Round #1111

A five-bedroom house in Nottingham has a mandatory HMO licence issued June 2023 for five occupiers. The licensee converted the dining room to a sixth bedroom in November 2024 and let it to a sixth sharer without notifying the council. The council inspected on 2 April 2025 and is now considering a financial penalty under section 249A HA 2004. Is the licensee's position that "the licence covers the house, not headcount" defensible?

# HMO Licensing: Section 249A HA 2004 Financial Penalty Analysis ## The Licensee's Core Argument and Why It Fails The position that "the licence covers the house, not headcount" is **not defensible**. It fundamentally misreads the statutory scheme. Here is a full analysis. --- ## 1. The Statutory Framework ### Section 249A Housing Act 2004 Inserted by the Housing and Planning Act 2016, s.249A empowers a local housing authority to impose a financial penalty (up to **£30,000**) as an alternative to prosecution where a person has committed an offence under the HA 2004. The relevant offence here is under **section 72**. ### Section 72 HA 2004 — The Operative Offence > **Section 72(1):** A person commits an offence if he is a person having control of or managing an HMO which is required to be licensed under Part 2 but is not so licensed. > **Section 72(2):** A person commits an offence if, being a licensee of an HMO, he permits the house to be occupied by more households or persons than the maximum number specified in the licence. **Section 72(2) is the direct and dispositive provision.** The licence is not a binary document covering the building as a whole; it contains specific **conditions and authorised maxima**. --- ## 2. What an HMO Licence Actually Authorises ### Schedule 4, HA 2004 — Mandatory Licence Conditions Every HMO licence must contain conditions specifying: - **The maximum number of households or persons** permitted to occupy the HMO (Schedule 4, para 1 and s.67(1)(b)) - Requirements relating to gas safety, electrical safety, smoke alarms, and furniture — but critically, **the occupier number is a mandatory licence term, not a discretionary one** The Nottingham licence issued June 2023 would on its face have specified: | Licence Term | Specified Figure | |---|---| | Maximum occupiers | **5** | | Maximum households | As specified | | Approved rooms | As listed in schedule | Permitting a sixth occupier **directly breaches the licence on its own terms** regardless of any physical works. The argument that the licence covers "the house" ignores that the licence conditions are embedded legal obligations, not mere administrative notes. --- ## 3. Additional Statutory Breaches Compounding the Position ### 3.1 Unlicensed HMO — Section 72(1) The conversion of the dining room into a sixth bedroom and its occupation as such **may also constitute an unlicensed HMO** on the alternative analysis that the nature of the HMO has changed beyond the scope of the licence, effectively creating a six-person HMO for which no licence exists. Nottingham City Council's HMO licensing scheme covers HMOs occupied by five or more persons under the mandatory scheme (s.55(2)(a) and the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018, SI 2018/221). A six-person HMO is still within mandatory licensing, but **the existing licence does not authorise six persons**, so the operative breach is s.72(2) rather than s.72(1) — though both may be argued. ### 3.2 Licence Condition Breach — Section 67(1) and Schedule 4 The physical conversion itself — adding a room as a bedroom — may breach: - **Conditions on room standards** under s.67 and Schedule 4 (minimum room sizes: Housing Act 2004 as amended; the Licensing of HMOs (Mandatory Conditions of Licences) (England) Regulations 2018, SI 2018/616) - Conditions relating to **means of escape from fire**, fire doors, and fire detection if the new bedroom was not assessed in the original licence application - Conditions on **electrical installation** if works were carried out ### 3.3 Failure to Notify — Section 68(4) A licensee is under a duty to notify the authority of **changes in circumstances** that affect the licence. Converting a room and adding an occupier are plainly material changes. Failure to notify is itself a breach of the licence conditions and relevant to the authority's civil penalty decision. ### 3.4 Selective/Additional Licensing — Nottingham Specific Nottingham City Council operates **additional HMO licensing schemes** across significant parts of the city. If the property falls within an additional licensing area, the analysis under s.72 applies equally to that scheme, and there may be parallel breaches. --- ## 4. Why "Licence Covers the House" Is Legally Misconceived | Licensee's Contention | Legal Reality | |---|---| | "The licence permits occupation of the building" | The licence permits occupation **up to the specified maximum** — s.72(2) makes excess occupation a criminal offence | | "No new licence is needed for one more person" | The existing licence does not authorise the sixth occupier; it expressly precludes it | | "Headcount is administrative, not substantive" | The maximum number of occupiers is a **mandatory licence condition** under Schedule 4 HA 2004, not an administrative note | | "The council can vary the licence if it wishes" | Variation is the council's option under s.69; the licensee has no right to self-authorise a variation by conduct | | "I've improved the housing stock by adding a room" | Irrelevant to the offence; compliance with standards is a precondition, not a post-hoc defence | --- ## 5. The Section 249A Civil Penalty Process ### Procedural Requirements Before imposing a penalty, Nottingham City Council must: 1. **Notice of intent** — served on the licensee specifying the proposed penalty amount and the reasons (s.249A(4) and Schedule 13A, para 1) 2. **28-day representations period** — the licensee may make written representations (Schedule 13A, para 2) 3. **Final notice** — after considering representations, the authority issues (or withdraws) the final penalty notice (Schedule 13A, para 3) 4. **Right of appeal** — to the First-tier Tribunal (Property Chamber) within 28 days of the final notice (Schedule 13A, para 5); the Tribunal may confirm, vary or cancel the penalty ### Penalty Quantum — Relevant Considerations The MHCLG guidance (*Civil Penalties under the Housing and Planning Act 2016*, April 2017, updated) directs authorities to consider: - **Severity of the offence** — deliberate conversion and letting without notification is at the serious end - **Culpability** — the licensee is not a naive amateur; a deliberate structural conversion followed by letting indicates high culpability - **Financial gain** — rental income from the sixth sharer is relevant; authorities should seek to remove profit from the breach - **Prior conduct** — any previous notices, penalties or prosecution - **Cooperation** — failure to notify the council proactively is an aggravating factor A penalty toward the **upper end of the £30,000 ceiling** is readily justifiable on these facts, particularly given: (a) the deliberate physical conversion; (b) the deliberate letting; (c) active concealment by non-notification; and (d) the duration of the breach (November 2024 to April 2025 — approximately five months). --- ## 6. Potential Criminal Liability Running in Parallel Section 249A penalties are imposed **as an alternative to prosecution**, not in addition. However, the Council retains discretion to prosecute under s.72(2) instead. On conviction in the magistrates' court, s.72 carries an **unlimited fine** (following the Legal Aid, Sentencing and Punishment of Offenders Act 2012 changes). The council cannot impose both a civil penalty and prosecute for the **same offence** (s.249A(7)), but it can choose the more appropriate route. --- ## 7. Practical Advice to the Licensee If advising the licensee, the following steps are urgent: 1. **Do not repeat the "headcount" argument formally** — it has no legal foundation and will undermine credibility in representations and any Tribunal appeal 2. **Serve notification on the Council immediately** under s.68(4) and apply for licence variation under s.69 — this does not cure the past breach but demonstrates current cooperation 3. **Remove the sixth occupier or regularise** — continued breach after council inspection is a serious aggravating factor 4. **Obtain full licence compliance assessment** — fire safety, room sizes (minimum 6.51m² for one person under the 2018

