Civil penalty policy

Maximum Penalty: £30,000 Guidance Document:

This policy document setting out how Plymouth City Council will deliver section 249A of The Housing Act 2004 (as implemented by section 126 of the Housing and Planning Act 2016) in order to issue civil penalties as alternative to prosecution

Section 126 and schedule 9 of the Housing and Planning Act 2016 came into force on the 6th April 2017.

These provisions give the local housing authority the power to issue a financial penalty for certain Housing Act 2004 offences as an alternative to prosecution.

The civil penalties option can be used for the following Housing Act 2004 offences:

• S.30 Failure to comply with Improvement Notice
• S.72 Offences in relation to Licensing of HMOs
• S.95 Offences in relation to Licensing of houses under Part 3 HA2004
• S.139(7) Offences in contravention of an overcrowding notice
• S.234 Failure to comply with Management Regulations in respect of HMOs

The council is required to have a policy in place that details when to prosecute and when to consider a civil penalty.

The council must also provide guidance on how the fine levels will be set.

The guidance document issued by DCLG provides details on the considerations that must be taken into account as part of the fine setting process. It places particular emphasis upon the severity of the offence and the landlord’s previous record of offending. A scoring mechanism has been devised to reflect the considerations set out in the DCLG guidance. This scoring mechanism is set out below.

When to prosecute and when to consider a civil penalty

The same criminal standard of proof is required for a civil penalty as for prosecution.

Plymouth City Council will firstly satisfy itself that if the case were to be prosecuted in the magistrates’ court, there would be a realistic prospect of conviction.

In order to do so Plymouth City Council will consider its own enforcement policy, consult the Crown Prosecution Service Code for Crown Prosecutors’, and work closely with our legal department.

Once satisfied that there would be a realistic prospect of conviction a decision will be taken as to whether to prosecute or to issue a civil penalty. All decisions will be taken on a case-by-case basis.

The guidance document issued by DCLG suggests that prosecution may be the most appropriate option where an offence is particularly serious or where the offender has committed similar offences in the past.

It is likely that a civil penalty will be considered as the most appropriate course of action except in the aforementioned circumstances where further consideration will be taken.

A Civil Penalty notice, or notice of intent, will only be served once reviewed and authorised by a Technical Lead (Housing Improvement), Community Connections.

Income from civil penalties

The income received will be applied in accordance with any legislation or guidance published by the government. Currently this is in accordance with http://www.legislation.gov.uk/uksi/2017/367/regulation/2/made

Levels of fine to be set

4.—(1) A local housing authority may apply any financial penalty recovered under section 249A of the 2004 Act(1) to meet the costs and expenses (whether administrative or legal) incurred in, or associated with, carrying out any of its enforcement functions in relation to the private rented sector.

(2) Any amount recovered as a financial penalty which is not applied in accordance with paragraph (1) must be paid into the Consolidated Fund.

The Rent Repayment Orders and Financial Penalties (Amounts Recovered) (England) Regulations 2017

Enforcement

“enforcement function” means, in relation to a local housing authority(2)—

(a)

any of its functions—

(i) under Parts 1 to 4 of the 2004 Act; or

(i) under Part 2 of the 2016 Act; or

(b) where paragraph (a) does not apply, any of its functions, conferred on it as local housing authority—

(i) connected with an investigation of, or proceedings relating to, a contravention of the law relating to housing or landlord and tenant; or

(ii) connected with the promotion of compliance with the law relating to housing or landlord and tenant

The Rent Repayment Orders and Financial Penalties (Amounts Recovered) (England) Regulations 2017

The guidance document issued by DCLG provides the following considerations when determining the level of a civil penalty;

a) Severity of the offence - The more serious the offence, the higher the penalty should be. In order to measure the severity of the offence the following criteria will be used;

Improvement Notices only:

Category 1 Hazards – Serious - A serious and substantial risk to the health and safety of the occupiers, and/or community, with potentially life threatening results. Housing defects posing such a risk may be associated with hazards assessed under the Housing Health & Safety Rating System.

For each Category 1 Hazard a score of 5 will be added.

