Councils and the courts are getting tough on landlords who fail to comply with the law, and are starting to use the Proceeds of Crime Act 2002 to make breaking the law an expensive pastime.
Here are two cases.
Norwich City Council – Mr Jospeh Howman – Norwich Magistrates Court – 12/10/2012
Howman pleased guilty to nine offences under the Multiple Occupation regs and failing to meet standards. His property in Norwich was let as 10 bedsits with shared bathrooms. Problems included
- no heating in the rooms
- no hot water in the main bathroom,
- dirty communal bathrooms
- fire doors in poor condition with many not working, and
- electrical hazards, including hanging wires and defective lighting.
Howman was fined £5,000 plus a £135 victim surcharge and £8,500 costs AND was ordered to pay £40,000 under the Proceeds of Crime Act (POCA) 2002. Total award £53,500.
Norwich City Council is the first local authority in the country to use POCA against a landlord who failed to comply with license conditions. (see the report here)
However this fine pales into insignificance beside the order in my next case
Brent Council – Mr Ali – Norwich Crown Court – 25/09/2012
This was a prosecution under the planning regulations which followed a two year investigation by officers from Brent into Mr Ali. The prosecution involved a property which had been turned into 12 flats without planning permission.
Ali was ordered to pay a fine of £4000 for the breach of the planning regulations and legal costs of almost £35,000.
However the significant part of the order was an eye popping £1.438 million under the Proceeds of Crime Act (the highest every award under this act for a planning offence) and is based on the benefit he is believed to have got from the illegal conversion.
The press release here tells us that
Brent Council will receive 37.5 per cent of the money and the rest will go to the treasury and the court collection agency.
A restraint order has been placed on Mr Ali to prevent him from disposing of his assets before he fulfils his obligations and pays the £1.438 million.
The Judge ordered that must pay the sum within six months or face a ten year prison sentence. It rather looks therefore as if they will get the money.
Two cases where crime did not pay. Maybe now Councils will be encouraged to do a few more.
It’s always good to see Local Authorites using their powers under existing legistaion to fight rogue landlords.
Running POCA claims alongside failing to licence HMOs was becoming flavour of the month last year. I attended a meeting at the Chartered Institute of Environmental Health Officers where the speakers were urging this line for future cases instead of the procedurally complex and unwieldy claims for claiming back housing benefit through the Rent Repayment Order.
Then a couple of cases went through earlier this year where judges effectively closed down the POCA addition to prosecuting unlicensed HMOs. we were advised that POCA claims werent runners anymore so I’m very surprised by these 2 cases and wonder what the difference was between then and now
Hi Ben
I believe the difference between the Sumal (Court of Appeal) decision and these cases is that in the Sumal case it was concluded that the ‘proceeds’ of letting an unlicensed HMO was not applicable to PoCA as there was no difference in income between letting a property with or without a licence. In the case of Howman it was concluded that his ‘proceeds’ were the rent he collected for bedsits which did not meet license conditions (and the condition of the property was a potential threat to the health and safety of the occupants). I think in the Ali case he was seen to have gained ‘proceeds’ from the illegal conversion.
Good news.
But what I fail to understand with these amounts is why clamping down on crime doesn’t pay.
Looking at it simplistically, Brent council will get about £500000 of that, enough to pay someones wages for 10 years to enforce these cases. It could be self funding, after all, it’s a growth industry!
No win No fee TRO’s, now there’s an idea. Ben could make millions and take early retirement.
It’s great news. Councils and courts are now getting too strict about law, rules and regulations. As in this news councils sue the landlords under the proceed of crime art. Thanks Tessa for another great post. I always found valuable information on your blog.
Thanks for jogging my memory Ellen, I was able to go back and look at Sumal and also found the space to re-read Tessa’s article in more detail
The POCA element in these 2 cases seem to result from more than just breaching HMO licensing. Planning regs and statutory dangers appear to have paved the way and make them different from Sumal.
My excuse? I’m tired and I spent a happy hour in my local county court being shouted at by a DJ reluctantly forced out of retirement to meet the shortage and taking it out on me.