only crime is that they don’t live in the city (only a crime in the enforcing council’s mind of course – it is in fact perfectly legal to live where you choose). It is easy to go after them and get massive enforcement moneys for small misdemeanours.

They don’t have to enforce these soft-targets as hard as they would if they were doing their job and weeding out rogue-landlords – but that’s hard work and there’s no money in it.  Instead they are proud to  leave decent landlords fearing for the future of their business, the decent homes they provide for their tenants, financial ruin and mental illness from the stress, some even contemplating suicide.  And over simple things which any fair and reasonable enforcer would work with them to resolve.

The council is very keen for landlords to contact them – especially those who do not know what to do, or may have inadvertently made an error, got their licensing dates confused, missed something simple and need the help.  In reality, they take the information and then use it against the landlord in order to enforce and fine, rather than help the landlord.

They appear to be helpful, whilst using the alert to send enforcers to check what they could put into the coffers by way of enforcement action and massive Financial Civil Penalties.

This is not going to encourage the behaviour of compliance that councils are supposed to be looking for.  It is going to force landlords to go underground, sell off their properties, remove them from the rental market make tenants homeless, reduce the private rental stock and create a shortage of perfectly suitable homes, because the Council is alienating landlords, rather than encouraging them. Because they think it is somehow big and clever (as well as highly profitable) to milk and destroy decent honest landlords.

It just shows how dangerous it is to allow as single entity to be ‘enforcer, prosecutor, judge and jury’ with no accountability to anyone except the Chief Finance Officer who just wants money whatever the human cost.

Heather Wheeler, when she was a Parliamentary Under Secretary of State at the Ministry of Housing, Communities and Local Government Enforcement, was clear on the role the Councils should take in relation to landlords, She said,  “It is essential that there is clear communication, and engagement with landlords, tenants and other stakeholders so rights and responsibilities are properly understood as that is often not the case.  This also means that for effective enforcement and prosecutions to take place, policies and procedures must be transparent and clearly available.

The fact that landlords who have licences and are not being made aware shows that Coventry City Council as many councils must be delinquent in its duties here.  And not just Coventry: Landlords and letting agents report to us daily their astonishment at the attitude of councils across the country and their ‘Vogon’ approach to enforcement.

Most landlords don’t know where to turn for help and turn to other landlords who are equally in the dark.  The Council has so many ways, methods, regulations and opportunities to enforce against even the best landlords with a crippling financial civil penalty, that the landlord has no chance. Everything is stacked against the landlord.

LANDLORDS let us be very clear:  The last person you should contact is the council. Do NOT contact them, it is NOT advisable.  They are the rule setter, the enforcer, the police, the judge and the jury.  Call them at your peril.

If you are running a property in the West Midlands you should know that the councils at Coventry City, Birmingham City, Dudley, Herefordshire, Sandwell, Sandwell,  Solihull, Walsall and Wolverhampton form the West Midland Housing Forum.  Therefore, you can expect the same treatment from them all now, or soon.

Coventry City Council has HMO Applications not processed for  362 submitted from 1^st April 2019 to 31^st March 2020 and 341 backlogged from the period 1^st April 2018 to 31^st March 2019.

That is 703 in total that they haven’t managed to process even though they’ve had the funds. Why do they need any more when they have a backlog of two years?

You may well ask what is the motivation?

If it’s not about the money, then why did the Coventry Telegraph find in 2017/2018 (using a freedom of information request) to report about 675 landlord complaints and 210 HHSRS inspections yet no financial civil penalties issued?   Well it’s because the real powers came after that time and then Coventry went to the other extreme.

At the time, Housing and Planning minister Gavin Barwell said: “These measures will give councils the additional powers they need to tackle poor-quality rental homes in their area. “By driving out of business those rogue-landlords that continue to flout the rules, we can raise standards, improve affordability and give tenants the protections they need.”   I don’t see it saying, “this legislation is introduced to give councils the powers they need to raise revenue from landlords with no regard to improving housing.”

Where is the evidence of housing improvement from their actions?  To date, no council has come up with convincing research that these licensing schemes have improved housing. None of the hundreds of landlords we have spoken to had a property that was in such a bad state as to warrant the excessive level of enforcement and civil penalties Coventry and other councils are inflicting in their out-and-out quest for revenue at all costs.

The truth is so self-evident: Until 2018, councils did not receive money from fines.  Any landlord fines went to central government.  As a result, council housing departments rarely took landlords to court and when they did, they knew they had to provide evidence ‘beyond all reasonable doubt’ to convince a judge of the landlord’s crime. It cost them so much to pursue and for little or no return into their budgets.

In 2018, councils were enabled to not only keep the fines – but also to increase them ten or twenty-fold above the level of court fines!  What’s more, they were given the power to hand out these fines with little or no oversight.  Not surprising then that they do so with little or no substantial evidence of danger.

Once the legislation was in place for them to receive the funds into council coffers, they needed a little time to perfect their approach: the rules, the fines, the cookie cutter paperwork, the invoicing and operational process. Once ‘the system’ was all in place, then could they enforce, receive fines, do it again.  “Rinse and repeat,” and in this context the emphasis in on ‘rinse!’   Most councils in England are doing exactly the same.

If you think about it it’s no different to their operations with parking tickets and traffic cameras. As we all know to our cost, these have become little more than revenue generating machines.

