A matter of respect: Upper Tribunal reinstates ‘generous’ penalties for Housing Act 2004 licensing offences

06 Feb 2020

Housing, Licensing, Property

In Waltham Forest LBC v (1) Marshall (2) Ustek [2020] UKUT 0035 (LC), the Upper Tribunal has affirmed that, when considering an appeal against the amount of a financial penalty imposed under section 249A, Housing Act 2004, the First-tier Tribunal must give “special” and “considerable” weight to the local authority’s decision.

Further, the Tribunal may not entertain a challenge to the authority’s enforcement policy. It may depart from it, when making its decision, but only in certain circumstances, and only if the appellant discharges the burden of persuading it to do so.


In 2015, Waltham Forest London Borough Council designated the area of its borough as subject to selective licensing, under Part 3 of the 2004 Act. In 2017, it resolved to use financial penalties under section 249A of the 2004 Act, as a possible alternative to prosecution, to enforce various licensing obligations, including the requirement to license a Part 3 house under section 85.

To that end it adopted a policy, explaining that it would calculate penalties by reference to a “Civil Penalties Matrix”, comprised of six bands, each providing a minimum “tariff” for different offences, “with the final level […] adjusted […] to take into account other relevant or aggravating factors”. It provided guidance about the offences to which, and circumstances in which, each band would apply:

  • A failure to apply for a licence by a person controlling five or fewer dwellings, with no other relevant features, would be a Band 2 offence of moderate severity, attracting a penalty of between £5,000 and £9,999.
  • A corresponding failure by a person with experience in letting and management would be a Band 4, severe offence, attracting a penalty of between £15,000 and £19,999.

The policy identified further factors, which would aggravate such an offence, including familiarity with the need to obtain a licence and any previous history of non-compliance.

Applying that policy, the authority had imposed penalties of £5,000 and £12,000 on Mr Marshall and Mr Ustek respectively, each for failing to license a flat in accordance with its selective licensing designation, contrary to section 95(1) of the 2004 Act. Both respondents had appealed to the First-tier Tribunal (“FTT”) against the amount of the penalties, under Schedule 13A to the 2004 Act.

Mr Marshall was the owner of a flat, which he had let out for rent since 2007. It had been unlicensed for more than 3½ years by the time the authority penalised him. He had registered to apply for a licence online shortly after the authority’s licensing designation came into force, in April 2015, but had become frustrated with the process and had not applied. He later failed to do so for more than a year after being informed of the need to license the flat and the consequences of failing to do so.

Mr Ustek was the owner of a small property portfolio, including three flats that he let out for rent. He had knowledge of mandatory and selective licensing under the 2004 Act and had previously applied for licences for two of the flats. He had let out one of them unlicensed for about 3½ years by the time the local authority penalised him, and had also been penalised for failing to comply with improvement notices served under Part 1 of the 2004 Act in respect of the other two.

The FTT’s decisions

While recognising that the policy provided “a logical method of applying the [statutory] guidance to arrive at […] the seriousness of an offence and the appropriate financial penalty“, and that it “worked effectively to distribute the weight of the allocated criteria across the range of possible fines“, the FTT reduced the penalties imposed on Mr Marshall and Mr Ustek to £1,500 and £4,000 respectively – the equivalent of a Band 1 penalty in each case.

The authority appealed to the Upper Tribunal, arguing that the FTT had failed to afford its policy or its decisions any, or adequate, respect.

The Upper Tribunal’s decision

The Upper Tribunal agreed.

In Marshall, it held, the FTT had “paid lip-service to the policy […], but then paid it no further attention.” [85] Indeed, “it did not even acknowledge that it was departing from the policy” [85] and “paid little or no regard to the decision taken by the local authority” [89]. Finding that Mr Marshall had provided no good reason to depart from it, Upper Tribunal Judge Cooke substituted her own decision for that of the FTT and reinstated the authority’s “generous” penalty of £5,000 [92].

In Ustek, similarly, it held that the FTT had “paid lip-service to the policy“, had “not acknowledged that it [was] going outside the policy by placing the offence in Band 1” and had “not considered the objectives of the policy before departing from it” [97]. Indeed, it had “not even understood the policy, or the decision taken by the appellant” [97]. Finding that Mr Ustek had given no reason to justify a departure from the policy, Judge Cooke substituted her own decision for that of the FTT and reinstated the authority’s “generous” penalty of £12,000 [101].

The wider implications of Marshall and Ustek

In doing so, the Upper Tribunal has provided local housing authorities, appellants and the FTT alike with a helpful yardstick – the first in fact – by which to measure the reasonableness of future penalties. In that regard it is not insignificant, local authorities will surely point out, that the Upper Tribunal considered penalties imposed in these cases to be “generous“.

Of far greater significance, however, are the Tribunal’s findings about the respect due to the policy applied and decisions made in such cases. Having undertaken a detailed review of licensing authorities, both in a housing and a wider licensing context, Judge Cooke held that the FTT must accept the local authority’s policy: “the FTT is not the place to challenge the policy about financial penalties” [53]. Indeed, when determining an appeal, it must “start from the policy” and, though it may depart from it, may only do so in certain circumstances [54]. Further, the appellant bears the burden of persuading it to do so [54], and in considering whether it should do so, the FTT must:

  • Look at the objectives of the policy and ask itself whether those objectives will be met if the policy is not followed” [54], and
  • Consider the need for consistency between offenders, which is one of the most basic reasons for having a policy and an essential component of fairness in the financial penalty system” [85].

Ultimately, as an appeal under Schedule 13A to the 2004 Act is by way of re-hearing, the FTT must of course make its own decision. In doing so, however, it must afford the local authority’s decision particular weight, described variously by the Tribunal as “special weight” [61], “considerable weight” [62] and “great respect” [62]. Parliament has, after all, conferred the primary decision-making function on democratically elected and accountable local authorities.

If, having heard evidence, it disagrees with the decision however, it may vary it, having given it the “special weight” it is due [62].

Given the Tribunal’s review and endorsement of licensing authorities, however, and explicit acknowledgment of the need to uphold the authority’s policy objectives, and ensure consistency in the policy’s application, it is suggested that the FTT should still be slow to do so.

Dean Underwood represented the successful local authority, leading Riccardo Calzavara in Marshall and Tara O’Leary in Ustek.