Lockdown landlord convicted for breaches in Planning Act

Update: In March 2018 news reached ourcity.london that two of the defendants written about in this article, Simon Low and Manlow Property Development, had seen their convictions in this case overturned at the Crown Court. You can read more about this development here. 

On 4 July 2017 in Willesden Magistrates court two companies, Wise Estates (UK) Limited, Manlow Property Management, and one individual, Simon Low, were convicted of breaches in the Town and Country Planning Act over the conversion of a family home into tiny micro-flats for rent.

On the face of it, the charges seem relatively minor. But the case uncovered some extraordinary practices at the shadier end of London’s rental market.

Wise Estates, Manlow and Simon Low are all in the business of renting micro flats to housing benefits claimants. Although they appeared as three separate defendants in the action brought against them, they are all part of the same family. Simon Low, a 63 year old Rabbinical Judge is the director of Wise Estates, a company which he set up to hold property assets which generate an income for his daughter, Judith Weiss. Manlow Property Management is run by Abraham Low, Simon’s son, and a partner, Pincus Mann. Manlow manages the property empire of Simon.

One of Simon’s properties was 9 Stonebridge Park in Brent which they had bought as a 3-bedroom terraced house. Wise Estates had converted the property and crammed in 5 flats without planning permission. The flats were tiny, measuring just 10 square meters each. It had one shared kitchen of just 6 square meters.

Lockdown

These flats were lockdown flats, a model which has become worryingly commonplace in London in recent years. Landlords are creating these tiny flats in order to rent to housing benefits claimants. In the words of Abraham Low, tenants are “collected” from the streets, homeless shelters and from local charities working with the homeless.

The tenants must be over the age of 35 and living alone, so that they can qualify for housing benefit at the single dwelling rate (claimants under 35 are only entitled to shared accommodation). The tenants are then offered the accommodation, which is rented out at the maximum rate for housing benefit. In London this is, on average, around £1000 a month.

This is not cheap housing. On a per square meter basis the rents are higher than luxury homes in Kensington and Chelsea. The tenants almost always sign a declaration to the effect that they are too feckless to manage their own money, so the council pays the rent directly to the landlord.

The lockdown model is an attempt to abuse loopholes in the planning and housing benefit regulations to extract the maximum housing benefits for landlords. It was first written about on this blog in this excellent piece by Jon Knowles. I subsequently wrote about the issue for the Sunday Times. According to a group of councils which are investigating the model, there are over 6,000 of these properties in London alone, making it an industry with a turnover of at least £1bn, and all funded by the housing benefit budget.

Homes in multiple occupation

Brent Council ordered that the home be converted back to a single family home. Wise Estates and Manlow, the management company managing the flats, sought a certificate of lawful use from Brent Council and then the planning inspectorate, arguing that the conversion was not to self contained flats, but to a house in multiple occupation (HMO). A house in multiple occupation is where people rent rooms as part of a shared house. The inclusion of a tiny, 6 meter square kitchen to service 5 flats was central to their argument that the property was in fact an HMO. Planning permission is not required to convert a family home to an HMO, and so if the Planning Inspectorate agreed that the flats were in fact HMOs, the enforcement notice from Brent would fall away. 

Suki Tamplin, the planning inspector presiding over the case, was not convinced. During the ensuing planning inquiry Brent presented evidence to show that whilst Manlow were busy claiming that this was an HMO to the planning inspectorate, they were also getting their residents to claim that these were studio flats on their housing benefits claims. This allowed Manlow to charge more than double the rent than if these had been true HMOs.

Wise Estates lost their appeal to the Planning Inspectorate, and they immediately started work removing the flats. However, there was a problem. Wise Estates had put in their application for a certificate of lawful use after they had lost their right of appeal to the enforcement notice. Whilst the owner of 9 Stonebridge Park was arguing with the planning inspectorate about whether the home was an HMO or a set of flats the company was in active breach of the enforcement notice, a criminal offense. This allowed Brent to prosecute that breach in a criminal court, despite the fact that Manlow started work on putting the property back in its original state just days after it had lost its attempt to get the property certified as an HMO.

Following the conviction Cllr Harbi Farah, Cabinet Member for Housing and Welfare Reform, said:

“The conviction is a success for the Council’s enforcement team, which has a zero tolerance policy towards breaches in planning law and rogue landlords in Brent.

“Planning permission would not have been granted for this type of conversion because of the over intensive use of the available living space. The illegal flats were very cramped and conditions were below standard. This planning breach resulted in a loss of a family home.

“Brent and the Mayor of London’s standards require studio flats to be at least 37 square metres. The illegally converted studio flats in Stonebridge Park ranged from 8 square metres to 12 square metres.

“The reason for the size policy is to ensure that Brent retains small scale family housing of which there is a significant shortage in the borough. It also ensures that new flats are of a good size quality, provide good amenity to the occupants and are not overcrowded.”

The Low property empire

So why did Brent continue to pursue the claim, even though they got what they wanted?

Simon Low is a big player in the lockdown model. During the trial it was revealed that he owns around 100 properties in the UK, with more abroad. Manlow is responsible for managing 150 properties in the UK.

The vast majority of these properties are likely to be run on the lockdown model. Simon Low told the magistrates court “the source of the income is multiple [meaning multiple occupation], if it isn’t multiple, it isn’t worth it.”

According to Manlow’s directors the company manages around 750 ‘units’. Manlow collect this rent on behalf of investors and take a fee for their management of the properties. It is not known how much Manlow collect in rent as they do not publish full accounts. However, if all of the rooms they let attracted the average housing benefit rate for single self-contained flats in London, then Manlow would be receiving over £700,000 in rent a month. Manlow strongly denies that they receive more than £700,000 a month, however they have not provided any figures themselves on how much they collect in rent from the housing benefit budget.

After conviction, the case was referred to the Crown Court for sentencing. Brent are seeking a confiscation order on the property under the proceeds of crime act.

Brent clearly want to make a statement with this case. The conversion of homes to lockdown flats without planning permission is unlawful, and could potentially lead to the home being confiscated.

But given the vast scale of the problem, and that Brent appear to be the only local authority taking serious action, will this one small victory be enough to end the abuse that is lockdown housing?