Selective Licensing: No ‘one right answer’ to what is the ‘Part 3’ house to be licensed

In an important decision, decided today, the Upper Tribunal has confirmed that there is no ‘one right answer’ to what is the ‘Part 3 house’ that is required to be licensed where a selective licensing designation is in place under Part 3 Housing Act 2004 (“the Act”). The Upper Tribunal accepted the respondent local authority’s submission that the scheme of licensing under Part 3 is intended to be flexible.

In 2020 the appellant landlord purchased a building which had been converted into 22 flats. The area in question had been designated by Thanet as a selective licensing area. No application(s) for licence(s) were made. The majority, if not all, of the flats, were occupied, pursuant to tenancies granted by the appellant.

After making enquiries, Thanet imposed five separate financial penalties on the appellant, under section 249A(1) of the Act. These related to 5 specific flats which Thanet had been able to access. In each case it was satisfied, to the criminal standard, that the flat was occupied under a non-exempt tenancy, and that the appellant was the person managing it. It concluded that each flat was a Part 3 house that was required to be licenced, but was not, resulting in the commission of an offence under section 95(1).

The appellant appealed to the First-tier Tribunal, and then onwards to the Upper Tribunal. The essence of its argument was that each flat was not a Part 3 house and that the only offence it committed was in relation to the building itself (which it contended was the Part 3 house). Its thesis was that in any given case an individual can only commit one offence in relation to a building because there is only ever one Part 3 house so far as that person is concerned, whether it be the whole or part of the building.

The corollary of the appellant’s thesis was that – on any given facts – there was only ever one licence that could be granted to an applicant under Part 3. On the facts of this case, its submission was that the only licence that could have been granted by Thanet (had application been made) would have been one licence for the building itself, containing all 22 flats.

Accordingly, the appellant sought the setting-aside of these notices, arguing that Thanet had hit the wrong targets.

The Upper Tribunal rejected the appeal. It accepted Thanet’s submission that the scheme of selective licensing is intended to be flexible, and that a licence can be granted to the freeholder of a building in respect of the whole building or of part of it, or of a single flat within it. The scheme of the Act is not prescriptive; there is no ‘one right answer’.

The Tribunal accepted Thanet’s further submission that there was, accordingly, nothing wrong in how it had proceeded: each flat was, indeed, a Part 3 house that was required to be licenced, but had not been. The section 95(1) offence had been committed in respect of each flat.

Comment

In this Decision the Upper Tribunal has provided much-needed clarity on one of the major remaining uncertainties about the operation of selective licensing.

Some landlords have argued that where a building contains flats, all of which are occupied under non-exempt tenancies, and all of which are under their control, the licensing authority is legally bound to grant only one ‘block’ Part 3 licence for the entire building, and that the Act does not permit any other course.

Different authorities have taken different approaches in such cases: some have granted a ‘block’ licence whilst others have granted licences for individual flats or groups of flats, always depending on circumstance. As Northumberland Mews now confirms, each approach is permissible.

Ranjit Bhose QC represented Thanet DC, instructed by Jennifer Phillips.