How The Renters’ Rights Act Made Freeholders More Likely To Face Legal Action For HMO Licensing Breaches In Blocks Of Flats

Since 1 May 2026 the offences of ‘managing’ or ‘being in control’ of an unlicensed property have been widened to specifically include being a landlord or a superior landlord of such a property. These changes apply to properties in England which require an HMO licence or a selective licence. These amendments to the Housing Act 2004 came into force on the same day that the Renters’ Rights Act 2025 abolished section 21 notices for private sector tenancies.

The changes to sections 72 and 95 of the 2004 Act mean that an offence can be committed by both the immediate landlord (or licensor) of tenants in an unlicensed property, as well as any superior landlord (i.e. the landlord’s landlord).

The aim of these amendments is to ensure that both landlords and superior landlords can be held accountable for any failure to obtain a licence. The changes will make it easier for local authorities to take enforcement action. They will also help tenants who wish to apply for a rent repayment order against a superior landlord; that is a new possibility, also introduced by the Renters’ Rights Act.

What was the law?

Prior to this change, the offence at s72(1) and section 95(1) Housing Act 2004 could only be committed by someone who was a ‘person managing’ or ‘person having control’ in respect of the property. These are technical terms defined in section 263 of the Housing Act 2004. It is difficult to summarise the scope of these terms, but a key point was that they included the occupiers’ immediate landlord (and any agent who collected the rent on their behalf) but omitted a superior landlord who was receiving only a ground rent.

Freeholders of blocks of flats were typically only liable for unlicensed flats in certain circumstances such as:

• Where there was no leaseholder and the freeholder acted as the direct landlord, they were liable for failing to obtain a licence.
• Where the entire block was an HMO, the block itself may have required a licence.

What is the law now?

A superior landlord of unlicensed property is capable of committing the amended versions of the offences at section 72(1) and section 95(1) Housing Act 2004. However, they will often have a defence.

A landlord, including a superior landlord, will not commit these offences if they can show a ‘reasonable excuse’ for managing or controlling an unlicensed property or being a landlord/licensor in those circumstances.

The Renters’ Rights Act has supplemented the ‘reasonable excuse’ defence, by confirming that landlords will have a defence if they can prove that:

• They had a reasonable excuse for being the landlord/licensor in the circumstances;
• They did not know, and had a reasonable excuse for not knowing, that the property was an HMO/one requiring a selective licence;
• They took all reasonably practicable steps to ensure the property was licensed; or
• They otherwise had a reasonable excuse for the failure to obtain a licence.

What will amount to a reasonable excuse?

Following these changes, freeholders should now consider what actions can be taken to establish a reasonable excuse defence, and how to document those steps to ensure that they can prove that defence later, if required.

Kumar v Kolev [2024] UKUT 255 (LC) offers potential relief for freeholders now concerned with monitoring licensing in blocks of flats. The Upper Tribunal held that the superior landlord had a reasonable excuse when his tenant allowed excessive subletting, creating an unlicensed HMO. The Tribunal found he was not required to supervise the tenant’s use of the property.

However, freeholders should bear in mind that section 72(4C) of the Housing Act 2004 has been amended to expressly exclude a reasonable excuse defence based solely on contractual terms, specifying that a tenancy agreement term relating to the occupation of the property will not amount to such a defence on its own.

What should freeholders do?

Freeholders might find it difficult to establish that they have a defence of reasonable excuse in circumstances where they have ignored warning signs of unlawful activity.

Freeholders should assess what steps they can take to protect their position when granting consent to leaseholders for sub-letting or HMO use which may result in a licence being required. At the very least, we would expect that freeholders would want to remind leaseholders of their legal obligations when it comes to licensing.

Freeholders should also consider what proactive steps they could take to ensure that properties are licensed when required. The amendments to the Housing Act do not expressly place any new duty on freeholders to monitor or supervise the licensing and use of flats which are let to leaseholders. It remains to be seen whether judges will accept that a freeholder had a reasonable excuse merely by being unaware of the issue, where no steps were taken to prevent their properties from being used without the required licences.

Finally, freeholders may also wish to decide on an action plan to follow if they become aware a property is being used as an unlicensed HMO and how to approach the leaseholders.

We can give advice on how the Renters’ Rights Act and other recent legislation affects freeholders, right to manage companies and other block managers. You can contact our solicitors by email or make an enquiry using our contact form. You can keep up to date with the progress of the Act by signing up for news about our upcoming events.