After much toing and froing between the House of Lords and the House of Commons, the Housing and Planning Bill finally received royal assent on 12 May 2016, to become an Act of parliament. The Housing and Planning Act 2016 contains many interesting provisions by a government seemingly intent on tackling what they perceive as “Rogue Landlords”.
The new provisions introduce, among other things, Banning Orders which local authorities can seek to impose on the most unscrupulous landlords and an alternative to prosecution by allowing local authorities to elect to impose fixed penalties rather than pursue a criminal prosecution.
Part 2 of the Act deals with “Rogue Landlords and Property Agents in England”, it is important to at this point to note that these provisions only apply to England and not Wales, hence the title. Banning Orders are defined under Chapter 2, Part 2 of the Act.
Section 15(1) provides the power to “a local authority in England to apply for a banning order against a person who has been convicted of a banning order offence”. Unfortunately, it is not yet known what will constitute a banning order offence because, as with much of the actual detail of the Act, it will be left to the Secretary of State to specify by making regulations at a later date.
It is not compulsory for a local authority to apply for a banning order but it is only possible after the landlord or agent has been convicted of a banning order offence. Before making an application to the First Tier Tribunal the local authority is required to follow the procedure set out below:
- The local authority must give notice of their intention to apply for a banning order;
- The notice must state the length of the proposed ban;
- The landlord/agent will be invited to make representation within 28 days which must be considered during that period; and
- Finally, once considering the representation, the local authority can apply to the FTT to make the banning order.
The implications of a banning order are set out in s14(1) of the Act and prevent a person from:
- letting housing in England;
- engaging in English letting agency work;
- engaging in English property management work; or
- doing two or more of those things.
The banning order will specify the duration of each ban imposed and a ban must last at least 12 months. There will be some exceptions to the banning order such as, where the landlord does not have the power to immediately end a tenancy or where an agent is required to wind down its business. There will also be powers for local authorities to make management orders which will allow them to take control of the management of the property.
There is a procedure for a person subject to a banning order to make an application to revoke or vary the order. Applications must be made to the FTT and will be considered under certain circumstances including where a conviction has been overturned on appeal or if a conviction has become spent in accordance with the Rehabilitation of Offenders Act 1974. It is a criminal offence to breach a banning order which carries a punishment of imprisonment, a fine or both.
Fixed Penalty Regime
The Act has also introduced a new regime which will give local authorities an alternative to prosecution for offences committed under the Housing Act 2004, including all HMO offences. Effectively, local authorities will have a choice whether to prosecute or impose a penalty with a maximum fine of £30,000. These provisions are provided for by s126 of the Act and contained in Schedule 9 of the Act.
A local authority will be precluded from imposing a fine where a person has been convicted of an offence in respect of that conduct or where criminal proceedings for the offence have been instituted in respect of that offence.
There will be an incentive for local authorities to impose fines because they will retain the money recovered, which is not currently the case with fines imposed in the magistrates’ court. However, if local authority elects to impose a fine rather than prosecute then they will be prevented from making an application for a banning order.
Before imposing the fine a local authority must:
- give notice of their intention to impose a fine, which must be given within 6 months of the last day of the offence being committed, and must contain the level of proposed fine, the reasons why the fine is being imposed and information about the right to make representations;
- the landlord/agent will be invited to make representations within 28 days;
- at the end of the period for making representations, after considering whether a fine should be imposed, the local authority will give a final decision notice setting out the level of fine and reasons and requesting payment with 28 days.
It will be possible to appeal the local authority’s decision to impose the penalty or the level of the penalty to the FTT. On appeal, the FTT will either confirm, vary or revoke the final decision notice. The local authority will be able to enforce payment through the county courts.
In practice, local authorities are more likely to impose fines than opt to prosecute because it will be quicker, cheaper and carries a higher financial incentive. It is likely that local authorities will only prosecute the worst offenders in the magistrates’ court and then proceed with an application for a banning order. Landlords or agents who are prosecuted for the “lower level” technical offences are more likely to be hit with a financial penalty rather than a criminal prosecution.
Database of Rogue Landlords
The Act also introduces provisions for the Secretary of State to create a central database of rogue landlords and property agents for those fined or convicted of an offence. Local Authorities will be responsible for entering names into the database and also responsible for maintaining the contents. An entry must be made into the database if a banning order has been made and the details will remain in the database for the duration of the banning order. Once the banning order ceases the entry must be removed.
All local authorities will have access to the database. It will provide them with the power to seek information on other properties owned or managed by those entered onto the database, to assist with the detection of offending persons with multiple properties.
Rent Repayment Orders
Where a landlord commits a relevant offence, for example, failure to obtain an HMO licence contrary to s72(2) Housing Act 2004, then tenants or the local authority may apply to the FTT for the repayment of rent. Under the Act, tenants no longer need to rely on the local authority obtaining a conviction or an RRO for the return of housing benefit before they can make their own application for an RRO. The FTT, however, needs to be satisfied, beyond a reasonable doubt, that an offence has been committed. You can read more about the changes to Rent Repayment Orders here.
Much of the detail of the Act is yet to be seen and will be introduced by regulations over the coming months. The regulations are likely to involve much consultation so there is still some way to go yet. There is no official implementation date, prior to the referendum result it was thought that many of the provisions would not come into force until April 2017. Following Brexit, it is likely that these timelines will now slip, with the government dealing with much more pressing issues. You can read more about the impact of Brexit on the private rented sector here.