Under the Housing and Planning Act 2016, the First-tier Tribunal is empowered to make a rent repayment order against a landlord found to be in control or management of an unlicensed house in multiple occupation contrary to section 72(1) of the Housing Act 2004. When the application is made by the tenant and sections 46(2) and 46(3) of the 2016 Act do not apply, the starting point for the making of an RRO is not the full rent paid during the relevant period, as the Upper Tribunal has determined in Williams v Parmar [2021] UKUT 244 (LC); [2021] PLSCS 169.
In Williams, the landlord admitted that she was in control and management of an unlicensed HMO contrary to section 72(1). Her tenants applied to the FTT for an RRO. Purporting to rely on Vadamalayan v Stewart [2020] UKUT 183 (LC); [2020] PLSCS 189, the FTT used as its starting point in calculating the amount of the RRO, the full amount of rent paid by the tenants during the relevant period. In reducing the level of the RRO, the FTT rejected as irrelevant all factors save those highlighted in section 44(4) of the 2016 Act; namely, the conduct of the landlord and tenant, the financial circumstances of the landlord and whether the landlord had been convicted of any offences to which chapter 4 of the 2016 Act applied. In so doing the FTT imputed a test of “meritorious conduct” on the part of the landlord as being the material factor when considering the landlord’s conduct.
By way of its amended grounds of appeal, the landlord argued the FTT had erred in misinterpreting the breadth of its discretion. In allowing the appeal on this point, the UT found that the FTT had erred in approach to Vadamalayan. As noted by the UT in Ficarra and others v James [2021] UKUT 38 (LC); [2021] PLSCS 43, 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 during the period in question. It was not authority for the proposition that the full rent was to be ordered under an RRO subject only to limited adjustment for the factors specified in section 44(4).
The UT found that in the present case the FTT had construed far too narrowly its discretion under section 44. There was no presumption that the full rent must be the starting point in circumstances where the conditions in section 46(2) and 46(3) were not met. Additionally, the FTT was not restricted to considering only the factors specified in section 44(4), albeit those were the main factors the FTT would be expected to take into consideration.
The UT also considered that the FTT had construed too narrowly section 44(2)(a) if it found that only meritorious conduct on the part of the landlord, if proved, could reduce the maximum starting point of an RRO. The circumstances and seriousness of the landlord’s conduct were factors that had to be considered as part of the “conduct of the landlord”. Any mitigating factors that arose could result in a lowering of the level of an RRO made. In determining how much lower the RRO should be the FTT should take into account the purposes intended to be served by the jurisdiction it had been granted to make RROs.
The UT expressly rejected the argument advanced on behalf of the landlord that an RRO should be made on the basis of what amount was reasonable in each case.
Elizabeth Dwomoh is a barrister at Lamb Chambers
