Housing – Rent repayment order – Exemption – Appellant appealing against rent repayment order made by First-tier Tribunal (FTT) in favour of respondent tenants – Whether FTT failing to take into account financial circumstances of appellant – Whether FTT taking too narrow approach to relevance of exemption from requirement for licence – Appeal allowed
In 2009, the appellant purchased a one-bedroom flat with a mezzanine above the living area providing an additional bed space at 19 Tannery House, 6 Deal Street, London, E1, intending to live there. In 2014, she became seriously ill, was unable to work and returned to her native Australia. She let the flat through a letting agency.
In 2016, the local housing authority introduced a selective licensing scheme under Part 3 of the Housing Act 2004. The scheme applied to the appellant’s flat but she was unaware of that designation and neither she nor her agent applied for a licence.
In 2017, the appellant moved back into the flat. In 2018, she granted the respondents a tenancy for a term of nine months before returning to Australia. She was still unaware of the licensing scheme and did not apply for a licence before the letting.
When the tenancy expired in June 2019, the respondents moved out and the appellant returned to live in the flat. Eleven months later the respondents applied to the FTT for a rent repayment order (RRO).
The appellant acknowledged that, by having control of a dwelling which was required to be licensed under Part 3 of the 2004 Act, but which was not so licensed, she committed an offence under section 95(1) of the 2004 Act.
The appellant then applied for a licence but was informed that, since the flat was her home, it was exempted from the selective licensing scheme.
The First-tier Tribunal (FTT) made an RRO under section 43 of the Housing and Planning Act 2016 requiring the appellant to repay £22,230 to the respondents. The appellant appealed.
Held: The appeal was allowed.
(1) Section 44(4) of the 2016 Act provided that, in determining the amount payable the tribunal had to take into account, amongst other things, the conduct of the landlord and the tenant and the financial circumstances of the landlord.
It was an honourable part of its function for an expert tribunal to raise matters of its own volition which were relevant to the issues to be determined. Any court or tribunal asked to make a decision on the basis of material which it considered to be incomplete was entitled to put questions of its own to the witnesses who gave evidence before it. Where one or more of the parties was without professional representation, the tribunal’s role in eliciting the information necessary to enable it to make a fair decision was doubly important: Regent Management Ltd v Jones [2012] UKUT 369 (LC) considered.
(2) In this case, the appellant had provided substantial information, including details of her financial commitments, a statement that she had been unable to work since 2014 due to her serious illness, a detailed medical history following her most recent discharge from hospital, and evidence of significant outgoings associated with her continuing poor health. This was an appropriate case for the FTT to adopt an inquisitorial approach.
For whatever reason, the FTT exercised its discretion in fixing the amount of the RRO without having regard to relevant information which was available to it. Therefore, its decision had to be set aside because it did not have regard to one of the matters required to be taken into account by section 44(4).
(3) It was always necessary for a tribunal to be satisfied that no relevant exemption under section 79(2)-(4) of the 2004 Act applied to a house during the period of the offence in respect of which a rent repayment order was sought. If an exemption applied, then no licence was required and no offence under section 95(1) was committed.
The initial burden of establishing that a house was one for which a licence was required fell on the applicant for the RRO, but if it was shown that a dwelling was within an area of selective licensing, that would usually be sufficient to require the respondent to demonstrate circumstances giving rise to a relevant exemption.
In this case, the appellant had been informed in writing by the local housing authority that her property was exempt. That could only mean that it was exempt in the sense that it was not a Part 3 house at all under section 79(2) because it was no longer subject to a tenancy or licence but instead was the appellant’s own home in which she lived. The FTT was not put on inquiry of any other possible basis of exemption, and it was entitled to limit its consideration to pointing out that an exemption was not retrospective.
(4) The better course was for the tribunal to redetermine the amount of the RRO, rather than remitting the case to the FTT.
The offence of letting a Part 3 house without a licence was not of the most serious type; it was nevertheless a criminal offence and enforcement of licensing obligations was essential to the effectiveness of a local housing authority’s ability to police housing standards in its area.
The appellant was at fault in not taking steps to inform herself of her licensing obligation before letting the property, but that was the first occasion on which she had let it herself and she was unaware of the need for a licence. That lack of awareness was contributed to by the fact that she lived abroad when the licensing scheme was introduced, her letting agent did not advise her of its commencement and she suffered from a serious debilitating illness. As soon as she became aware of the need for a licence, she applied for one, only to be told it was no longer required. There was no evidence she had deliberately sought to avoid her responsibilities: Aytan v More [2022] UKUT 27 (LC); Hallett v Parker [2022] UKUT 165 (LC); [2022] PLSCS 106 and Acheampong v Roman [2022] UKUT 239 (LC); [2022] EGLR 46 considered.
The circumstances were exceptional in that the appellant had limited means and no earning power, whose very poor health had contributed to her lack of attentiveness to her licensing obligations. The offence was towards the bottom of the range of seriousness. Accordingly, the appropriate order was that the appellant repay the total sum of £2,000 to the respondents, to be divided equally between them.
Faisel Sadiq (acting pro bono) appeared for the appellant; Cameron Neilson (of Justice for Tenants) appeared for the respondents.
Eileen O’Grady, barrister
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