A recent High Court ruling could enable landlords to apply for House in Multiple Occupation (HMO) licensing costs to be partially refunded in instances where councils have charged fees which exceed the authority’s costs of processing an application.
The news comes after London landlord Peter Gaskin challenged the cost of Richmond on Thames’ HMO licensing scheme in Court, believing that he had been overcharged.
Whilst renewing his licence, Mr Gaskin noted that Richmond on Thames council had asked him to pay a fee in order to cover its costs of running an HMO licensing scheme on top of the cost of processing his renewal application.
Mr Gaskin refused to pay this fee and instead offered the council a lower payment, noting that an EU Directive stated that fees should only ever cover the basic cost of processing an application and nothing more.
However, the amount offered was promptly rejected by the authority and the landlord found himself facing prosecution in Court on grounds of operating an HMO without a licence.
Appearing before the High Court, Mr Gaskin argued that the letting of private accommodation could be considered ‘provision of a service’ under EU Directive 2006/123/EC – which states that where an application fee is payable for a person to access a ‘service’ activity, the fee must never exceed the cost of authorisation procedures.
The Court upheld this view, finding that Mr Gaskin was indeed providing a service under the definition of EU law. As a result of this, it ruled that Richmond on Thames council was not entitled to request its additional fee.
Commenting on the case, Andrew Turner, Chief Executive of specialist buy-to-let mortgage broker Commercial Trust, said that the ruling could “set a precedent” for other landlords caught in this position – potentially “saving HMO landlords hundreds of pounds” in instances where councils have been charging more than they are legally allowed.
“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,” he said.
Whether an appeal will be launched to contest the ruling in coming weeks remains to be seen.