In Rakusen v Jepsen [2020] UKUT 298 (LC); [2021] PLSCS 138 and Williams v Parmar [2021] UKUT 244 (LC); [2021] PLSCS 169 the Upper Tribunal (Lands Chamber) emphasised that the policy reasons behind the rent repayment order regime was to punish and deter rogue landlords from committing housing offences, by in part depriving them of any financial gain made from the same. The UT stressed in Williams that the First-tier Tribunal would need to assess all relevant factors before deciding the amount of an RRO. Repayment of the full rent, unless there was a good reason to order payment of a lesser sum, was not the correct starting point.
In Hallett v Parker and others [2022] UKUT 165 (LC); [2022] PLSCS 106 the UT was asked to determine on appeal whether the FTT had taken all relevant factors into account when it made an RRO requiring the landlord to repay the full amount of rent received for the relevant period he had rented his property to the respondent tenants without an HMO licence.
The appellant was the landlord of a property situated in Brent, London, NW6. In 2015, the relevant local housing authority introduced additional licensing for all HMOs. In September 2019 the landlord let the property to the respondent tenants. He was unaware of the licensing requirement because he had only previously rented to families through his managing agents. When the property was let to the respondents, the appellant took over management of the same.
In March 2020 the tenants complained to the local housing authority that the shower in the flat was in need of repair. On inspection of its records, the authority informed the landlord and the tenants that the property was unlicensed. The landlord promptly applied for the same. The tenants subsequently applied to the FTT for an RRO for the full amount of rent paid while the property was unlicensed; namely, the sum of £11,712.75. The landlord admitted that the flat required a licence, but raised the defence of reasonable excuse. He argued that his letting agent had failed to inform him that the property required a licence. The defence was rejected by the FTT, which made an RRO in the sum of £11,712.75.
On appeal, the landlord argued that the FTT failed to take into consideration the totality of his conduct in accordance with section 44(4)(a) of the Housing and Planning Act 2016. He asserted that an award of the full amount of rent was reserved only for the most serious cases. For example, housing related offences for which a landlord had been convicted of the use of violence to obtain eviction or entry into premises as set out in section 46(3)(a).
In allowing the appeal, the UT observed that the FTT had wrongly adopted the approach following Vadamalayan v Stewart [2020] UKUT 183 (LC); [2020] PLSCS 189 to award the full amount of rent paid as the starting point unless there was a good reason to discount the same. Vadamalayan was authority for the proposition that an RRO was “not to be limited to the amount of the landlord’s profit obtained by the unlawful activity for the period in question.”
Although the FTT had found that the landlord’s defence of reasonable excuse was not made out, it was still required to consider the circumstances that founded the defence to ascertain if the conduct relied upon was a mitigating factor in reducing the amount of the RRO. As had been determined in Ekweozoh v London Borough of Redbridge [2021] UKUT 180 (LC); [2021] PLSCS 148 smaller landlords should be encouraged to seek the assistance of managing agents because their tenants were likely to benefit and the same encouragement should be reflected in the application of sanctions. In the present case the landlord was a small landlord, who rented one property that was found to be in relatively good condition and who accepted that he had failed to meet his regulatory responsibilities out of ignorance. He deserved some leeway. The UT substituted an RRO in the sum of £3,000.
Elizabeth Dwomoh is a barrister at Lamb Chambers
