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Enforcement Policy - Leasehold Reform (Ground Rent) Act 2022

Step 4 - Fairness and Proportionality

The level of financial penalty should reflect the extent to which the conduct fell below the required standard.  The financial penalty should meet, in a fair and proportionate way, the objectives of punishment, deterrence and the removal of gain derived through the commission of the breach.

Factors that could be considered include:

  • any other relevant financial information available, such as profit margin for a corporate body or a landlord's indebtedness. This should consider if the financial penalty would have a disproportionate impact on the landlord's ability to comply with the law in future or other unintended consequences (e.g., a landlord becoming at risk of losing their own home).
  • wider financial impact on third parties (e.g., impact of employed of staff).
  • totality principle: if issuing a financial penalty for more than one breach (relating to two or more leases), or where the landlord has already been issued with a penalty, the Council must consider whether the total financial penalties comply with the Act and are just and proportionate to the breaches.

A financial penalty covering multiple breaches must not cumulatively exceed the minimum and maximum limits for a penalty, as if each breach had been treated separately.

It should not be cheaper to breach the Act than it is to pay a financial penalty.