PRS regulations: Certain conditions may be imposed

Major changes were made to the powers and duties of local housing authorities to deal with poor-quality housing accommodation in their area by the Housing Act 2004. New housing standards were introduced (Part 1 of the Act), while Part 2 introduced a new system for handling “houses in multiple occupation” (HMOs). Key points ■ Local housing authorities may have a licensing system for private landlords ■ Landlords must apply for a licence if they are to let their properties ■ Conditions may be imposed when a licence is granted ■  Conditions may be imposed to improve the management of dwellings ■ But these may not include a condition requiring a change to the premises or installation of new equipment Local housing authorities also have powers under the Act to designate areas where private rented housing can be let only if the landlord has been licensed by the authority. A common feature of Parts 2 and 3 of the Act is that where the authority grants a licence it must be given subject to conditions. Some such conditions are mandatory; others are at the discretion of the authority. An appeal against a licensing decision lies with the First-tier Tribunal (Property Chamber) (the tribunal) and from there goes to the Upper Tribunal (the UT).    Licensing conditions It is also possible to appeal from the UT to the Court of Appeal, which is what happened in Brown v Hyndburn Borough Council [2018] EWCA Civ 242; [2018] PLSCS 33 where a private landlord, acting with other such landlords, obtained permission to appeal a decision of the UT determining that certain conditions should have been included as part of the Part 3 licence. The local authority was the respondent to the appeal and the body that granted the licence with its conditions.  Paul Brown has adopted these licence conditions including the two that he was appealing. However, he contended that those two conditions are unreasonable and should not form part of the licence. The authority has adopted the practice of including these conditions in all Part 3 licences it grants. This case is, therefore, of wide significance to the private rented sector. What were the contested licence conditions? First, a condition requiring a suitable carbon monoxide detector to be installed in any premises where gas is supplied; and, second, throughout the period of the licence the premises must be covered by a valid electrical installation condition report. The appeal to the tribunal succeeded. The tribunal decided that authorities did not have the power under Part 3 to require landlords to upgrade their properties, or to introduce new equipment or facilities, such as licence conditions. These could not, concluded the tribunal, be justified under section 90 of the Act as conditions regulating the “management, use and occupation” of the dwelling. The first licence condition was modified and the second deleted by the tribunal.  The decisions of the tribunals The authority’s appeal to the UT succeeded as it interpreted the legislation differently: the two conditions could be justified as matters relating to the “management, use and occupation of the dwelling” under section 90 of the Act. On the landlord’s appeal to the Court of Appeal, the court approached the issue by examining the different objectives of Parts 1, 2 and 3 of the Act. The first Part requires authorities to carry out inspections of housing conditions in their area and to take action if certain types of housing hazards are found in a particular dwelling. Such hazards must be dealt with by powers under Part 1 and not by using the licensing powers. Under Part 2, HMOs meeting certain conditions must be licensed. This Part also allows authorities to require the treatment of other categories of poor standard housing to be treated as HMOs.  Authorities may, as they have done here, adopt in certain circumstances the selective licensing of dwellings other than HMOs (under Part 3 of the Act). Broadly speaking, this can be done if the authority is satisfied that there is low housing demand and anti-social behaviour that private landlords are failing to deal with. The Court of Appeal then stated that the two key issues to be decided were whether: (1) the powers in section 90 extend to works that improve the property or add new facilities or equipment; and (2) authorities can impose conditions in a licence to address hazards that could have been addressed under Part 1 of the Act (the UT concluded that these powers can be used only where a particular hazard has been discovered). The court decided that the powers to include conditions relating not only to the regulation of the dwelling, but also its conditions and contents that may apply to an HMO, do not apply to the general management purposes provided for in section 90 of the Act. As a result, the decision of the UT was incorrect, the appeal was allowed and the original decision of the tribunal was restored.  Comment Many landlords will welcome this decision, though others may see force in the following comment of Judge Gerald in the UT: “In my judgement, it cannot be said that the provision of a carbon monoxide detector and the regular (in fact, only five-yearly) inspection and testing of electrical installations is anything other than the perfectly normal, straightforward and sensible management of a house which is to be let out to third parties.” (cited at [39]). James Driscoll is a solicitor, writer and consulting editor to Halsbury’s Laws