Landlord Defeats Enforcement Action and £22,500 Penalty Stating ‘Reasonable Excuse’

In a recent legal case a landlord managed to defeat enforcement action taken by the local authority – alongside a £22,500 penalty – for failing to comply with an improvement notice on the basis that they had a reasonable excuse.

In this post we will look more closely at this case and what it might mean for landlords and others. Might landlords be able to use the fact they have a reasonable excuse in order to derail action local authorities might take against them?

Background to the law

The Housing Act 2004 charges local authorities with enforcing housing standards in rented property. They do this by applying the Housing Health and Safety Rating System or HHSRS and then, if defects are found, making use of a range of enforcement actions.

Housing Enforcement Action Under Part 1 of the Housing Act 2004 – A Closer Look

One of the enforcement actions local authorities can take is to issue an improvement notice. This allows a local authority to state what improvement work must be carried out on a property and by when.

The Act also allows local authorities to apply a civil penalty where an improvement notice is not complied with as an alternative to prosecution.

Under the law a specific process must be followed before a penalty can be applied. Landlords are permitted to have what is described as a ‘reasonable excuse’ for not complying. They are also able to appeal to the First-tier Tribunal against a local authority’s actions.

How this case arose

Landlord Naila Tabassam owns a rental property in Ollier Avenue in Manchester M12.

In early 2019 the tenant of the property made a complaint about the property to the local authority, Manchester City Council. The council then commenced an enforcement process. A number of letters and notices, including an improvement notice requiring work to be carried out, were issued. As no response was received a civil penalty notice for £22,500 for non-compliance was eventually issued to Mrs Tabassam.

The council sent their correspondence to the rented property itself and also to an address for service relating to the rented property according to HM Land Registry records. This was an address in Barlow Road, Manchester, believed to be the landlord’s personal address.

This is where things got complicated, and what this case is really about.

Unfortunately Mrs Tabassam had not lived in Barlow Road since 2014. She had not, however, updated the address for service in relation to her rented property with her new personal address. As a result she did not receive any of the council correspondence personally. Nor did the tenant pass on the paperwork sent to the rented property address.

In early 2020 the tenant moved out of Ollier Avenue and Mrs Tabassam refurbished the property. (She later said that the tenant had damaged the property and would not previously allow access for repairs to be carried out. This was likely why the council had become involved in the first place.)

In summer 2020 Manchester City Council sent Mrs Tabassam a final reminder to pay the £22,500 penalty they had imposed. Mrs Tabassam DID receive this because the council also sent it to her new personal address which, apparently, they found by searching their Council Tax records to find out where she now lived.

What happened in the First-tier Tribunal?

Mrs Tabassam subsequently appealed the penalty, rather than the improvement notice itself, to the First-tier Tribunal (Property Chamber) or FTT.

The FTT decided that an offence had been committed as Mrs Tabassam had failed to comply with the improvement notice. It ruled that the fact she had not received the correspondence was not a reasonable excuse for not complying with it under the law because she had not updated her address for service.

The FTT reduced the penalty to £15,000 however.

The appeal to the Upper Tribunal (Lands Chamber)

Mrs Tabassam then appealed the decision of the FTT to the Upper Tribunal (Lands Chamber) via her legal advisers and was represented by barrister Mr Mikhail Charles. A hearing was held before Upper Tribunal Judge Elizabeth Cooke in early April 2024.

The hearing explored whether the improvement notice and other correspondence had been correctly served or not (although this was not the grounds for the appeal). It referred to the law and a previous legal case and found that it had, indeed, been sent to an address that complied with the legal requirements. On this basis the Tribunal agreed that the offence of non-compliance had been committed.

The Tribunal then looked at whether Mrs Tabassam had a reasonable excuse under the law for not complying with the improvement notice. It was decided that failing to update her personal address details at HM Land Registry in relation to the rented property could technically not be a reasonable excuse – else other landlords might do this deliberately to evade the law. However, although the law establishes that it is an owner’s responsibility to keep their address up to date, it was accepted that failing to do so was an oversight and not a deliberate attempt to evade enforcement action. They referred to a previous legal case which the FTT should have taken into account.

The Tribunal considered the old adage ‘ignorance of the law is no excuse’ but decided that this is not a clear cut matter and each case should be considered individually.

The Tribunal considered other relevant issues. Her barrister pointed out that Mrs Tabassam had been unaware of the problems at the property and that the tenant had refused her entry to it. He pointed out that she had subsequently quickly dealt with the problems and refurbished the property.

The Tribunal compared this case with cases where HMO landlords have failed to obtain an HMO licence – although Ollier Avenue was not an HMO. Essentially it found that there was little comparison between breaching HMO licensing laws and this particular infringement. It found this was a relatively moderate infringement and it suggested that non-HMO landlords could not be expected to be as knowledgeable about the law as HMO landlords.

The Tribunal looked at whether the council could have done more initially to establish Mrs Tabassam’s current personal address by checking its Council Tax records sooner, and considered that it could have. It recommended that local authorities should first do ‘a little further checking’ when a landlord fails to respond to enforcement action, to see if there might be a simple reason.

The Tribunal suggested that to find the landlord guilty of a serious criminal offence in this case was ‘exceptionally harsh’. It suggested that the FTT should look more closely at the gravity of the issue when deciding these cases.

A case was also made by Mrs Tabassam’s barrister that even the reduced penalty of £15,000 was too high (although the eventual outcome meant this was ultimately of no relevance).

In conclusion the Upper Tribunal (Lands Chamber) decided that that the appeal was successful and the FTT’s decision was overturned.

In her ruling dated 10 April 2024 Upper Tribunal Judge Elizabeth Cooke said: ‘In my judgment the FTT was wrong and irrational to find that Mrs Tabassam did not have the defence of reasonable excuse. I substitute the Tribunal's own finding that she did have that defence, with the result that no offence was committed and no financial penalty was payable.’

Summary – what we might learn from this case

The outcome was a good one for the particular landlord in this case.

However, it shows that housing law is very complex. Even after almost 20 years the operation of elements of the Housing Act 2004 have not been completely established.

The case provided some clarification on the law relating to the service and enforcement of notices under the Act. It found that local housing authorities can send notices to an address for service found via HM Land Registry.

The case also shed some light on what might be a reasonable excuse for not complying with an improvement notice (and maybe similar notices and orders too).

It also appears to suggest that local housing authorities should be able to differentiate between genuinely accidental and deliberate evasion of the law and should take this into account.

So does this case provide a loophole for landlords facing enforcement action?

No, not at all. The particulars of this case were very unique. Mrs Tabassam’s failure to update her address details was a minor omission and not done to evade enforcement. Landlords who do so deliberately may not benefit from the same outcome.

Also, while ‘reasonable excuse’ is a defence in law this case shows that it is a very unclear one, and one that cannot be easily relied upon.

The case, however, does serve to remind landlords that they should keep their contact details up to date with HM Land Registry (and elsewhere). As failing to do so can lead to some potentially serious problems.

Local housing authorities may wish to revisit and revise their procedures in light of this case. In particular they may wish to take greater effort to ensure correspondence sent to landlords is actually received.

Lastly this case may provide some confidence to good landlords who are faced with enforcement procedures. It is always worth considering how such action can be defended or appealed against. But, as the law is complex here, it is essential to take expert, professional advice.