The Upper Tribunal has cancelled an £11,000 HMO financial penalty imposed on company director Tariq Khuja, ruling that his position as OX1 Ltd’s sole director and shareholder did not by itself prove personal liability for the company’s housing offences.
In Khuja v Cherwell District Council [2026] UKUT 363 (LC), the Tribunal allowed Khuja’s appeal against the personal penalty. The £11,000 penalty imposed on OX1 Ltd, which owned three flats above commercial premises in Banbury, remains in place.
The distinction is important for directors of landlord companies because councils can pursue individuals as well as companies in some cases. The ruling does not remove the underlying management duties, but it requires a clear legal basis before a director is penalised personally.
Upper Tribunal finds no automatic director liability
Cherwell District Council had originally issued penalties totalling £24,975 against both OX1 Ltd and Khuja over HMO management-regulation breaches. The First-tier Tribunal reduced each penalty to £11,000.
The Upper Tribunal found that the First-tier Tribunal had not established that Khuja had consented to the offences under section 251 of the Housing Act 2004. It said a director is not personally liable simply because they are the company’s sole director, shareholder or controlling mind.
The case concerned omissions rather than a specific decision or action by Khuja. The Tribunal found no conclusion that he knew of the defects before the council’s August 2023 inspection. His later work with the council to remedy them could not, on its own, show that he had consented to the earlier breaches.
Company penalty remains after Banbury HMO case
The decision leaves the company penalty intact. That is a material limit: the ruling is not a finding that the HMO breaches did not occur, nor does it stop authorities from taking action against a company that owns or manages rental property.
It also addresses the risk of double counting where both a company and its sole shareholder face penalties over the same failings. The Tribunal said the impact of the company’s penalty on its sole shareholder should have been considered when fixing any separate personal penalty.
This follows Landlord Knowledge’s June report on a Waltham Forest landlord penalty, where the Upper Tribunal found that an authority had missed the six-month deadline for a civil penalty. Together, the cases show that enforcement action can fail on legal process and statutory tests even where councils identify serious housing concerns.
The latest ruling should not be read as a reason for company directors to distance themselves from compliance. Directors of property-owning companies should still keep clear records of inspections, repair decisions, contractor instructions and how HMO duties are assigned. Brent’s recent £50,000 HMO manager fine is a reminder of the scale of penalties where authorities can prove serious management failures.
What this means for landlords
- If you use a company: document who is responsible for inspections, repairs and HMO compliance rather than relying on informal arrangements.
- If a council alleges personal liability: obtain legal advice on the statutory test and the evidence said to show consent, connivance or neglect.
- Watch for: penalties against both a company and an individual arising from the same facts, particularly where the individual is the sole shareholder.
- Bottom line: company status is not a shield against enforcement, but a director’s title alone is not enough for a personal civil penalty.
Editor’s view
This is a narrow but useful decision. It does not soften HMO standards, but it does require councils and tribunals to separate a company’s failings from a director’s personal conduct before adding a second penalty.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 02 October 2026
Sources: Upper Tribunal (Lands Chamber), Housing Act 2004
Related reading: Upper Tribunal narrows HMO penalty risk for fixed-rent landlords