Category 2 Hazards – Less Serious – A risk of injury or disease to the occupiers potentially resulting in medical treatment. Housing defects posing such a risk may be associated with hazards assessed under the Housing Health & Safety Rating System.

For each Category 2 Hazard a score of 2 will be added.

Where offence is within a House of Multiple Occupancy (HMO) – A one-off premium of 10 points will be added where any hazard or issue would affect more than 1 household i.e. whole building issues or

common parts issues in HMO’s. This is to ensure that the scope of the hazard or issue is considered in addition to its ability to harm.

b) Culpability and track record of the offender - A higher penalty will be appropriate where the offender has a history of failing to comply with their obligations and/or their actions were deliberate and/or they knew, or ought to have known, that they were in breach of their legal responsibilities. Landlords are running a business and should be expected to be aware of their legal obligations.

In order to assess the culpability of the perpetrator the following factors will be considered;

In order to measure the culpability of the perpetrator the following criteria will be used;

Culpability

Deliberate - An intentional breach by a landlord or property agent or flagrant disregard for the law for example by failing to comply with a notice or regulations.

For Deliberate acts a score of 20 will be added

Reckless - An actual foresight of, or wilful blindness to the risk of offending but decides to take the risk nevertheless for example failing to comply with a strict liability in the HMO regulations.

For Reckless acts a score of 15 will be added

Negligent - The failure of the landlord or property agent to take reasonable care to put in place and enforce proper systems for avoiding the offence, for example partial compliance with a schedule of work to an enforcement notice but failure to fully comply with all schedule items.

For Negligent acts a score of 10 will be added

Low or no culpability - The offence committed has some fault on the part of the landlord or property agent but there are other circumstances for example obstruction by the tenant to allow a contractor access for repairs, or damage caused by tenant negligence.

For Low culpability acts a score of 5 will be added

A premium will be added where the requirement to licence a property under Parts 2 or 3 of the Housing Act 2004 has not been complied with.

Where a person in control, landlord or person managing fails to obtain a licence without direct contact by Plymouth City Council requiring them to do so, a score of 5 will be added.

Where a person in control, landlord or person managing fails to obtain a licence despite direct contact by Plymouth City Council requiring them to do so, a score of 15 will be added.

Track record

In order to assess the culpability of the perpetrator the following factors will be considered;

In order to measure the culpability of the perpetrator the following criteria will be used;

1st offence - no previous conviction or civil penalty imposition for offences in relation to this policy in the previous four years irrespective of the locality to which the offence relates.

For 1st offences a score of 5 will be added

2nd subsequent offence by same person/company - any conviction or civil penalty imposition for offences in relation to this policy, within four years of the 1st offence, irrespective of the locality to which the initial offence relates.

For 2nd offences a score of 15 will be added

Ongoing non-compliance - any conviction or civil penalty for offences in relation to this, within four years of the previous instance (at least 3rd occurrence), irrespective of the locality to which the initial offence relates.

For ongoing offences a score of 30 will be added

• The harm caused to the tenant – This is a very important factor when determining the level of penalty. The greater the harm or the potential for harm (this may be as perceived by the tenant), the higher the amount should be when imposing a civil penalty.

The Authority will consider the following factors in its decision-making process:

The severity of harm calculation needs to reflect the types of issues encountered, however a premium score will be added for actual harm having occurred and the vulnerability of the tenant as set out in the Housing Health and Safety Rating System and in the table below;

Harm Occurred: A score of 10 will be added where the occupier/s have suffered harm due to the defects/hazards noted.

Harm Vulnerability: A score of 5 will be added where the occupiers have not suffered harm but are in the vulnerable age group to the hazard noted.

Harm Potential: A score of 2 will be added where the vulnerable age group are not present.

• Stage 1 – Indicative Penalty Charge

Scoring Chart

The scoring chart below is a reference index for the policy, as set out in the text above. Each offence is attributed points scoring based on the factors of; ‘severity’, are hazards exposed to ‘multiple households’, what is the level of ‘culpability’ for the perpetrator, is the property a ‘licensable HMO’, what is the perpetrators ‘track record’, what level of ‘harm’ is present, and what level of ‘vulnerability’ is present. Once the overall score has been calculated, this table is referred to for an ‘Indicative

Penalty Charge’. The officer will then give further consideration to the factors of; ‘suitability of punishment’, is it a ‘deterrent to the offender’ (and/or others) and does it suitably ‘remove any financial benefit’ received from the offence.

