WARNING: Judge tells landlord ignorance is no defence against licencing fine

A landlord has lost his appeal against a fine for renting out unlicensed properties after arguing that the seller’s solicitor had failed to tell him about a selective licensing scheme.

City Estate Holdings bought two houses in Westbourne Avenue, Gateshead, at auction in April 2020, and let them out in August. In November, the council told it both properties needed a licence, which owner Michael Kosmas applied for three days later. However, the company was fined more than £9,000 in July 2021.

A First Tier Property Tribunal found that Kosmas was unaware of licensing requirements and that it had been “entirely reasonable” for him to rely on his professional advisers, which gave him the defence of reasonable excuse. It said that even with this, “the imposition of a civil penalty would have been unnecessary to achieve the objects of the licensing regulations”.

Solicitors

Kosmas had described himself as a professional landlord but acknowledged that he was “unlikely to be able to keep up with the changing regulations applicable to rented property”. He said the seller’s solicitors, along with his firm’s own solicitors, failed to tell him about licensing requirements.

At appeal, Upper Tribunal Judge Elizabeth Cooke, who is also President of the Property Litigation Association, said City Estate Holdings could have instructed its solicitors or a letting agent to find out and advise it on the regulatory position about letting the property.

She said that being a good landlord might go towards mitigating the amount payable in a financial penalty, “but it does not amount to the sort of exceptional circumstance that might justify a decision not to impose a financial penalty where it is proved beyond reasonable doubt that the offence has been committed and the respondent has failed to establish the defence of reasonable excuse”.

Another First Tier Property Tribunal will now decide on the size of the fine.

Read more about landlord fines.