In Simpson House 3 Ltd v Osserman and others [2022] UKUT 164 (LC); the Upper Tribunal (Lands Chamber) has underscored the importance of the First-tier Tribunal taking into consideration the totality of a landlord’s conduct when determining the amount required to be paid under a rent repayment order.
The respondents were the tenants of a flat in multiple occupation situated in Dalston, London. The appellant, a large property investment company, was the tenants’ landlord. In October 2020 the tenants applied to the FTT for a rent repayment order to be made. They claimed their landlord was guilty of the offence of having control or management of an unlicensed HMO contrary to section 72(1) of the Housing Act 2004.
At the hearing the tenants relied upon six examples of the landlord’s poor conduct, including its neglect of fire safety, delays in repairing the boiler, poor maintenance of the building and lack of pest control.
Before the FTT the tenants also alleged that the landlord’s agents had harassed them by placing them under surveillance following concerns raised about their landlord’s conduct in the media. Further, the tenants accused their landlord of threatening them by serving notices to evict that were both invalid because they failed to satisfy statutory and regulatory procedures. Additionally, the tenant’s agent wrongly advised the tenants that their failure to vacate the property would lead to them losing their deposit and receiving a poor credit rating.
The FTT found that the landlord was guilty of having committed the offence.
In relation to the landlord’s conduct, the FTT found that overall it was reactive to the tenants’ complaints of disrepair. It also found that the landlord had acted responsibly in entrusting management of its property to experienced agents. It found the tenant could not have foreseen the circumstances that led to the agents being unable to properly manage the property. The FTT considered that a deduction limited to 35% should be applied to the RRO sought by the tenants to reflect the landlord’s “good conduct”.
The landlord appealed, but did not pursue the same. The tenant cross-appealed on the basis that the FTT failed to take into account relevant considerations when determining the amount of the RRO. They claimed that the FTT had only taken into account the landlord’s “good conduct” and not the landlord’s “bad conduct” when weighing up the factors relevant to the amount of the RRO. In particular the tenants argued that the FTT had failed to consider the allegations of harassment, the landlord’s reasons behind service of the section 21 notices and the fact the tenants had been threatened with losing their deposits and receiving a poor credit rating if they failed to vacate the flat. The UT agreed.
The UT determined that the FTT was required to have regard to the conduct of the landlord in reaching its decision. The tenants had highlighted specific examples of the landlord’s poor conduct and it was incumbent on the FTT to deal with them when explaining its decision for assessing the level of the penalty.
In circumstances where the landlord was a substantial property investment company, with sufficient resources to comply with its regulatory obligations, the UT indicated that the FTT should be slow to impose a reduced penalty if the landlord chose to engage management agents. It could not simply divest itself of its regulatory responsibilities or the risks of non-compliance.
Elizabeth Dwomoh is a barrister at Lamb Chambers