• Remove any financial benefit the offender may have obtained as a result of committing the offence – The guiding principle here should be to ensure that the offender does not benefit as a result of committing an offence, i.e. it should not be cheaper to offend than to ensure a property is well maintained and properly managed.

Following the initial scoring calculation, an estimation of offender costs to resolve the hazard or issue identified will be produced.

In addition an estimation of any financial benefit, which may include rents received, arising from the offence(s) will be produced. Where rents received are considered, this will be over a maximum 12 month period.

Consideration will then be given to the initial scoring calculation as to whether or not this element has been suitably met. If there is a decision to increase the fine level the reasoning behind the decision will be clearly set out in the Notice of Intent and any Final Notice.

f)  Multiple offenders

Following Stage 1 considerations (a-e above) an indicative fine level will be calculated, by applying the points total to the scoring chart matrix. Where there are multiple offenders, in relation to the same offence, the most severe outcome will be calculated in the first instance. Then each offender’s culpability score will be divided by the accumulative total of culpability scores to work out a percentage of penalty charge (see example scenario 3), before Stage 2 considerations (g-j below) are made. Where there are multiple offenders, separate notices will be served.

• Punishment of the offender – A civil penalty should not be regarded as an easy or lesser option compared to prosecution. While the penalty should be proportionate and reflect both the severity of the offence and whether there is a pattern of previous offending, it is important that it is set at a high enough level to help ensure that it has a real economic impact on the offender and demonstrates the consequences of not complying with their responsibilities.

The Authority will consider the following factors in its decision-making process:

Following the stage 1 scoring calculation, consideration will be given as to whether or not this element has been suitably met. This will be considered separately for each offender. If there is a decision to increase the fine level the reasoning behind the decision will be clearly set out in the Notice of Intent and any Final Notice.

• Deter the offender from repeating the offence – The ultimate goal is to prevent any further offending and help ensure that the landlord fully complies with all of their legal responsibilities in future. The level of the penalty should therefore be set at a high enough level such that it is likely to deter the offender from repeating the offence.

The Authority will consider the following factors in its decision-making process:

Following the stage 1 scoring calculation, consideration will be given as to whether or not this element has been suitably met. This will be considered separately for each offender. If there is a decision to increase the fine level the reasoning behind the decision will be clearly set out in the Notice of Intent and any Final Notice.

1. Deter others from committing similar offences – While the fact that someone has received a civil penalty will not be in the public domain, it is possible that other landlords in the local area will become aware through informal channels when someone has received a civil penalty. An important part of deterrence is the realisation that (a) the local housing authority is proactive in levying civil penalties where the need to do so exists and (b) that the level of civil penalty will be set at a high enough level to both punish the offender and deter repeat offending.

The Authority will consider the following factors in its decision-making process:

Following the stage 1 scoring calculation, consideration will be given as to whether or not this element has been suitably met. This will be considered separately for each offender. If there is a decision to increase the fine level the reasoning behind the decision will be clearly set out in the Notice of Intent and any Final Notice.

j)  Reductions

Level of compliance by perpetrator, their attitude in doing so, and early payment - Where the decision has been taken that a prosecution is appropriate, or subsequently a civil penalty notice should be issued, it is unlikely that the perpetrator could be deemed as compliant. However if there is a clear behavioural change and a will to ensure future compliance, followed by a payment within the prescribed 28 days a reduction of 10% may be attributed to the total.

Financial hardship - Local housing authorities should make an assessment of a landlord’s assets and any income (not just rental income) they receive when determining an appropriate penalty. The perpetrator will have the opportunity to make representations following the service of the Notice of Intent and may decide to set out any financial hardship in those representations. It will be for the perpetrator to provide sufficient documented evidence of income when relying upon such representations. The Council reserves the right to request further information to support any financial claim, and where this is incomplete, appears to be inaccurate or is not sufficiently evidenced may determine that the representation should not be considered. It is possible that financial hardship could be a factor when a perpetrator makes representations, particularly for lesser portfolio landlords, but this is not an easily predictable measure and needs to be judged on a case by case basis.

