Landlords who let properties that qualify as a House of Multiple Occupancy (HMO) may require a licence to do so lawfully – subject to the requirements of the Local Authority.

A tenanted property is considered a HMO where it is occupied by 2 or more householders sharing basic amenities.

A household is either a single person or members of the same family who live together. Family members include people that are:

  • Married or living together
  • Relatives or half-relatives
  • Step-parents and step-children

This applies whether the property is let to multiple tenants under 1 tenancy agreement, or under separate tenancy agreements for each room.

It is an offence under s72 of the Housing Act 2004 to control or manage a HMO which is required to be licensed but is not – so not only can landlords be penalised for failure to have a licence, there are also consequences if an agent manages an unlicensed HMO and the property does not have a licence.

S263(1) of the Housing Act 2004 defines a ‘person having control’ as the person who receives rack-rent (rent which is not less than two-thirds of the full net annual value of the premises), or would receive it if the property the premises were let at a rack-rent.

Under s263(3) ‘person managing’ means the person who receives rents or other payments from persons who are in occupation as tenants or licensees of the whole or part of the premises, or would receive those rents if they had not entered into an agreement with another person who is not an owner of the premises (like a letting agent), who receives the rent or other payments. Where the rents are received by an agent or trustee, the agent or trustee falls within this definition.

The case of Cetin v Epping Forest District Council [2025] UKUT 196 (LC) considers whether an agent instructed by a landlord on a let-only basis falls within the definition of ‘person-managing’ and thus can be penalised for managing an unlicensed HMO.

The Facts

Cetin was a director of Discover Residential Ltd (“the Company”). The Company let rooms in a 5-room HMO property to two tenants, who took occupation in October 2021. Both tenants paid the first months’ rent in advance on 12 October 2021 as well as a holding deposit and a commission of £250.00 each to the Company. As a result of the lettings, there were 5 occupants in the property, and the property fell within the definition of a licensable HMO.

In April 2023, Epping District Council imposed a financial penalty of £7,064.32 on the basis that the above actions were an offence under section 72 of the Housing Act 2004.

First Tier Tribunal (FTT)

The FTT found that the property was being used as a licensable HMO, which was not licensed, and that Cetin should have been aware that it was possibly being used for such a purpose being a qualified and experienced property agent.

The FTT determined that Cetin was a person managing the HMO and subsequently found that the Company had committed an offence under s72(1) of the Housing Act 2004 and that those offences were committed with the consent or connivance, or were attributable to neglect by Cetin. The fine was reduced to £3,532.16 given the low value of commission the Company received.

Upper Tribunal (UT)

Cetin appealed the FTT decision on the basis that he was engaged on a let-only basis and was not a person managing the HMO, so could not be liable under s72.

The UT determined that a ‘let-only’ arrangement did not make an agent a ‘person managing’ under s263(3) because:

  1. The definition of person managing is intended to identify someone who takes part in management responsibilities. The receipt of rent or other payments is a prime example of management responsibilities and is considered an appropriate way of identifying who should be required to observe statutory management responsibilities. Those obligations are continuous in nature and are not intended to extend to ‘let-only’ arrangements.
  2. It would not make sense for a ‘person managing’ to be intended to apply to agents who are not engaged for the purposes of managing a property and do not have the power to do so.
  3. S263(3) states that an agent or trustee can be a ‘person managing’ where they receive the rents and other payments, which indicates an intention for the definition to apply to continuing affairs, rather than a single payment at the commencement of a letting.

Conclusion and Take-aways

Letting agents and landlords should pay close attention to the terms of a let-only agreement and the actions that the agents will perform as part of that agreement. Lettings agents should ensure that they do not ‘cross the line’ as such and perform actions that may lead them to fall within the definition of a person managing.

All landlords and agents should be clear on when a property is a HMO and what the relevant legal requirements are for the HMO.

This case clarifies where the line is drawn between ‘Let-Only and ‘Fully Managed’ arrangements and at what point an agent can be liable for a breach of s72 of the Housing Act 2004.

Landlords and agents should make enquiries with the relevant local authority if they have any questions about the legal requirements for a HMO.

If you require any assistance with a rented property, whether it is a HMO or not, please do not hesitate to contact a member of our Property Litigation team.