Diamante Investments Limited v The London Borough of Waltham Forest [2025] UKFTT 914 (GRC)

[2025] UKFTT 00914 (GRC)Case Reference: FT/SL/2025/0008V
First-tier Tribunal
(General Regulatory Chamber)
Hearing Heard on: 30 th July 2025Date 31 July 2025
Standards & Licensing
Heard by Cloud Video Platform
Before
JUDGE ARMSTRONG-HOLMES
Between
DIAMANTE INVESTMENTS LIMITEDAppellantTHE LONDON BOROUGH OF WALTHAM FORESTRespondentunrepresented and did not attend for AppellantPeter Cruickshank of Counsel for RespondentDecision: The appeal is allowed and the Final Notice is varied such that the monetary penalty is reduced to £4,000.REASONS

Background

[1]The Appellant, Diamante Investments Limited, trading as Amanda Roberts, is a letting agent. The Respondent is the enforcement authority, which served a Final Notice on the Appellant on 12th February 2025. The Final Notice imposed an overall financial penalty of £5,000 for the following:(i) For breach of the requirement to belong to a redress scheme between, contrary to Article 3 of the Redress Schemes for Lettings Agency Work and Property Management Work (Requirement to Belong to a Scheme etc) (England) Order 2014 – for letting agency work.(ii) For breach of the requirement to belong to a redress scheme between, contrary to Article 5 of the Redress Schemes for Lettings Agency Work and Property Management Work (Requirement to Belong to a Scheme etc) (England) Order 2014 – for property management work.[2]This Order came into force on 1st October 2014, and from that date it became a legal requirement for letting agents and property managers in England to join a government approved redress scheme. There are currently only two government approved redress schemes in England, namely the Property Redress Scheme and the Property Ombudsman. Consequently, a lettings agent or property manager must belong to one of these two schemes.[3]The Appellant had been a member of the redress scheme operated by the Property Ombudsman until 14th February 2024 when its membership was terminated because of non-payment of the renewal fee.[4]On 22nd November 2024, the Respondent received an email from the Property Ombudsman, advising that the Appellant’s membership of their redress scheme had lapsed as a result of the non-payment of the renewal few, and that it was falsely displaying the Property Ombudsman’s logo on its business website. This triggered an investigation by the Respondent, which resulted in the Respondent issuing a Notice of Intent to the Appellant for its failure to belong to an approved redress scheme on 23rd December 2024.[5]On 16th January 2025, the Respondent received representations from the Appellant by email, stating that the company had been trading for many years and had always been part of the Property Ombudsman’s scheme until the current owner, Anthony Steer, had become the sole owner of the business. It was explained that the Appellant was not aware that they were no longer in the scheme, and that there was no intention to falsely advertise that they were. The email sought guidance as to how this situation could be remedied, stating that this would be done immediately.[6]On 27th January 2025, the Respondent notified the Appellant that an officer panel would be convened that week to consider his representations in relation to the intended imposition of a financial penalty. The Appellant responded on the same date, stating the following:(i) That they had applied to the Property Ombudsman to join their redress scheme.(ii) That there had been no intention to falsely advertise that they were members of the Property Ombudsman’s redress scheme.(iii) That the ownership of the company had changed, and Tony Steer was now the new owner.(iv) That they were not aware that the membership was no longer valid, as the original owner was always a member of the Property Ombudsman scheme.[7]The officer panel subsequently made the decision to impose a financial penalty of £5,000 in full for the breaches of Articles 3 and 5, and the Final Notice was issued on 12th February 2025.[8]The Appellant accepts that membership of the redress scheme had lapsed, but appeals against the level of fine imposed, submitting that it is excessive.[9]The Appellant did not attend the hearing, having been notified of the hearing date and time by the Tribunal on 17th July 2025. Enquiries were made of the Appellant by telephone before the hearing commenced, but it was communicated to the Tribunal by the owner of the business, Anthony Steer, that he would not be attending the hearing or sending a representative to attend. He did not provide any reason for not attending.[10]Rule 2 of the The Tribunal Procedure (First-tier Tribunal) (General Regulatory Chamber) Rules 2009 (“the Rules”) requires me to deal with cases fairly and justly. Dealing with cases fairly and justly includes avoiding delay and “ensuring, so far as practicable, that the parties are able to participate fully in the proceedings.”. The Appellant in this instance has chosen not to attend the appeal hearing, despite being given further opportunity to appear by video link when telephoned by the Tribunal. He provided no specific reason for his decision not to attend. In the circumstances of this case, the Appellant is not disputing that the fine has been properly levied against him; he is simply appealing the amount he has been fined. The issue for this Tribunal to consider is therefore narrow, and I consider that proceeding with the hearing will avoid unnecessary delay, and that proper consideration of the appeal and this issue will be possible. I am therefore content to hear this appeal in the absence of the Appellant.

