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A recent court case may have set a legal precedent enabling landlords to challenge the cost of HMO licences set by their local authorities.
The court case of Mr Peter Gaskin v LB Richmond Upon Thames  EWHC 1996 (Admin) has called into question the validity of certain licensing costs. Currently, by law local authorities are able to set the cost of HMO licences at their own discretion. The topic has gained traction recently as new rules for HMO licensing will come into effect from October 1st. It is estimated that a further 177,000 more landlords will need to obtain a licence.
However, in the recent court case it was ruled that licence fees can only cover the cost of the licensing scheme and not other costs such as enforcement. This was due to the fact that the Administrative Court decided that Mr Gaskin, a HMO landlord, was providing a service within the meaning of EU law, by the private letting of accommodation. As Mr Gaskin had met the requirements for providing a service, the court determined that the fee charged by the local authority had to be structured in such a way which complied with EU law.
The property in question is situated in Richmond Upon Thames in London. Under the Housing Act 2004 Mr Gaskin was required to obtain a HMO licence from the London Borough of Richmond before he was permitted to let out rooms in the property. HMO licences need to be renewed every five years and when the time came for Mr Gaskin to renew his he was told by the council that he would need to pay a fee which covered the costs of processing his application but also contributing towards the authority’s costs of running the HMO licensing scheme. Mr Gaskin refused to pay the amount requested, instead offering a lower sum.
The landlord was prosecuted in the Magistrates’ Court for operating an HMO without a licence. However, under EU Directive 2006/123/EC (“the Services Directive), there is a provision in its article 13(2), that where a charge is imposed for someone to apply to have access to a service activity, the charge is not permitted to exceed the cost of the authorisation procedures. The Administrative Court handed down judgment on July 31st, 2018, and stated that Mr Gaskin was providing a service within the meaning of EU law. Which therefore deemed that the London Borough of Richmond Upon Thames’s fee for an HMO licence was unlawful as the charge covered costs beyond the cost of processing the licence application. The council was therefore not entitled to demand the fee which it had demanded.
Chief executive at Commercial Trust Limited, Andrew Turner, said: ‘This is an interesting case which may set a precedent for some landlords and could have the potential to save HMO landlords hundreds of pounds, if some local authorities have been charging more than they were legally entitled to, for HMO licences. This is a matter of law and I would urge any HMO landlords that believe they may have been overcharged, to seek professional legal advice.’