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Enforcement Policy - Leasehold Reform (Ground Rent) Act 2022

Step 1 - Determining the Severity

The more serious the breach, the higher the penalty will be.  

The Council will assess the severity of the breach using the culpability and harm factors set out below. The listed factors are not exhaustive, and where a breach does not fall squarely into a category, individual factors may require a degree of weighting to make an overall assessment. Other discretionary factors may also be applied in order to reflect consistency and the Council may consider decisions in other UK jurisdictions where they contain some relevant and persuasive content.

Culpability

Where there is higher culpability, there will be a higher financial penalty.

Very High

(Deliberate*)

Where the landlord intentionally breached, or flagrantly disregarded, the law or has/had a high public profile and knew their actions were unlawful.

High

(Reckless*)

Actual foresight of, or willful blindness to, risk of a breach but risk nevertheless taken.

Medium

(Negligent*)

Breach committed through act or omission which a person exercising reasonable care would not commit.

Low/No

Breach committed with little fault, for example, because:

  • significant efforts were made to address the risk although they were inadequate on the relevant occasion
  • there was no warning/circumstance indicating a risk
  • failings were minor and occurred as an isolated incident

* These are the terms used in the statutory guidance.

Harm

Where there is greater harm caused, there will be a higher financial penalty.

The following factors relate to both actual harm and risk of harm. Dealing with a risk of harm involves consideration of both the likelihood of harm occurring and the extent of it if it does.

High

(High Likelihood of Harm)

 

  • Serious adverse effect(s) on individual(s) and/or having a widespread impact due to the nature and/or scale of the Landlord's business
  • High risk of an adverse effect on individual(s) - including where persons are vulnerable

Medium

(Medium Likelihood of Harm)

  • Adverse effect on individual(s) (not amounting to "high" harm - above)
  • Medium risk of an adverse effect on individual(s) or low risk of serious adverse effect.
  • Leaseholder and/or landlords substantially undermined by the conduct.
  • The Council's work as a regulator is inhibited
  • Leaseholder or prospective leaseholder misled

Low

(Low Likelihood of Harm)

  • Low risk of an adverse effect on actual or prospective leaseholders.
  • Public misled but little or no risk of actual adverse effect on individual(s)

The Council will define harm widely and the leaseholder(s) may suffer financial loss, damage to health or psychological distress (especially vulnerable cases). There are gradations of harm within all of these categories.

The nature of harm will depend on personal characteristics and circumstances of the leaseholder and the assessment of harm will be an effective and important way of taking into consideration the impact of a particular breach on the leaseholder.

In some cases, no actual harm may have resulted, and the Council will be concerned with assessing the severity of the misconduct; it will consider the likelihood of harm occurring and the gravity of the harm that could result.