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Rent repayment orders: A gathering storm

What is a Rent Repayment Order?

If a landlord has committed a “relevant offence” under the Housing and Planning Act 2016 [1], the First-tier Tribunal (FtT) can make a rent repayment order (RRO).  An RRO can require a landlord to repay a specified amount of rent to tenants, or to the local authority if rent has been paid by way of universal credit.  Whilst it is not necessary for the landlord to have been convicted of the offence in question, the FtT must be satisfied beyond reasonable doubt (i.e. the criminal standard of proof) that a specified offence has been committed.

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Recent case law guidance on the level of Rent Repayment Order

An RRO is commonly obtained when a landlord has operated a property without the appropriate statutory licence.  It can require the repayment by the landlord of up to 12 months’ rent.   In two recent rent repayment order case appeals (heard together), Acheampong v Roman & Ors and Choudhury v Razak and Paridaans [2], the Upper Tribunal (Lands Chamber) (UT) provided guidance on the factors the FtT will need to consider when deciding the level of an RRO.

Calculating the level of Rent Repayment Order

The UT confirmed the correct approach to determine the amount of an RRO is:

  1. Ascertain the whole of the rent for the relevant period
  2. Subtract any element of that sum representing payment for utilities that only benefit the tenant (such as gas, electricity and internet access) [3]
  3. Consider the seriousness of the offence, compared to other types of offence in respect of which a RRO might be made and compared to other examples of the same type of offence [4]
  4. Consider whether any deduction from, or addition to, that figure should be made in light of the following factors:
  • the conduct of the landlord and the tenant
  • the financial circumstances of the landlord
  • whether the landlord has at any time been convicted of a relevant offence in relation to housing as set out in the Housing and Planning Act 2016 (such offences include control or management of an unlicensed HMO or an unlicensed house).

What practical advice arises concerning Rent Repayment Orders?

Walker Morris is seeing an increasing number of claims for RROs being made by tenants on the basis their landlord has failed to obtain the required licence[s] for the property.  Crucially, ignorance is no defence: it does not matter if the landlord is unaware of the need to obtain a licence.

Whilst 100% RROs are generally reserved for the most serious cases, it is not uncommon for the FtT to order professional landlords to repay 80-90% of rent for the relevant period.

Regulatory compliance and responsible property management is therefore now more important for professional landlords than ever before.

What happened in the particular cases?

Mr Choudhury let a self-contained basement flat to two tenants in the London Borough of Hammersmith and Fulham.  The area required a Selective Licence for any rented house or flat. He admitted failing to obtain a licence for the flat.  The tenants sought repayment of the full rent paid for 12 months (£18,000).

Mr Acheampong let a flat in a purpose built block to four tenants in the London Borough of Haringey, which operates an Additional Licensing scheme for houses in multiple occupation.  The Tribunal was satisfied that Mr Acheampong had failed to obtain the requisite licence. The total amount of rent claimed by the tenants was £15,005.

The FtT made RROs in each case.  Both landlords appealed against the amount they were required to repay to the UT.

Both appeals succeeded to the extent that the FtT’s decision as to the amount of the rent repayment order was set aside.  The UT ordered Mr Choudhury to repay £12,600 to his tenants.  The level of Mr Acheampong’s RRO is yet to be decided.

How we can help with Housing Management and Rent Repayment Order applications

Walker Morris’ Housing Management & Litigation team comprises specialist lawyers experienced in advising landlords on statutory licensing requirements for their properties.  We also regularly and successfully represent landlords who are served with applications made by tenants for RROs and on appeals to the UT.

For tailored, expert advice whether from a compliance/risk management or dispute resolution perspective, please contact Karl Anders, Deborah Brown, or Isabel Clough.

 

[1] such as licensing offences (under the Housing Act 2004 or Housing and Planning Act 2016), illegal eviction, failure to comply with an improvement notice, breach of a banning order, or other specified offences

[2] [2022] UKUT 239 (LC)

[3] It is for the landlord to supply evidence of these.  If precise figures are not available, the FtT can make an informed estimate

[4] Relative seriousness can be assessed by reference to the applicable maximum sentences on conviction. This consideration also involves assessing what proportion of the rent, after deduction for any utilities, is a fair reflection of the seriousness of the offence?  That figure is then the starting point/the default penalty in the absence of any other factors

Karl
Anders

Partner

Housing Management & Litigation

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Deborah
Brown

Litigation Executive, PRS Housing Consultant

House Management & Litigation

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+44 (0)113 283 4052

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