Housing – Rent repayment order – House in multiple occupation – Appellant landlord appealing against decision of First-tier Tribunal (FTT) making rent repayment orders (RROs) in favour of respondent tenants – Whether FTT applying correct rental period in calculating amount of RRO – Whether amount of RRO should be reduced – Whether FTT adopting correct approach to exercise of discretion on amount of RRO relating to rent paid during relevant period – Appeal allowed in part
The appellant landlord let six individual bedrooms in 28 Afghan Road, London SW11 to the respondents, on six month assured shorthold tenancies, without having a licence for a house in multiple occupation (HMO), contrary to section 72(1) of the Housing Act 2004. That was a relevant offence for the purposes of chapter 4 of part 2 of the Housing and Planning Act 2016, which gave power to the First-tier Tribunal (FTT) in such circumstances to make a rent repayment order (RRO) on the application of a tenant or the local housing authority.
The FTT made six RROs against the appellant in favour of the respondents. The appellant appealed contending that the correct rental period was not applied by the FTT in calculating the amount of the RROs, and so the amount should be reduced; and that the FTT had erred in its approach to quantifying the amount of the RROs by rejecting as irrelevant all factors other than those specified in section 44(4) of the 2016 Act.
The appellant did not dispute the offence or the jurisdiction to make an RRO. She accepted that, at a time during the period of 12 months ending with the date of the respondents’ applications, the property was an unlicensed HMO that she controlled. The only challenge was to the amount of the RROs made by the FTT. The different amounts in each case reflected differences in the amount of the four-weekly rent payable for different sized bedrooms and the slightly different tenancy commencement dates.
Held: The appeal was allowed in part.
(1) The amount of an RRO was governed solely by section 44 of the 2016 Act. Section 44(3) and (4) suggested that, in some cases, the amount of the order would be less than the rent paid in respect of the period mentioned in the table in section 44(2), though the amount had to “relate to” the total rent paid in respect of that period. An RRO was not limited to the amount of the landlord’s profit obtained by the unlawful activity during the period in question. There was no reasonable doubt that, in the period of 12 months ending with the application of the respondents to the FTT, the appellant committed an offence under section 72(1) of the 2004 Act, as she had accepted. The FTT therefore had jurisdiction to make RROs in each of the cases before it. The only matter for decision was the appropriate quantum of the orders: Vadamalayan v Stewart [2020] UKUT 0183 (LC); [2020] PLSCS 189 and Ficcara v James [2021] UKUT 0038 (LC); [2021] PLSCS 43 considered.
(2) The FTT had taken too narrow a view of its powers under section 44 to fix the amount of the RROs. There was no presumption in favour of the maximum amount of rent paid during the period, and the factors that might be taken into account were not limited to those mentioned in section 44(4), though the factors in that subsection were the main factors that might be expected to be relevant in the majority of cases.
The FTT might, in an appropriate case, order a lower than maximum amount of rent repayment, if what a landlord did or failed to do in committing the offence was relatively low in the scale of seriousness, by reason of mitigating circumstances or otherwise. The FTT had to take into account the purposes intended to be served by the jurisdiction to make an RRO.
(3) The Upper Tribunal was in a position to re-conduct the exercise of determining the amount in which the orders should be made. The tribunal had to address specifically what proportion of the maximum amount of rent paid in the relevant period, or reduction from that amount, or a combination of both, was appropriate in all the circumstances, bearing in mind the purpose of the legislative provisions. A tribunal had to have particular regard to the conduct of both parties, including the seriousness of the offence committed, the financial circumstances of the landlord and whether the landlord had at any time been convicted of a relevant offence. It also had to take into account any other apparently relevant factors.
It was implicit in the structure of chapter 4 of part 2 of the 2016 Act, and sections 44 and 46 in particular, that if a landlord had not previously been convicted of a relevant offence, and if their conduct, though serious, was less serious than many other offences of that type, or if the conduct of the tenant was reprehensible in some way, the amount of the RRO might appropriately be less than the maximum amount. The amount of any reduction would depend on the particular facts of each case.
(4) The appellant was, on the evidence, a first offender, with no relevant convictions. She was, however, a professional landlord who should have known the requirements for licensing an HMO. The failure to apply for a licence was unexplained, save that the appellant said that she overlooked it. The appellant only applied for a licence after an environmental health officer visited and itemised deficiencies of the property and the absence of a licence. The inference was that she wanted to be able to derive rental income from the property before she was in a position to do the further works necessary to enable her to obtain an HMO licence.
Those factors indicated that this was a reasonably serious offence of its kind, though not the most serious case that could be imagined. Accordingly, it was not necessary or appropriate to mark the offending of the appellant with an RRO in the maximum adjusted amounts, after taking into account the undisputed reductions for the cost of the extensive services that were provided to the respondents. However, only a modest further reduction of 20% was appropriate and a smaller reduction of 10% in the case of one respondent who was particularly affected by the condition of the property. Where the unlicensed house had serious deficiencies and the landlord was a professional landlord, more substantial reductions would be inappropriate, even for a first-time offender.
Richard Colbey (instructed by Direct Access) appeared for the appellant; The respondents appeared in person.
Eileen O’Grady, barrister
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