Landlord Who Flouted Planning Rules Stripped of Over £500,000 in Rent

Breaching a planning enforcement notice is a serious offence and landlords should take careful note of a case in which a property owner was stripped of over £500,000 in rent paid on a house which had been converted into 12 flats without planning consent.

After buying the house for £340,000, the landlord obtained permission to convert it into three flats. However, he flouted the terms of the consent by converting it into four times that number. It was some years before the council discovered what had happened but, when it did, it issued an enforcement notice against him, requiring that the property cease to be used as self-contained flats.

The landlord ignored letters from the council and took no steps to comply with the notice. After the council prosecuted him, he pleaded guilty to breaching the notice and was fined £20,000. He also received a £527,887 confiscation order, that sum representing every penny of rent that had been paid by tenants of the property over a period of more than four years.

Challenging that order, the landlord argued that the true source of the rent paid was not his breach of the notice but the lawful tenancy agreements made with individual tenants. He also submitted that the fact that he had planning consent for three flats should have been taken into account. The order was said to be disproportionate in that it was based not on his profits from the property but on gross rental receipts.

Ruling on the matter, however, the Court of Appeal found a direct link between his criminal conduct and the receipt of rent. The criminal benefit he received was properly adjudged to be the total value of the rents obtained. Although he could lawfully have converted the house into three flats, the fact that he might have done things differently had he chosen to do so was not the point.

The landlord’s appeal against the confiscation order was dismissed. However, the Court reduced the amount of his fine from £20,000 to £13,333 on the basis that he should have been given a one-third discount in recognition of his guilty plea.