The Legal Framework

[11]The Redress Schemes for Lettings Agency Work and Property Management Work (Requirement to Belong to a Scheme etc) (England) Order 2014 (“the 2014 Order”), provides as follows: 3. Requirement to belong to a redress scheme: lettings agency work(1) A Person who engages in lettings agency work must be a member of a redress scheme for dealing with complaints in connection with that work.(2) The redress scheme must be one that is – (a) approved by the Secretary of State; or (b) designated by the Secretary of State as a government administered redress scheme.(3) For the purposes of this article a “complaint” is a complaint made by a person who is or has been a prospective landlord or a prospective tenant. 5. Requirement to belong to a redress scheme: property management work (1) A Person who engages in property management work must be a member of a redress scheme for dealing with complaints in connection with that work. (2) The redress scheme must be one that is – (a) approved by the Secretary of State; or (b) designated by the Secretary of State as a government administered redress scheme. 8. Penalty for breach of the requirement to belong to a redress scheme (1) Where an enforcement authority is satisfied on the balance of probabilities that a person has failed to comply with the requirement to belong to a redress scheme under article 3 (requirement to belong to a redress scheme: lettings agency work) or article 5 (requirement to belong to a redress scheme: property management work), the authority may by notice require the person to pay the authority a monetary penalty (a “monetary penalty”) of such amount as the authority may determine. (2) The amount of the monetary penalty must not exceed £5,000. (3) The Schedule provides for the procedure relating to the imposition of a penalty.[12]The Schedule referred to by Article 8(3) details the procedure which must be adopted by the authority when considering whether to impose a financial penalty or not, and the information which must be given to the person who is being served with a Final Notice. The Schedule does not provide any assistance as to the level of fine to be imposed by the authority.[13]The permitted grounds of appeal are detailed within Article 9 of the Order. These are as follows:(i) That the decision to impose a financial penalty was based on an error of fact;(ii) That the decision was wrong in law;(iii) That the amount of the monetary penalty is unreasonable;(iv) That the decision was unreasonable for any other reasons.[14]The Tribunal may quash, confirm or vary the final notice.

Appeal Bundle

[15]Prior to the hearing I had been provided with a 103-page bundle, which I had read in its entirety. The bundle included the Appellant’s Notice of Appeal, the Respondent’s Response, witness statements of Sandra Bennett (Trading Standards Manager), dated 16th June 2025, and Cordelia Cornelius (Trading Standards Officer), dated 24th June 2025, and other correspondence relating to the Appellant’s membership of a redress scheme. I have read and considered all of the documents contained within this bundle.[16]In his Notice of Appeal, the Appellant expanded upon the representations that had been submitted to the Respondent before the decision was made to issue a Final Notice. It was explained that the company had been trading for over ten years, but Mr Steer only took over the business in 2022, and he had not previously dealt with the renewal of the redress scheme. He had incorrectly assumed that renewals were being paid for by direct debit, and that as the previous owner had been a member of the scheme, he had no reason to believe that this membership had lapsed. He reiterated that there had been no intention to let membership of the redress scheme lapse, or to advertise that the company was part of a scheme when it was not, and that this has now been remedied, having paid for a full year’s membership.[17]In response, the Respondent submits that all letting agents and property managers in England are required to join a government approved redress scheme, and as professionals, the Appellant’s owner is expected to be aware of the law, as it directly impacts upon their business / industry. It is submitted that “the Guidance” suggests that there is an expectation that a £5,000 fine per breach should be considered the norm, and that a lower fine should only be levied if the enforcement authority is satisfied that there are extenuating circumstances present. However, the ‘Guidance’ relied upon was not included within the bundle by the Respondent.[18]The Respondent further detailed that the Property Ombudsman had advised the Appellant that the membership payment was overdue on 12th September 2023, 19th September 2023, and 6th February 2024. It further submitted that the Property Ombudsman had provided notes from their database which evidenced contact with the Appellant regarding the lapsed membership on 28th November 2023 and 12th December 2024. These notes were not included within the bundle, but in its letter of 12th February 2025 to the Appellant (page 16 of the bundle) the Respondent refers to each of these dates as being times when the Property Ombudsman contacted the Appellant about the payment being outstanding.[19]The Respondent’s Statement of Case document (p.52 of the bundle) details that the Property Ombudsman Compliance Team contacted the Appellant on 24th October 2024 regarding the display of their logo, but there was no response, despite the email having been received and read (copies of that email and the read receipt appear at pages 62 and 63 of bundle).[20]The Property Ombudsman confirmed in an email of 12th December 2024 to the Respondent (at page 78 of the bundle) that the Appellant was a member of the Property Ombudsman from 23rd August 2004 until 14th February 2024 when the membership ceased because of the non-payment of the renewal fee. Of course, the Redress Schemes for Lettings Agency Work and Property Management Work (Requirement to Belong to a Scheme etc) (England) Order 2014 only came into force on 1st October 2014, and it is therefore unclear what benefits or schemes membership of the Property Ombudsman provided prior to that date. However, for the purposes of this appeal, the relevant date is 14th February 2024, which is when the membership of the redress scheme ceased.

