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The Court of Appeal has handed down judgment in Global 100 Ltd v Jimenez; Global Guardians Management Ltd v (1) Laleva (2) LB Hounslow [2023] EWCA Civ 1243.
In each case, a property guardian company had arranged for individuals to occupy rooms in vacant properties (in one case, an office building and in the other, former residential accommodation). There were sufficient occupiers that, in principle, the properties comprised licensable Houses in Multiple Occupation (s.72, Housing Act 2004). The companies did not obtain licences. In each case, the occupiers contended that the guardian companies were “in control” of an unlicensed HMO, contrary to s.72, and sought rent repayment orders (s.40 et seq, Housing and Planning Act 2016). In Laleva, the local authority additionally imposed a financial penalty (s.249A, Housing Act 2004).
The critical issue in the appeals was whether, in fact, the properties were licensable HMOs. That turned on s.254(2)(d), Housing Act 2004 and whether the occupation by property guardians was the “only use” of the property or whether there were, in fact, two uses. First, to provide the guardians with somewhere to live. Secondly, to provide security against trespassers and squatters.
The FTT and UT each held that the “only use” was as a residence; any security resulting from their occupation was simply a consequential benefit of that occupation, rather than a “use” of the land.
The Court of Appeal upheld those conclusions. The focus of s.254(2)(d) was on the use to which the occupiers put the land. The intention of the guardian companies (i.e. that the buildings be secured against trespassers) was irrelevant. The only use was as a residence and so s.254(2)(d) was satisfied.
The guardian companies also had an additional argument as to why, even if the property was an HMO, they were nonetheless not committing any offence under s.72 (and, if there was no offence, no rent repayment order could be made nor any s.249A penalty imposed). A person was only “in control” of an HMO (and hence capable of committing the s.72 offence) if they received the rack rent. The guardian companies argued that, as there had been no evidence as to the open market letting value, it could not be said that the license fees paid to them by the guardians were the “rack rent”.
The Court of Appeal also rejected that argument. The guardian companies were commercial enterprises, not charities, and there was nothing to suggest that the sums which they actually charged the occupiers were anything other than the highest amounts which the market would bear.
The judgment is available here.
Justin Bates appeared for the occupiers in the two appeals. He led George Penny (187 Chambers) and was instructed by Hammersmith & Fulham Law Centre.
