The Residential Landlords’ Association has learnt that Ipswich Borough Council has begun the process of refunding landlord licensing fees, following the Westminster Court of Appeal sex shop case last year.
In an email to the RLA last week, the council confirmed that it is, “…currently going through their records to refund landlords of any [overpayment of] fees charged” on mandatory HMO licences. The council also confirmed that, “…Once the information is gathered, the Council will contact those landlords and arrange payment.”
The fees are being refunded following a Court of Appeal decision last year which found in favour of a European Services Directive (ESD), which operates to curtail the ways in which domestic UK legislation provides for fees to be charged by local authorities to landlords for such licences.
The decision of the Court of Appeal in the Westminster Sex Shop Fees case (Hemming (t/a Simply Pleasure) Limited v Westminster City Council) radically altered the landscape so far as fixing fees for regulatory authorisations such as for HMO and selective licensing is concerned, meaning local authorities must adhere to a set of principles when setting licensing fees.
These principles include:
- A local authority can only charge for HMO licensing or selective licensing for:
- The actual and direct administrative costs of investigating the background and suitability of the landlord applicant; and,
- The cost of monitoring the compliance by licensed landlords with the terms of their licences.
- Fees must be reasonable and proportionate.
- Fees can only cover the actual cost of the application process (plus monitoring); i.e. only the cost of processing the application and monitoring can be charged.
- Local authorities cannot include the costs of enforcing the licensing scheme against unlicensed landlords in the licence fee.
- Set up charges for the scheme cannot be recovered.
- Overheads and general administrative costs cannot be recovered. This means that the running and capital costs of the relevant council department cannot be charged as part of the fee.
- The Council is not allowed to make a profit.
Should a local authority chose to ignore the ESD and implement either a selective or an additional HMO licensing scheme based on a proposed budget that does not adhere to the ESD, then the local authority may become liable for overcharging landlords, and have to refund them in a cash payment with interest.
If landlords believe they have been overcharged they are allowed six years to submit a claim.
The RLA has been in touch with several local authorities to discuss this issue with them, and has been actively challenging other local authorities where licensing schemes are being proposed, such as licensing proposals by Northampton Borough Council.
The RLA Landlord News Hub will continue to provide you with the latest news on this subject.
- ‘Westminster Court of Appeal sex shop case: HMO and selective licensing fees briefing paper’ (5th September 2013)
- ‘Westminster Court of Appeal sex shop case raises questions about HMO and selective licensing fees’ (27th May 2013)
- ‘Westminster rejects landlord licensing’ (14th March 2013)