The Appeal Hearing

[21]Counsel for the Respondent was invited to provide me with a copy of the ‘Guidance’ which the Respondent had relied upon to assert that £5,000 per breach should be considered the norm (para. 17 above). I was subsequently provided with a copy of the Respondent’s ‘Lettings Enforcement Policy’, which uses a hyperlink (at page 3 of 13) to take the reader to a document at: http://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/412921/Improving_private_rented_sector.pdf[22]That document was published by the Department for Communities and Local Government in March 2015 and is entitled ‘Improving the Private Rented Sector and Tackling Bad Practice – A Guide for Local Authorities’. Pages 47 to 55 of that Guidance deals with The Redress Schemes for Lettings Agency Work and Property Management Work (Requirement to Belong to a Scheme etc) (England) Order 2014, and at page 53 and 54 it deals with ‘Penalty for breach of requirement to belong to a redress scheme’. That section provides some clarification to the Respondent’s aforementioned assertion, and states as follows:
“The expectation is that a £5,000 fine should be considered the norm and that a lower fine should only be charged if the enforcement authority is satisfied that there are extenuating circumstances. It will be up to the enforcement authority to decide what such circumstances might be, taking into account any representations the letting agent or property manager makes during the 28 day period following the authority’s notice of intention to issue a fine. In the early days of the requirement coming into force, lack of awareness could be considered; nevertheless an authority could raise awareness of the requirement and include the advice that non-compliance will be dealt with by an immediate sanction. Another issue which could be considered is whether a £5,000 fine would be disproportionate to the turnover/scale of the business or would lead to an organisation going out of business. It is open to the authority to give a lettings agent or property manager a grace period in which to join one of the redress schemes rather than impose a fine. The enforcement authority can impose further penalties if a lettings agent or property manager continues to fail to join a redress scheme despite having previously had a penalty imposed. There is no limit to the number of penalties that may be imposed on an individual lettings agent or property manager, so further penalties can be applied if they continue to be in breach of the legislation.”
[23]The Respondent’s own Lettings Enforcement Policy (at page 3 of 13) provides further assistance to the question of what may amount to ‘extenuating circumstances’ for the purposes of reducing a fine from the £5,000 mark. The Policy provides a non-exhaustive list of factors which will be considered in mitigation and in the decision making process when deciding whether to vary, withdraw or confirm a penalty under the 2014 Order. These are as follows:(i) The severity of the breach (For example, if an agent’s membership has briefly lapsed (for a number of days or weeks) or whether they have never been a member of a redress scheme).(ii) The financial impact of the breach on tenants and landlords.(iii) How long the legislation/requirements have been in force.(iv) The history of compliance/non-compliance of the agent.(v) Any complaints against the agent.(vi) The attitude of the agent and co-operation with the Council.(vii) Whether the breach was rectified promptly.(viii) Steps the agent has or has not taken to ensure compliance.(ix) Where applicable – Affordability – The level of proposed fine against – The financial status of the agent and ability to pay.(x) Any other personal or health issues that may have had or be having an effect on the agent’s business impacting on the period of breach or ability to pay.(xi) Any other factors that could amount to extenuating circumstances.[24]Relying upon these documents, the Respondent submitted that the financial penalty was in line with the government’s guidance, and that the Appellant had failed to demonstrate that there were any extenuating circumstances. Accordingly, the Respondent submitted that £5,000 was not an unreasonable financial penalty to have been imposed in the circumstances.[25]Witness statements had been provided within the bundle by Sandra Bennett, Trading Standards Manager, and Cordelia Cornelius, Trading Standards Officer, by the Respondent. Despite being questioned at the hearing about the dates referred to within the Response to the appeal, they were unable to assist with the origin of those dates, namely 12th September 2023, 19th September 2023, 6th February 2024 and 28th November 2023.[26]Following the hearing, the Respondent provided the Tribunal with a copy of an email from The Property Ombudsman to the Respondent, dated 28th January 2025, in which it was detailed that the Accounts Team at the Property Ombudsman emailed the Appellant on 12th September 2023, 19th September 2023, and 6th February 2024, to advise that their payment for membership of the redress scheme was overdue. Additionally, the email refers to notes on the Property Ombudsman’s database which refers to a conversation with ‘Julie’ on 28th November 2023, who advised that there had been a problem with Barclays Bank, but that they did not wish their membership to expire, and that on 5th February 2024 a “final email/letter sent on 05/02/2024 – To pay by 12/02/2024”. This was confirmed by the Respondent as being the source of the dates referred to in the Response to the appeal (see para. 18 above). I am content that permitting the Respondent to adduce this evidence is both fair and just in the circumstances of this case.

