East London rent-to-rent scammers handed £187K fine

A five-year legal battle culminated in an East London couple being issued with fines totalling £187k after they failed to licence six HMOs. Under its selective licensing scheme, Waltham Forest Council identified the offences and successfully defended the court battle, overturning the defendants’ two claims for judicial review.

One of the largest fines in the country has been secured by Waltham Forest Council in East London against a pair of landlords for rent-to-rent scams.

After a five-year legal battle Mohamed Lahrie Mohamed and Shehara Lahrie were found guilty of eight counts of failing to license six Houses in Multiple Occupation (HMOs).

The fines, totalling £187k, were handed down at Wimbledon Magistrates Court on September 29 following a four-day trial in April 2021. The defendants also agreed to pay the council’s prosecution costs of £67,362.62.

The couple had claimed the properties were being rented out to single family households. Instead they were being let out in multiple occupation to between eight and 16 people through a network of letting agents.

Between them the pair had 600 houses across northeast London and ran their property business through more than 30 different companies from an office in Hoe Street, Walthamstow.

“Without the large scale licensing we probably wouldn't have been able to identify the offences[or] had the resources to defend five years of court battle.” – David Beach, Director of Enforcement, Waltham Forest Council

Waltham Forest operates a large selective licensing scheme covering most of the wards in the borough. Director of enforcement at the council, David Beach said: “Without the large scale licensing we probably wouldn't have been able to identify the offences, and we certainly wouldn't have had the resources to defend five years of court battle.”

He added: “If you were to do a survey of how many authorities out there - without the funding of licensing behind them - would be able to fund 130k worth of legal costs I think it would be a fairly small number.”

The court costs were high, and the case lengthy, in part because the defendants also made two claims for judicial review, both on technical grounds. In the first instance, the defendants argued that the council hadn’t provided enough information as to the nature of the charge, and also that they hadn’t been laid out in time.

In the second claim, they argued the council needed to prove “mens rea” - that the couple knowingly allowed their properties to be rented out as HMOs without a licence. The High Court ruled in the council’s favour on both counts on 7 May, 2020.

While the offences relating to the court case were committed before civil penalties came in, these have subsequently been used against these two landlords. Beach estimates that around £160K worth of penalties had been issued and, following the court case, an agreement has been reached for the pair to pay £120k. All of this money will go back to the council for housing enforcement work.

Beach added: “The positive thing coming out of this is that the landlord has promised to clean up their act, and we haven't had any issues of non-compliance for the last couple of years.  

“That's the way, licensing and regulation should be. We haven't got the time and resources to go in and be in places 24-7. We need landlords to be more responsible and to properly let and manage their properties.”