Example Scenarios

Scenario 1 – Failure to comply with an Improvement Notice

This person has failed to comply with an improvement notice containing 4 hazards; Excess Cold, Damp and Mould, Falls on Stairs and Fire Safety (2 x Cat 1 hazards and 2 x Cat 2 hazards). They were also previously prosecuted for failing to comply with an improvement notice 3 years ago at a different address. The occupant is a 67 year old lady who has recently been in hospital with a broken hip suffered from a fall within the home.

Scoring – Scenario 1

Following stage 1 calculations, consideration would be given to the financial benefit the perpetrator had by undertaking the offence. This would include, but may not be limited to:

1. The costs of works required, £8,000 (GCH - £4000, Banisters/balustrades - £1500, Damp proofing & repair works - £2000, Servicing and repair of faults to Fire System - £500).

Therefore the financial benefit would then be assessed as £8,000.

In this instance, the officer would see that the indicative penalty charge of £10,000 is sufficient to remove the financial benefit of committing the offence and would therefore retain the penalty as £10,000. In this instance the officer will justify the charge by detailing reasons in an Enforcement Action Proposal for authorising.

In some instances the penalty may be varied further in accordance with this policy and can be issued for up to a maximum amount of £30,000.

A Civil Penalty notice, or notice of intent, will only be served once reviewed and authorised by a Technical Lead (Housing Improvement), Community Connections.

In addition to the above, Plymouth City Council could give consideration to further enforcement action available through the Housing and Planning Act 2016.

Scenario 2 – Failure to comply with an Improvement Notice in a HMO

This person has failed to comply with an improvement notice containing 4 hazards; Excess Cold, Damp and Mould, Falls on Stairs and Fire Safety (2 x Cat 1 hazards and 2 x Cat 2 hazards). It is a licensed HMO with 8 people. They were also previously prosecuted for failing to comply with an improvement notice 3 years ago at a different address. The occupants include a 67 year old lady who has recently been in hospital with a broken hip suffered from a fall within the home.

Scoring – Scenario 2

Following stage 1 calculations, consideration would be given to the financial benefit the perpetrator had by undertaking the offence. This would include, but may not be limited to:

1. The costs of works required, £8,000 (GCH - £4000, Banisters/balustrades - £1500, Damp proofing & repair works - £2000, Servicing and repair of faults to Fire System - £500).

Therefore the financial benefit would then be assessed as £8,000.

In this instance, the officer would see that the indicative penalty charge of £15,000 is sufficient to remove the financial benefit of committing the offence and would therefore retain the penalty as £15,000. In this instance the officer will justify the charge by detailing reasons in an Enforcement Action Proposal for authorising.

In some instances the penalty may be varied further in accordance with this policy and can be issued for up to a maximum amount of £30,000.

A Civil Penalty notice, or notice of intent, will only be served once reviewed and authorised by a Technical Lead (Housing Improvement), Community Connections.

In addition to the above, Plymouth City Council could give consideration to further enforcement action available through the Housing and Planning Act 2016.

Scenario 3 – Failure to licence a Licensable HMO – No other offences

This couple have failed to licence a licensable HMO, they are joint owners of the property and also joint directors of the company associated with letting the property. Direct communication was exchanged with the company and one of the couple (Mr X), following a visit, advising that a licence was necessary. The property needs some attention however, no notices have been served and it is not considered that the HMO management regulations have been breached. There is no history of non-compliance in the past.

Following stage 1 calculations, consideration would be given to the financial benefit the perpetrator had by undertaking the offence. This would include, but may not be limited to:

• The cost of the avoided HMO licence fee (if not subsequently applied)
  • The rents received for the 5^th or more person in residence (during the period of the offence being committed) over a maximum 12 month period.

Assuming that the current HMO licence fee was £900, and each of the tenants paid £92 per week for their accommodation, which was occupied for 44 weeks of the past year. The financial benefit would then be assessed as

£8,996.

