Housing: Letting company hit with £12,000 bill for unlicensed property (Updated 19-11-11)

A letting company has been fined £2000, ordered to repay about £6500 in rent – which they illegally collected – and charged with £4000 in costs. (Photo Gallery Below)

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Sumal and Sons Properties Ltd, of Stamford Hill, North London, were hit with the huge bill at Inner London Crown Court (ILCC) in October 2011.

The defendants had been found guilty in their absence at Stratford Magistrates’ Court of failing to license a Victorian two-bedroom privately rented house. It was located on Worcester Road, Manor Park, in the Little Ilford ward Neighbourhood Improvement Zone.

Under the Proceeds of Crime Act, sentencing was committed to the ILCC to consider a compensation order. The rent paid to them while the property was not licensed was deemed to be a criminal benefit.

Council enforcement officers said the house was severely overcrowded with families sharing single rooms. There was extreme condensation and damp and poor insulation, leading to freezing conditions.

The prosecution comes as Newham Council is undertaking a consultation exercise, examining the possibility of licensing all private landlords. If given the go-ahead, Newham would be the first borough in the country to do this. The proposals are backed by national housing charity Shelter which has urged other councils to follow the council’s lead.

Newham Mayor Sir Robin Wales said: “We will never accept private sector tenants being directly exploited by landlords who force them to live in dangerous and unacceptable conditions.

“Good landlords have nothing to fear from this scheme. For the bad ones, this a clear message they must clean up their act. ”

Kay Boycott, director of communications, policy and campaigns at Shelter, said: “We are delighted to hear that Newham Council could be introducing this scheme, which would help protect vulnerable tenants from rogue landlords who are making their tenants’ lives hell.

“We urge other local councils to follow Newham’s lead in sending a clear signal that enforcing the law against rogue landlords is a priority.”

Photo Gallery

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Further Information

Sumal and Sons are a landlord and letting agent who let a property in a selective licensing designation in the Little Ilford Ward of Newham London. The London Borough of Newham is still the first London borough to introduce a 100% licensing desgnation under the selective licensing provisions of the Housing Act 2004.

Sumal and Sons owned and managed 48 Worcester Road, London, E12 who after several attempts and written requests failed to licence the property which was required to have a licence in the selective licence designation.

The hearing for offence under s95 of the Housing Act 2004 was heard at Stratford Magistrates Court and the defendants were found guilty in absence of failing to licence the property. At the time of sentencing the prosecution made an application for a committal to the crown court for sentencing and consideration for a confiscation order pusuant of section 70 of the Proceeds of crime Act 2002.

The details of which follow;

Introduction:

1. The defendant Company had been convicted of this offence in its absence, and committed to the Crown Court at the request of the prosecution pursuant to Section 70 POCA 2002. At a hearing of 28^th July 2011 the defence endeavoured to strike out the confiscation proceedings as being in excess of the Court’s jurisdiction. This application was unsuccessful, and the case was adjourned for sentencing, and resolution of an abuse of process argument and confiscation proceedings.

Court Proceedings:

1. All parties were introduced, and it was decided that the Court would deal first with an argument that the proceedings represented an unwarranted infringement of the defendant’s Art. 6 and Art. 8 Human Rights; then with sentence being conditional discharge; then with abuse of process (re confiscation) and finally with confiscation.
2. Full argument on all these subjects was heard. The Judge ruled that there was no infringement of Sumal & Sons’ convention rights (Article 6 and 8), and decided that the matter was too serious to impose a conditional discharge (which would have removed the option of confiscation proceedings).
3. The abuse of process argument was then advanced, as was a more interesting argument made by the defence that there was in fact no ‘benefit’ to Sumal & Sons, as the rental income obtained was insufficiently connected to the offence of failing to obtain a licence.
4. The court found no reason to stay proceedings as an abuse of process. In ruling on confiscation, the judge accepted the prosecution argument that the property (rent) was obtained ‘in connection with’ the failure to obtain a licence, and therefore fell within the statutory definition of a person’s benefit from criminal conduct.
5. As agreed between the parties, the relevant benefit (rental income over the period the property was unlicensed) was £6450.83 (all rental income obtained after the date of the charge for the offence was subtracted, as was putative income from a three week period when it appears that the property was untenanted). The available amount was in the same sum.
6. In passing sentence for failing to licence the property under s95 of the Housing Act 2004, the courts fined Sumal & Sons £2000. A ‘victim surcharge’ of £15 was added.
7. Costs were awarded to LBN in the sum of £3821.96.
8. The Judge allowed Sumal & Sons until 2^nd April to pay the fine, costs and confiscation order in their entirety. There was some discussion about setting a period of imprisonment in default of payment. This would normally be 6 months for a confiscation order between £5000 and £10000. There is, however, no power to imprison a director for the default of a company, and so no period in default was set.

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