Housing – Rent repayment order – Landlord and tenant – Appellant appealing against decision of First-tier Tribunal (FTT) making rent repayment order against respondent – Appellant arguing that sum to be repaid too low – Whether FTT properly calculating rent for relevant period – Whether FTT taking account of relevant factors when determining amount of rent to be repaid – Whether conduct relevant in landlord and tenant relationship – Appeal dismissed
The respondent owned a six-bedroomed house at 14 Wellington Road, Hastings. In June 2017, she let the property to the appellant at a rent of £1,200 per month. In October 2019, she claimed possession on the grounds of rent arrears. An order for possession was made but subsequently set aside by consent because the respondent had failed to comply with the requirements for service of a notice under section 8 of the Housing Act 1988.
The appellant applied to the First-tier Tribunal (FTT) for a rent repayment order (RRO) under the Housing and Planning Act 2016 because, throughout her tenancy, the property did not have a licence as required under a selective licensing scheme under Part 3 of the Housing Act 2004. The local housing authority had adopted a selective licensing scheme under section 80 of the 2004 Act in 2015. After that time, under section 85 of the 2004 Act, any private landlord renting out a property in the area had to obtain a licence and it was a criminal offence to manage or be in control of a house that required a licence without one. It was not in dispute that the respondent committed the offence from the start of the tenancy until she applied for a licence in February 2020; section 95(3) of the 2004 Act provided the landlord with a defence once an application had been made.
The appellant sought an RRO for the seven months from 4 December 2018 to 11 July 2019. The FTT found that the rent paid for the relevant period (and therefore the maximum the respondent could be ordered to pay under section 44(3)(a) of the 2016 Act) was £4,201.09. In the light of the matters it took into account under section 44(4), the FTT ordered the respondent to repay 25% of that sum. The appellant appealed contending that that amount was too low.
Held: The appeal was dismissed.
(1) In the exercise of its discretion, the FTT had to determine the penalty payable in the light, in particular, of the factors listed in section 44(4) of the 2016 Act. It was expressly directed to take the tenant’s conduct into account but was not directed to consider that conduct only insofar as it had an effect upon the offence itself. The same applied to the landlord’s financial circumstances; relevance would be a matter for examination in each case. The circumstances of the present case were a good example of why conduct within the landlord and tenant relationship was relevant; it would offend any sense of justice for a tenant to be in persistent rent arrears over an extended period and then choose the one period where she made some regular payments, albeit never clearing the arrears, and be awarded a repayment of all or most of what she paid in that period. In the present case, that default, together with the respondent’s kindness and her financial circumstances, led the FTT to make a 75% reduction in the maximum amount payable. There was no reason to characterise any of those considerations as irrelevant or the decision as falling outside the range of reasonable orders that the FTT could have made: Chan v Bilkhu [2020] UKUT 289 (LC); [2020] PLSCS 190 considered.
(2) It was no longer appropriate for rent repayment orders to be limited to the repayment of the profit element of the rent. Nor was it correct for the FTT to deduct from the maximum amount, the amount of any fine or civil penalty imposed on the landlord. The only available starting point for the repayment order was the rent paid by the tenant. But since the rent paid was also the maximum which might be ordered, the difficulty with treating it as a starting point was that it might leave little room for the matters which section 44(4) obliged the FTT to take into account, and which parliament clearly intended should play an important role. A full assessment of the FTT’s discretion as to the amount to be repaid ought also to take account of section 46(1) of the 2016 Act: Where the landlord had been convicted, other than of a licensing offence, in the absence of exceptional circumstances, the amount to be repaid was to be the maximum that the FTT had power to order, disregarding section 44(4) or section 45: Vadamalayan v Stewart [2020] UKUT 183 (LC); [2020] PLSCS 189 and Ficcara v James [2021] UKUT 38 (LC); [2021] PLSCS 43 followed.
(3) It had not been necessary in the present appeal to consider whether, in the absence of aggravating or mitigating factors, the direction in section 44(2) that the amount to be repaid had to relate to the rent paid during the relevant period, meant that the amount had to equate to that rent. Meanwhile, Vadamalayan was not to be treated as the last word on the exercise of discretion which section 44 clearly required; neither party was represented in that case and the tribunal’s main focus was on clearing away the redundant notion that the landlord’s profit represented a ceiling on the amount of the repayment.
(4) The present appeal was a useful example of an unimpeachable exercise of discretion on the part of the FTT but said nothing further about the amount to be awarded in the absence of anything that weighed with the FTT under section 44(4). The only clue that the statute gave was the maximum amount that could be ordered, under section 44(3). Whether or not that maximum was described as a starting point, clearly it could not function in exactly the same way as a starting point in criminal sentencing, because it could only go down; however badly a landlord had behaved it could not go up. The statute gave no assistance as to what should be ordered in those circumstances.
There was no question of the respondent having to make a payment to the appellant; the only issue in reality was the level of the arrears owed by the appellant to respondent, which was reduced by the amount ordered by the FTT.
Robert Denman (instructed by Holden and Co LLP, of Hastings) appeared for the appellant; the respondent appeared in person.
Eileen O’Grady, barrister
