Having obtained planning permission to convert his property into three self-contained flats in 2006, the landlord decided instead to convert his property into 12 self-contained flats. The local planning authority soon caught wind of the unauthorised development and issued an Enforcement Notice requiring the landlord to cease using the property as self-contained flats.
Long story short, the Enforcement Notice was not complied with and the matter ended up in the Magistrates Court. In addition to a fine of £20,000 for failure to comply with the Enforcement Notice, the landlord was also hit with a Confiscation Order in the sum of £527,887.55 - representing the total value of rent paid by tenants of the 12 self-contained flats for period of over four years.
The landlord appealed to the Court of Appeal, arguing that the Confiscation Order was disproportionate and should have been based on his net profit from the property after expenses rather than the total value of rents obtained. The Court of Appeal disagreed and dismissed the appeal. The Court did however reduce the fine imposed by the Magistrates Court from £20,000 to £13,333 on the ground that the landlord should have been given a one-third discount in recognition of his guilty plea.
Moral of the story? Ill-gotten gains do not profit - this case serves as a reminder that courts take a hard line approach when it comes to clawing back any financial benefit obtained through unauthorised development.
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