Landlord and tenant – Rent repayment order – Superior landlord – Respondent tenants applying for rent repayment order against appellant – Appellant seeking to strike out application as not immediate landlord – First-tier Tribunal refusing to strike out application – Appellant appealing – Whether rent repayment order to be made against superior landlord – Appeal dismissed
In 2006, the freeholder of flat 9, Mandeville Court, Finchley Road, London, NW3, granted a lease to the appellant for a term of 999 years. In May 2016, the appellant granted a tenancy of the whole of the flat to a company (KPIG) for a term of 36 months, less one day. The agreement gave the tenant the right to sublet each unit individually, or the whole, as part of the day-to-day management of its business.
KPIG entered into separate written agreements with the three respondents, each of whom was granted the right to occupy one room in the flat. The documents were described as licence agreements and provided for the payment of a licence fee.
The appellant appeared to accept that the flat was a house in multiple occupation (HMO) requiring a licence under Part 2 of the Housing Act 2004. No licence had been granted. The appellant did not renew KPIG’s tenancy at the end of the fixed term.
The respondents applied to the First-tier Tribunal (FTT) under section 41 of the Housing and Planning Act 2016 for rent repayment orders against the appellant on the grounds that he was responsible for the “control or management of an unlicensed HMO”.
The appellant applied to strike out the application under rule 9(3)(e) of the Property Chamber Rules on the grounds that it had no reasonable prospect of success – a rent repayment order could only be made against the immediate landlord of the applicant and the appellant was not the immediate landlord of the respondents.
The FTT refused to strike out the application against the appellant on the ground that it was bound by the decision of the Upper Tribunal in Goldsbrough v CA Property Management Ltd [2019] UKUT 311 (LC). The appellant appealed.
Held: The appeal was dismissed.
(1) Section 73 of the 2004 Act provided for rent repayment orders as a sanction if an HMO which was required to be licensed under Part 2 of the Act was not so licensed. The scope of the orders was significantly expanded by Chapter 4 of Part 2 of the Housing and Planning Act 2016. Additional housing offences now triggered the right to apply for an order and the process was simplified.
Under section 73(5) of the 2004 Act, only the person entitled to receive the rent on his own account could be made the subject of a rent repayment order. There would therefore have been no question of a successful claim against a superior landlord like the appellant. He was not entitled to receive rent in connection with the respondents’ occupation of any of the rooms in the flat. His entitlement was to the rent of the whole flat, irrespective of the occupation of any part of it by an occupier.
(2) The purpose of section 40(1) of the 2016 Act was to prescribe the circumstances in which the FTT would have power to make a rent repayment order. It identified one triggering event: namely, that a landlord had committed one of the offences listed in section 40(3).
Section 40(2)(a) defined a rent repayment order as “an order requiring the landlord under a tenancy in England to repay an amount of rent paid by a tenant”. There was no necessity for an immediate relationship between the landlord under the tenancy and the tenant to whom an amount of rent was to be repaid. A further condition was introduced in section 41(2)(a): a tenant might only apply for an order against a person who had committed an offence if the offence related to housing that, at the time of the offence, was let to the tenant. But, for the purpose of defining what a rent repayment order was, all that was said by section 40(2)(a) about the recipient of the payment was that they were a tenant; it was possible that the landlord who was to make the payment might not be the immediate landlord of the tenant who was to receive it.
(3) Section 40(3) identified the offences to which Chapter 4 applied, including having control or management of an unlicensed HMO contrary to section 72(1) of the 2004 Act. Section 40(1) made the commission of an offence to which Chapter 4 applied by “a landlord” the sole jurisdictional criterion for the making of a rent repayment order. The whole purpose of Chapter 4 was to expand the original jurisdiction from a single HMO offence to a much wider range of housing offences. There was nothing improbable in parliament having intended that the expansion should also expose an additional class of landlords to the risk of a rent repayment order.
The policy of Part 2 of the 2016 Act was clearly to deter the commission of housing offences and discourage “rogue landlords” in the residential sector by the imposition of stringent penalties. There was no policy reason why the objective of deterring offences should not extend to superior landlords.
(4) Therefore, the FTT had jurisdiction to make a rent repayment order against any landlord who had committed an offence to which Chapter 4 applied, including a superior landlord. There was no additional requirement that the landlord be the immediate landlord of the tenant in whose favour the order was sought. That was the natural meaning of the statute and was consistent with its legislative purpose. The only jurisdictional filter was that the landlord in question had to have committed one of the relevant offences, and the FTT had to be satisfied to the criminal standard of proof that that was the case. A narrower interpretation involved reading the language as prescribing an additional condition which was not clearly stated, and which would detract from the simplicity and effectiveness of the statutory regime.
(5) There had been no investigation of the facts in this case and it had not been established that the appellant had committed any offence. The alleged offence was subject to the statutory defence of reasonable excuse under section 72(5)(a) of the 2004 Act. The application for a rent repayment order would be referred back to the FTT to be determined.
Tom Morris (instructed by Winckworth Sherwood LLP) appeared for the appellant; Edward Fitzpatrick (instructed by Justice for Tenants) appeared for the respondents.
Eileen O’Grady, barrister
Click here to read a transcript of Rakusen v Jepsen and others
