Landlords may be overpaying shared house licensing fees and could claim hundreds of pounds in refunds from local councils, according to a ruling from the High Court.
The shock decision came from a legal challenge by landlord Peter Gaskin, who refused to pay £1,799 house in multiple occupation licensing costs imposed by Richmond Council, London.
Gaskin rents out rooms in several properties, including a shared house in Richmond.
When he applied to renew his licence, the council demanded a fee that included a charge for running the council’s HMO licensing scheme and a payment for processing his application.
Gaskin agreed to pay the processing fee but refused to hand over the additional cost. The council prosecuted him for renting out rooms in an HMO without a licence.
Gaskin challenged the decision with a judicial review in the High Court.
There, three judges agreed the fee breached European Union rules as Gaskin provided a service under the EU Directive 2006/123/EC (the Services Directive).
The directive orders that the council could only charge an application fee for the licence and could not levy a payment towards the general management of the borough’s HMO licensing scheme.
“The court held that Gaskin, in purchasing, converting, extending the property, in managing it himself rather than using letting agents and in carrying out tasks such as arranging for insurance and maintenance work, was engaged in a self-employed economic activity provided for remuneration,” said lawyer Alexander Campbell, of Field Court Chambers, who was part of Gaskin’s legal team.
The decision means Richmond Council’s HMO licensing fee is unlawful because the charge was not limited to the cost of processing the licence application.
The High Court ruling could impact fees charged to HMO landlords across the country if they included any amount above the cost of processing the licence application. It’s likely (if not a certainty) that Richmond Council will appeal the decision.