Ground 6B and ‘sufficient compensation’

Julie Ford sent me another interesting scenario to work through, so here we go!

The new Ground 6B in RRB allows a landlord to serve notice on a tenant for a variety of reasons, but the general idea is that if the landlord is in breach of some other obligation because of the existence of the tenancy they must have some way to end that tenancy to reduce their exposure. (Note: I am sure this used to be called Ground 6A – maybe it’s just the Mandela effect). One of those reasons is that the property requires a licence (Note: licence includes both HMOs and selective licences) and there are too many households/people in that property for the licence.

Section 3(5) of RRB allows for a Court to order the landlord to pay ‘such sum as appears sufficient as compensation’ if a Court makes an order for possession on Ground 6B. This makes sense because Ground 6B can only be used if the landlord is in breach of their own obligations so it would not be fair for ‘bad’ landlords to still have access to a no-fault evictions. There has already been commentary that a tenant may already be entitled to compensation depending on the breach, but I don’t mind this provision to be honest as it at least guarantees a degree of compensation even if a counter-claim has not been articulated.

With that context out of the way, we come to the question:

If tenants in a licenced property have a child and that pushes the number of people over the licence threshold, what kind of compensation would a landlord be expected to pay given that it was not the landlord’s fault that the licence was breached?

Cards on the table, this will involve a fair amount of speculation on my part because the penalties introduced by S3(5) are entirely new so we have no idea what a Court might determine. That said, I think it is entirely possible for the ‘sufficient compensation’ to be £0 in certain circumstances.

Imagine two scenarios:

1) Tenants are in hospital having just given birth to a beautiful baby girl. They are not even aware that the property requires a licence, let alone has a cap on the number of inhabitants. Their landlord waltzes into the ward and hands them a congratulations card and Section 8 Notice as they have gone over the cap.

2) Tenants move into a property having declared that they have no children. They do in fact have children and that exceeds the cap. The local authority are breathing down the landlord’s neck threatening to fine them unless the landlord does something about the overcrowding. The landlord serves the tenants with a Section 8 Notice.

We have Ground 6B satisfied in both scenarios, but I think we can all agree that a Court is likely to be harsher to the first landlord than the second. The Court must still make an order for possession (Ground 6B is a mandatory ground) but they can express their disapproval of the landlord’s conduct through the compensation that might be awarded.

I think the key factors in the level of compensation will be the zeal of the landlord, the pressure from the local authority, and the culpability of the tenants in the breach.