[2026] UKUT 180 (LC)
Why important?
This case confirms that dwellings which are part of a House in Multiple Occupation under Section 254 of the Housing Act 2004 can also be regarded as houses for the purposes of a selective licensing scheme under Part 3 of the Act.
Background
Z owned a three-storey terraced house divided into four units. Three of these were self-contained, and the fourth had access to a separate bathroom. The area had been subject to a selective licensing scheme since 2020, but Z did not apply for a licence until after an inspection by LCC in 2024. In February 2025 LCC issued four financial penalty notices of £2125 each for the offences under Section 95 of the Act in respect of the four unlicensed units.
Z appealed to the First Tier Tribunal on the basis that the building was an HMO by virtue of Section 254(4), so that the four flats were exempt from being licensed under the Part 3 scheme. Alternatively, it was argued that only one licence was need for the whole building. LCC’s position was that each of the units needed a licence regardless of whether the building was an HMO.
The FTT found that the building was not an HMO for the purposes of Part 2 of the Act – it did not meet Article 4 of the Licensing of Houses in Multiple Occupation (Prescribed Descriptions) (England) Order 2018, and the area was not part of an additional HMO licensing scheme (See Sections 55(2)(a) and (b)). Part 2 HMOs are outside a Part 3 licensing scheme – see Section 85(1)(a). From this the FTT found that the building was not part of a Part 2 scheme, so that the four units were licensable under the Part 3 scheme adopted by LCC. The FTT therefore found that the penalties had been properly imposed by LCC.
Z was given permission to appeal as whether individual dwellings in a converted building could be licensed under Part 3 was a new point that had not been covered at the appellate level.
The Upper Tribunal
Z’s appeal was dismissed. The judge was clear that the matter came down to one of statutory interpretation. The Upper Tribunal had ruled in Northumberland Mews Ltd v Thanet District Council [2022] UKUT 179 (LC) that each of the dwellings in a building could be a house for the purposes of a Part 3 scheme as defined in Section 99 of the Act. The arguments put forward by Z was that this decision was not being challenged, but rather that this case could be distinguished as the building this time was a Section 254(4) HMO. The judge rejected those arguments, which could not form the basis for coming to a different judgment. He also rejected the arguments based on Article 5 of the Order, as like Section 85, it only relates to buildings that require a Part 2 licence as an HMO, which this one did not.
The judge also endorsed the comments in the Northumberland Mews case, which made it clear that Section 99 gave flexibility to a Council so that the following could all be subject to a Part 3 licence:
“a flat (part of a building consisting of one dwelling)
part of a building consisting of several flats (being part of a building consisting of more than one dwelling).
a building consisting of several flats (being a building consisting of more than one dwelling)”
Comment
The key point is that if a dwelling is not part of a licensable HMO, then it can be subject to a Part 3 licence in areas where such a scheme has been adopted. It underlines that judges will take a purposive interpretative approach to avoid unduly technical arguments undermining the relevant legislation. To some extent this approach has been influenced by nearly 50 years of applying EU legislation. As Brexit disappears in the rear-view mirror, we may see a reversion to a more historical common law approach.
Dr Tim Everett LLB LLM PhD FCIEH FRSPH CMCIH CEnvH
September 2026