## Is "the licence covers the house, not headcount" defensible? **No. The argument is not defensible.** It misunderstands the legal structure of mandatory HMO licensing under the Housing Act 2004 and is contradicted by the licence terms, the notification duty, and the enforcement framework. --- ### 1. What the mandatory HMO licence actually authorises Under **s.64(3) HA 2004**, a licence must specify, among other things: - the **maximum number of households or persons** permitted to occupy the HMO; and - any **conditions** imposed by the authority. The Nottingham licence issued June 2023 was granted for **five occupiers in five bedrooms**. That is not boilerplate — it is a **material term of the licence** with legal force under s.67. The licence does not authorise occupation by a sixth person. The licensee's framing — "the licence covers the house" — conflates the licensed *premises* with the licensed *use*. The licence authorises a specific use of those premises, defined in part by occupancy. --- ### 2. The duty to notify and apply for variation **Section 68 HA 2004** imposes a duty on the licence holder to notify the authority of any *change of circumstances* that is material to the licence. Converting a dining room into a bedroom and letting it to an additional occupant is plainly material — it changes the nature of the HMO, its occupancy level, and potentially its amenity adequacy under the Management of Houses in Multiple Occupation (England) Regulations 2006 (SI 2006/372). Where circumstances change, the correct course was: 1. **Notify the council** under s.68; and 2. **Apply to vary the licence** under **s.69 HA 2004**, which requires the authority to consider whether the house remains suitable for the increased occupancy (room sizes, kitchen, bathrooms, fire safety) before granting any variation. Failing to do either of these things is a breach of the licence conditions as a matter of substance, regardless of whether a specific condition expressly repeated the s.68 duty. --- ### 3. The s.249A financial penalty exposure **Section 249A HA 2004** (inserted by the Housing and Planning Act 2016, s.126) allows a local housing authority to impose a financial penalty as an alternative to prosecution where a person has committed a **housing offence**. The relevant offences here are: | Offence | Provision | Nature | |---|---|---| | Operating an HMO in excess of licence terms (more than five occupiers) | s.72(2) HA 2004 | Strict liability | | Breach of licence conditions | s.72(3) HA 2004 | Strict liability | | Failure to comply with s.68 notification duty | s.68(7) HA 2004 | Separate offence | **Section 72(2)** is particularly damaging to the licensee's argument: it makes it an offence to permit the HMO to be occupied **by more persons than the licence authorises**. The statute is explicit that the number authorised is a substantive limit, not a mere administrative note. The defence that "the licence covers the house" does not answer an offence framed around headcount. The maximum civil penalty under s.249A is **£30,000** per offence. --- ### 4. Compounding factors Nottingham will consider - **Duration**: The sixth person has been in occupation since November 2024 — approximately five months by the inspection date. This is sustained, not momentary, non-compliance. - **Works**: Converting a dining room to a bedroom involved deliberate structural or layout change. This is not an inadvertent administrative failure; it evidences a positive decision to increase capacity without authorisation. - **Fit and proper person test**: Under **s.66 HA 2004**, the authority must be satisfied the licensee is a fit and proper person. Deliberate non-notification and breach of licence terms is directly relevant to that assessment. The council may review whether the licensee remains fit and proper, with revocation under **s.70** a potential consequence beyond the financial penalty. - **MHCLG / DLUHC penalty guidance**: Guidance on s.249A penalties directs authorities to apply higher penalties where the breach was deliberate, sustained, and involved financial gain — all three factors are present here. --- ### 5. Conclusion The argument is legally incoherent. The licence is not a blank authorisation to use the building as an HMO of any size; it is an authorisation to use it as an HMO for **five persons**. Exceeding that is a strict liability offence under s.72(2). The failure to notify under s.68 is a further independent offence. The licensee has no viable defence on either point, and the deliberate nature of the conversion will aggravate the penalty rather than excuse it. Legal advice should focus on mitigation — immediate notification, a variation application, and remedying any amenity deficiencies — rather than contesting liability.