It is on public record that Coventry City Council began working in conjunction with Warwick University on a project to improve the quality of the off-campus housing in the area around Canley and Cannon Park.  The project focused primarily on proactively inspecting houses in multiple occupation (HMOs).  It appears to have been such good business that the Additional HMO Licensing Scheme will help with more enforcement and create yet more revenue.

Furthermore, most Councils’ housing officers appear to believe (or is that wilfully misunderstand) that being a Landlord is a very profitable business – when, in fact in recent years, any landlord’s net income has been reduced substantially by the Central Government action of increased taxation, the increased costs of compliance and regulations together with many councils introducing expensive licensing schemes for housing where the need appears unwarranted.

Liverpool City Council, for example, had their proposed licensing scheme overturned recently by government as being unjustified.

In truth, the 80% or more of landlords who own just 1 – 4 properties are left with cashflow at nigh-on minimum-wage level when calculated against all the hours they work operating and managing properties to provide decent homes to their tenants.

Coventry Council last year revealed at a First-Tier Tribunal hearing that the methodology by which a civil penalty amount was calculated was by the Council’s Civil Penalties Policy which includes a matrix which had been set in partnership with other Local Authorities in the UK to establish a consistent framework

Could this be considered price-fixing or abuse of a dominant market position?  Remember the Council is the operator of the scheme, the enforcer and the judge, unless they get overturned by the First-Tier Tribunal or Central Government – or by us the landlords taking action against them.

They must not be allowed to continue with this unwarranted and immoral approach to revenue generation at the expense of decent landlords.

But few landlords would have a clue how to take a case to the First-Tier Tribunal, nor indeed where to turn for professional advice.

One may look at this all quite dimly and wonder how this has happened.

You may consider that Councils have conspired together in setting high level priced Financial Civil Penalties at levels 10 to 20 times higher than the courts would award. Surely this is tantamount to cartels price fixing to the lay person.  Oh, but they are a public body!

Investigate your Councils – you will see their true form in Civil Penalties!

There appears to be no reason for implementing the Additional Licensing Scheme in Coventry by the City Council especially during this Covid-19 Crisis, other than possibly the money.  The scheme is likely to impact a number of student homes, which the Council may hope to reduce through the introduction of more purpose-built student blocks one is seeing developed by large international and national property investment funds in conjunction with local councils and universities.  Is this more insider-dealing against the interests of private sector landlords, one is forced to wonder?

Most landlords don’t know where to turn and Landlord Licensing & Defence is happy to take a call on 0208 088 0788 or help@lldl.co.uk and give initial independent advice to landlords on the position they are in and to cover some basic options available to them.

As we said, calling the council for advice is nonsense and is like calling the police and asking if they caught you speeding.  They then come around and run a programme on your car and find that indeed you were indeed speeding.  If you had never called them, they would never have come around.

It is the same with your council.  Be afraid.  Get professional advice.  But above all, make sure your properties are compliant, it is the only true defence.   In the meantime, seek help.

As Malcom Gladwell said in his book David and Goliath:  “This final lesson about the limits of power is not easy to learn. It requires that those in positions of authority to accept that their greatest advantage has real constraints.  The excessive use of force creates legitimacy problems, and force without legitimacy leads to defiance, not submission.”

So, one hopes that Coventry City Council will review its decisions firstly to NOT implement the Additional Licensing Scheme,  to be pragmatic as required by Government advice and delay this implementation following the example set to them by Luton and Newcastle councils.

Secondly, they must process the applications they have in backlog before taking on more.

And thirdly, they must stop this vilification and persecution of decent landlords  and instead work with landlords who want to do a good job and are indeed doing their best in the face of a bewildering amount of legislation and regulation.

Every council’s job is to improve housing stock, and anyone with an ounce of fair play and human decency can see that the way to do this is to work with landlords and not just treat them as cash producing machines.

Councils should assist those who make mistakes, rather than just hit them with Financial Civil Penalties, because this approach will seriously damage the private rented sector, remove the rental housing stock that only the private sector provides because councils have failed to provide any for two decades now, possibly more.

In a classic case of “be careful what you wish for”, this greed and power-trip by council housing departments will in time have exactly the opposite effect and create another issue for another

We are not condoning breaking the law, what we are saying is: Get professional help before turning yourself in and confessing to something that you didn’t realise you had done.

area of the Council to deal with at far greater cost than they have extracted whilst systematically destroying landlords and the private rental sector.

We live in hope, but frankly, not very much hope.

About the author:

Phil Turtle is a Casework Consultant at Landlord Licensing & Defence. He is a Certified HHSRS Practitioner – similarly qualified as many Council Enforcement Officers.

Landlord Licencing & Defence is helping landlords get out of trouble when they get into it. We are fighting against councils that have become power-crazed and which are persecuting decent landlords for immoral financial gain.

Councils have become ruthless and unforgiving and will destroy a Landlord, his health and his/her business in one inspection.

Everyone makes mistakes, Landlord Licensing & Defence reduces the chances of an incident breaking you, psychologically, financially and physically.   There are some vicious people within councils near to your portfolio enforcing the Housing Act 2004 Parts 1, 2, 3 and 7 with angst.

Some landlords just don’t give a damn and break all the rules – they deserve the punishment. Decent landlords do not.

Landlord Licensing & Defence fights a Landlord’s corner like no other. We cut to the chase and gets things sorted. We understand, because we are landlords ourselves.

Civil Penalties are severe and business-breaking for most. See https://www.landlordsdefence.co.uk/fines-penalties/ for proof.

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