The risks of turning a deaf ear to a tenant’s criminal activity

I was walking into my town recently when I noticed a new local grocery store selling tobacco products. It made me think about the responsibilities of landlords regarding their commercial premises and brought to mind the case of R v Leonardo Viscomi [2019].

The Viscomi case is particularly interesting because it demonstrates the potential consequences for a landlord who knows about criminal activity taking place on their property but fails to take any action.

Mr Viscomi’s commercial premises had been used for the sale of illicit tobacco and alcohol. More importantly, he had been made aware of the situation by Trading Standards and received a lot of pre-action correspondence regarding the matter. Notwithstanding, the landlord failed to take sufficient action against his tenant. Eventually Lincolnshire Trading Standards carried out a number of raids at the premises, during which significant quantities of illicit tobacco were seized.

Whilst Mr Viscomi pleaded guilty, he received an eight-month suspended prison sentence and 150 hours of unpaid work. There were also consequences under the Proceeds of Crime Act (“POCA”) in relation to the rental income he had received over the years. Approximately £52,000 in rental income was subject to a confiscation order.

The case is a useful warning to landlords: knowingly allowing criminal activity in your premises and failing to take appropriate action is problematic. The High Court’s decision in Fouladi v Darout Ltd (2018) reaffirmed the long-established principle that a landlord is not generally liable for a tenant’s nuisance simply because it owns the property, but liability can arise where the landlord has authorised, participated in or adopted the wrongful conduct.

What enforcement powers do local authorities have?

Local authorities have significant enforcement powers. The Local Government Act 1972 gives a local authority the power to prosecute where it considers this expedient for the promotion or protection of the interests of the inhabitants in its area. This can be particularly relevant to departments such as trading standards, environmental health and food safety.

Other additional powers include:

• Closure notices and closure orders. Under the Anti-social Behaviour, Crime and Policing Act 2014 a local authority or the police, may issue a closure notice where it is reasonably believed that the use of premises has resulted, or is likely to result, in nuisance, disorder or criminal behaviour.
• Civil injunctions. Local authorities, police and certain housing providers can apply for civil injunctions to prevent anti-social behaviour.
• Community Protection Notices. This provides another mechanism for addressing persistent conduct that has a detrimental effect on the local community’s quality of life.
• POCA powers. As highlighted above, POCA enables enforcement authorities to seek the confiscation or civil recovery of property connected with unlawful conduct. These powers can be used where rental income, property interests or other assets are alleged to derive from criminal activity.

What can landlords do about illegal tenant activity?

The tenant remains the primary wrongdoer and the landlord will usually have contractual remedies available against them under the lease. Commercial leases commonly contain provisions dealing with the unlawful use of the property, compliance with legislation and breaches of the tenancy. In appropriate circumstances, a landlord may be able to forfeit the lease, therefore bringing the tenancy to an end because of a tenant’s breach.

If the tenant does not remedy their breach or fails to provide satisfactory compensation within the specified time, the landlord may either peaceably re-enter the property or initiate court proceedings to seek forfeiture of the lease. Legal advice should always be sought where forfeiture is involved given the nature of this remedy.

It is important, however, to remember that the landlord must follow a statutory notice procedure and serve a written notice under section 146 of the Law of Property Act 1925, and such notice must comply with the specific provisions outlined in the lease.

*R v Leonardo Viscomi [2019] and R v The Knightland Foundation and Friedman [2018] EWCA Crim 1860.

*Fouladi v Darout Ltd [2018] EWHC 3501(Ch)