Decision and Reasoning

[27]The 2014 Order has been in force since 1st October 2014, and as such professionals working within the lettings and property management industry should be fully aware of its requirements. It is evident that the Appellant was aware of the requirement to belong to a redress scheme, as prior to 14th February 2024 it had been a member of the scheme operated by one of the two government approved redress schemes (The Property Ombudsman). Thereafter, the membership lapsed, through a failure to pay the required membership fee.[28]In submitting that the fine imposed is excessive, the Appellant is essentially arguing that the amount of the monetary penalty was unreasonable. As the owner of the business, Mr Steer’s argument is advanced on the basis that he was not aware that the membership of the redress scheme had lapsed. He stated in his Notice of Appeal that although the business had been trading for 10 years, he only took over the business in 2022, and had not previously dealt with the renewal of the redress scheme. This had apparently been dealt with by the previous owner of the business. Additionally, it is advanced that there was no intention to permit membership of the scheme to lapse.[29]The requirement to belong to a redress scheme is of course one of strict liability, as all lettings agents and property managers must belong to a government approved scheme. It would certainly undermine the public confidence in such schemes if businesses were permitted to display a logo which suggested they were a member, when in fact they were not covered by the associated protections or benefits to customers associated with such membership. In this instance, a Final Notice was issued by the Respondent on 12th February 2025, and despite an email from the Appellant to the Respondent on 27th January 2025 referring to an application for membership having been made to the Property Ombudsman, the email confirmed that membership of the scheme was yet to be accepted or confirmed.[30]The Notice of Appeal, dated 14th February 2025, states that the Appellant had by that point paid for a full year of membership of the redress scheme, though no evidence of this has been provided to the Tribunal. At the very least, taking the date of the Final Notice into account, it is evident that the Appellant was not a member of a government approved redress scheme for nearly a year, whilst purporting to be a member by displaying the Property Ombudsman’s logo on its public-facing website. That was, of course, misleading to members of the public.[31]The conversation with ‘Julie’ (see paragraph 26 above) took place on 28th November 2023. The emails from the Appellant to the Respondent, following the issue of the Notice of Intent, and dated 16th January 2025 and 27th January 2025 were sent from the Appellant’s business email address by Julie Button. The first of those two emails is signed ‘Julie Button on behalf of Mr Anthony Steer’. This somewhat undermines the assertion made by the Appellant that its membership lapsed without its knowledge, when this likelihood was discussed with an employee by the Property Ombudsman in late 2023, before the membership subsequently lapsed on 14th February 2024.[32]Prior to that point, the evidence is that the Property Ombudsman’s Accounts Team emailed the Appellant on 12th September 2023, 19th September 2023, and 6th February 2023 about the outstanding membership fee. Thereafter, a letter was sent to the Appellant on 5th February 2024, advising that the membership fee needed to be paid by 12th February 2024. I cannot accept that the Appellant did not know that its membership of the redress scheme had lapsed on 14th February 2024, and on the balance of probabilities I find that the Appellant did know about its failure to pay the renewal fee for the redress scheme and the consequential lapse in its membership. This is of course relevant to the question of whether any extenuating circumstances existed which might mitigate against the level of the fine imposed.[33]There is no evidence before me which shows that there has been any financial impact upon any tenants or landlords as a consequence of these breaches, nor is there any evidence before me from the Appellant which might show an inability to pay the financial penalty or an effect upon the running of its business. The breach was for a considerable period of time, approaching at least a year of non-compliance with the 2014 Order, though it is accepted that prior to the breach, the Appellant had been a member of a government approved redress scheme since the 2014 Order came into force. That of course demonstrates that the Appellant was fully aware of its obligations in terms of the need to belong to a redress scheme, though the Respondent’s own Lettings Enforcement Policy states that one factor to be considered when making a decision on the level of fine is “the history of compliance or non-compliance of the agent”. The history of compliance in this instance goes back to the date that the 2014 Order came into force, namely 1st October 2014. On the face of it, the Appellant appears to have had a good trading history, without complaint being made against it, and in these circumstances, I consider that the fine imposed was unreasonable in the circumstances.[34]The Final Notice is varied to the extent that the Monetary Penalty is reduced from £5,000 to £4,000.