Introduction and the Civil Penalty Notice Procedure
The Housing and Planning Act 2016 introduces a number of amendments to the Housing Act 2004. Section 249A of the Housing and Planning Act 2016 establishes the legal basis for imposing civil penalties as an alternative to prosecution for specific offences under the 2004 Act.
Civil penalties are an alternative when a landlord fails to comply with:
- Section 30: failure to comply with an improvement notice
- Section 72: mandatory licensing of HMO
- Section 95: licensing under Part 3 of the Housing Act 2004
- Section 139: failure to comply with an overcrowding notice
- Section 234: breach of management regulations in respect of HMO
The government has laid out statutory guidance as to the process and the criteria that needs to be considered when determining civil penalties. These are:
- the culpability and track record of the offender
- the level of harm caused to the tenant
- the severity of the offence
- aggravating factors
- mitigating factors
- penalty to be fair and reasonable but should remove any financial benefit the offender may have obtained as a result of committing the offence
- whether it will deter the offender from repeating the offence
The statutory guidance indicates that a council should ensure that the civil penalty acts as a punishment, takes into account any previous patterns of offending and no offender should benefit as a result of committing the offence.
The law allows a maximum financial penalty of £30,000 per offence. In determining the level of any penalty a council will have regard to local circumstances, the relevant local enforcement policy and the relevant government guidance detailing the factors to take into account, as shown above.
The overriding principle of when considering civil penalties is that the landlord (as defined by the Housing Act 2004 as the owner, person having control or the licence holder) should not make any financial gain as a result of their failure to comply with the relevant legislation.
The burden of proof for a civil penalty
The proof is the same as set out previously for the offences under the Housing Act 2004. For a criminal prosecution the council must satisfy itself that it can show beyond reasonable doubt that the landlord has committed the offence and that if heard in a magistrates’ court there would be realistic prospect of conviction.
The council will have consideration of the Code for Crown Prosecutors, published by the Director of Public Prosecutions when considering the evidence.
The council will consider:
- does it have sufficient evidence to prove beyond reasonable doubt that an offence has been committed by the landlord? - see Evidentiary Stage of the Full Code Test in the Crown Prosecution Service Code for Crown Prosecutors, published by the Director of Public Prosecutions
- is there a public interest in imposing a Civil Penalty on the landlord in respect of the offence? - Public Interest Stage of the Full Code Test in the Crown Prosecution Service Code for Crown Prosecutors, published by the Director of Public Prosecutions
- has the council taken into account its own Enforcement Policy when deciding to impose the civil penalty including the alternative option of prosecuting for the offence?
All decisions as to determining whether or not to pursue a civil penalty will be in accordance with the Enforcement Policy covering Private Sector Housing.
Process for Imposing a Civil Penalty
Where it has been determined by the council that a financial penalty is the most appropriate action as an alternative to prosecution, the council will follow the process set out below.
A “Notice of Intent” will be served on the person suspected of committing the offence. The Notice will specify:
- a. The amount of any proposed financial penalty
- b. The reasons for proposing the financial penalty
- c. Information about the right to make representation to the council
The person to whom the notice relates will be given 28 days to make written representation to the council about the proposal to impose a financial penalty. Representations can be made against an element of the proposed action. If the landlord challenges the level of the civil penalty it will be for them to provide appropriate and satisfactory documentary evidence to support their submission. Failure to provide such evidence will mean that the council will not be able to consider any representation against the level of penalty imposed.
Representations can only be made by the recipients served with a Notice of Intention. No other parties have an automatic right to make representations; the council will consider any such information on a case-by-case basis.
Following the 28-day period the council will decide whether it receives representation or not:
- a. Whether to impose a financial penalty on the person, and;
- b. The value of any such penalty imposed
If a council decides to impose a financial penalty, a final notice will be issued imposing that penalty. The final notice will specify:
- a. the amount of the financial penalty
- b. the reasons for imposing the penalty
- c. information about how to pay the penalty
- d. the period for payment of the penalty (28 days from the date of the final notice)
- e. information about rights of appeal to the First Tier Tribunal
- f. the consequences of failure to comply with the notice
The council can at any time withdraw either the Notice of Intent or Final Notice or reduce the level of penalty imposed. This will be in the form of a written notice to the person on whom the notice has been served.
If the council decides to withdraw a civil penalty, it has the right to pursue a prosecution against the landlord for the original offence for which it was imposed. Each case will be considered on its merits and be in the public interest.
The person who has been served a Final Notice has the right of appeal to a First Tier Tribunal. In the event of an appeal against the council decision the penalty would be suspended until the decision has been determined.
Payment of the civil penalty will be within 28 days of the date of the Final Notice, unless appealed. Where appealed and the decision to serve the Notice upheld it will be for the Tribunal to specify the period in which the landlord is to pay any fine imposed.
There is a reduction of a third of the penalty if at the first opportunity the landlord admits guilt for the offence and immediately remedies any outstanding issues. This is in line with the Sentencing Guidelines and will only be available for the first offence and will not be less than the minimum level of penalty. Any subsequent offence will not be subject to any reduction.
The discount will only be applied to the landlord when the council serves the Notice of Intent and the following criteria is met:
- the payment is made within the 28 days of the date of the Notice of Intent
- the payment is made in full
At any point after 28 days of service of the notice of the Notice of Intent there will be no further offer of any reduction in the level of penalty.
This reduction will only be implemented if the level of gain is below the civil penalty. If the level of gain is above the reduction but less than the calculated penalty the reduction will be the level of gain plus £2,000 or 10%, whichever is the greater.
If the financial penalty imposed is not paid within the appropriate time period, either 28 days from the date of the Final Notice or within such time as determined by the First Tier Tribunal the council will commence proceedings to recover the debt owed. This will include the recovery of any additional costs to the council from having to undertake such action. This process will be the council’s existing recovery policy and procedures for the collection of such debt including pursuance of the debt via the county courts if appropriate.
A certificate signed by the Chief Finance Officer for the Authority including the outstanding amount due will be accepted by the courts as conclusive proof of any outstanding payment due to the council.
In setting a financial penalty, the council may conclude that the offender is able to pay any financial penalty imposed unless the offender has supplied any financial information to the contrary.
It is for the offender to disclose to a council such data relevant to his financial position as this will enable it to assess and determine what they can reasonably afford to pay.
Where the council is not satisfied that it has been given sufficient reliable information, the council will be entitled to draw reasonable inferences as to the offender’s means from evidence it has heard and from all the circumstances of the case. This may include the inference that the offender can pay any financial penalty.
However, when considering the level of any financial penalty the final determining factor will always be the level of financial gain as a result of the landlord’s failure to comply with the relevant legislation.
Consequences of a Civil Penalty
Financial Penalties are an alternative to criminal proceedings and unless withdrawn and the council determines that in the public interest a prosecution for the ordinal offence is the preferred option, then a landlord cannot be prosecuted for the same offence once the penalty has been paid and the matter concluded.
Should a civil penalty be imposed on a landlord it will not automatically prevent the council from granting a licence under Part 2 or 3 of the Housing Act 2004. The council will consider each case on its merits including the reasons for the penalty and the extent of the person’s involvement in any property under consideration.
Where a person has received two financial penalties under this legislation in any 12-month period, irrespective of the locality to which the offences were committed, a council will consider making an entry on the national database of rogue landlords and property agents. When considering making an entry, a council will have regard to any guidance issued by the Secretary of State and best practice available.