In this instance, the officer would see that the indicative penalty charge of £7,500 is not sufficient to remove the financial benefit of committing the offence and would therefore look to increase the penalty to £8,996. In this instance the officer will justify the charge by detailing reasons in an Enforcement Action Proposal for authorising.

Direct contact had been made with landlord (Mr X) but not with (Mrs X) therefore, in terms of fairness and proportionality, the penalty charge should reflect this. The rents are received by the company and both parties are equal percentage directors. Therefore the financial benefit is considered to be equally received. Mr X is considered to be ‘Reckless’ because of the direct contact (carries a penalty of 15 points) but Mrs X is considered to be ‘Negligent’ (carries a penalty of 10 points). Where there are multiple offenders, each offender’s culpability score will be divided by the accumulative total of culpability scores to work out a percentage of penalty charge. In this instance Mr X is 15/25 (60%)

£5397.60 and Mrs X is 10/25 (40%) £3,598.40.

In some instances the penalty may be varied further in accordance with this policy and can be issued for up to a maximum amount of £30,000.

A Civil Penalty notice, or notice of intent, will only be served once reviewed and authorised by a Technical Lead (Housing Improvement), Community Connections

In addition to the above, Plymouth City Council could give consideration to further enforcement action available through the Housing and Planning Act 2016.

Scenario 4 – Offences in contravention to an Overcrowding Notice

This person lets out a flat that is suitable for a maximum occupation of 2 persons. He was written to following an initial visit where the occupancy level was identified as 4 persons in total. Tenancies were obtained for the property which evidenced that the landlord had intentionally let to 4 persons. The landlord was issued with an overcrowding notice and advised that he would need to take lawful steps to reduce the occupancy. The property needs some attention; however, there is no improvement notice served or management regulation breaches identified. There is a history of non- compliance in the past for overcrowding in connection with another property.

Following stage 1 calculations, consideration would be given to the financial benefit the perpetrator had by undertaking the offence. This would include, but may not be limited to:

1. The rents received for the 3^rd and 4^th resident (as this relates to the offence) over a maximum 12 month period

Assuming that each of the tenants paid £80 per week for their accommodation, which was occupied for 52 weeks of the past year. The financial benefit would then be assessed as £8,320.

In this instance, the officer would see that the indicative penalty charge of £7,500 is not sufficient to remove the financial benefit of committing the offence and would therefore look to increase the penalty to £8,320. In this instance the officer will justify the charge by detailing reasons in an Enforcement Action Proposal for authorising.

In some instances the penalty may be varied further in accordance with this policy and can be issued for up to a maximum amount of £30,000.

A Civil Penalty notice, or notice of intent, will only be served once reviewed and authorised by a Technical Lead (Housing Improvement), Community Connections

In addition to the above, Plymouth City Council could give consideration to further enforcement action available through the Housing and Planning Act 2016.

Scenario 5 – Failure to comply with Management Regulations in HMOs

This person has a non-licensable HMO. They were written to following an initial visit where a number of Management Regulation breaches were identified. The offender was given an informal period of time to resolve the breaches but only partial works have been undertaken. There is no history of non-compliance.

Following stage 1 calculations, consideration would be given to the financial benefit the perpetrator had by undertaking the offence. This would include, but may not be limited to:

1. The costs of works outstanding, £700 (Banisters/balustrades - £500, Stair repairs £200).

Therefore the financial benefit would then be assessed as £700.

In this instance, the officer would see that the indicative penalty charge of £3,000 is sufficient to remove the financial benefit of committing the offence and would therefore retain the penalty as £3,000. In this instance the officer will justify the charge by detailing reasons in an Enforcement Action Proposal for authorising.

In some instances the penalty may be varied further in accordance with this policy and can be issued for up to a maximum amount of £30,000.

A Civil Penalty notice, or notice of intent, will only be served once reviewed and authorised by a Technical Lead (Housing Improvement), Community Connections

In addition to the above, Plymouth City Council could give consideration to further enforcement action available through the Housing and Planning Act 2016.

Appendix 1A – Occupancy Severity Table

(Occupancy % & Points Scored)