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Rent Repayment Orders: A Snapshot

Hannah Lennox, Trainee Solicitor, provides an overview of Rent Repayment Orders.

The Legislation

A Rent Repayment Order (RRO) is an order requiring a landlord to repay money paid in respect of rent to a tenant or to a local authority. Tribunals can make Rent Repayment Orders under section 43(1) Housing and Planning Act 2016 where they are satisfied, beyond reasonable doubt, that a landlord has committed a relevant offence. Section 40 sets out the relevant offences which all indicate the intention is to discourage unscrupulous and unlawful behaviour by landlords:
• Section 6(1) Criminal Law Act 1977 – violence for securing entry
• Section 1(2), (3) or (3A) Protection from Eviction Act 1977 – eviction or harassment of occupiers
• Section 30(1) Housing Act 2004 – failure to comply with improvement notice
• Section 32(1) Housing Act 2004 – failure to comply with prohibition order etc
• Section 72(1) Housing Act 2004 – control or management of unlicensed House in Multiple Occupation (HMO)
• Section 95(1) Housing Act 2004 – control or management of unlicensed house
• Section 21 Housing and Planning Act 2016 – breach of banning order

This article focuses on RROs obtained on the basis of s72(1) Housing Act 2004 as Tribunals have seen a steady rise in such applications. This is in part explained by the increasing practice of local authorities to highlight the opportunity of obtaining a RRO to tenants. Section 72(1) states “A person commits an offence if he is a person having control of or managing an HMO which is required to be licensed under this Part (see section 61(1)) but is not so licensed.”

There are several things to note from the above synopsis.

Firstly, local authorities have a range of measures they can deploy upon discovering an unlicensed HMO, beyond pursuing a prosecution. RROs and financial penalties are more efficient than prosecuting landlords as the process is concluded sooner and a housing officer can handle the matter throughout. However, outsourcing of enforcement to tenants through RROs may become another symptom of local authorities’ budget cuts.

Secondly, the Residential Property Tribunal are being asked to apply the criminal standard of proof, “beyond reasonable doubt” where a conviction has not already been made. Tribunals are therefore now having to warn landlords that statements and decisions made in Tribunal proceedings may be used in later criminal proceedings. In Opara v Olasemo the Upper Tribunal found that the First-Tier Tribunal had approached their ability to draw inferences to satisfy themselves to the criminal standard of proof too cautiously. The Upper Tribunal highlighted ‘for a matter to be proved to the criminal standard it must be proved “beyond reasonable doubt”; it does not have to be proved “beyond any doubt at all”.’

Third, there is a lack of consistency in language between the Acts. Section 72(1) Housing Act 2004 refers to a “person” who has control of or manages a HMO. The Act defines these terms and there is some caselaw which ought to be consulted by anyone relying on s72(1). However, RROs are made against “landlords”. Whilst it is unlikely a Tribunal will give much tract to any argument that a landlord is not a person in control of or managing a property which they let, it is not impossible to imagine legal argument being put forward on this point by a landlord.

Further, it raises a question over the culpability of managing agents where landlords are paying for managing agents to manage every aspect of their property – who ought to be paying the price of a failure to licence? The Housing and Planning Act 2016 lays the financial penalty at the landlord’s doorstep. However, where does the burden lie when a landlord has authorised and paid for another to act as their agent? Landlords will expect this to be part of a managing agent’s service, but an agent is unlikely to expect to be sued where their principal has not obtained a licence. Prudent landlords and agents will ensure the licence is in place at the commencement of any tenancy and set reminders as they approach the expiry of a licence, which is only given for a certain number of years.
Urban Lettings (London) Ltd v London Borough of Haringey [2015] UKUT 104 (LC) considered which of a choice of landlords ought to be liable for a RRO – on appeal the upper tribunal confirmed both could have committed an offence under s72 Housing Act 2004 and both could be liable for a RRO under the Housing and Planning Act 2016.

Depending on their experience of the landlord/managing agent, tenants may not mind who is found liable. However, tenants may be presented with some difficulty in identifying the appropriate respondent(s) to their application. This is certainly the case where agents have been unclear about who the landlord is, where a landlord company rents out a property which is owned by the company’s sole owner and director or where there has been a change in ownership/management during the relevant period.

Landlords have also had difficulty in the past in identifying their own liability for a RRO. Oxley v Live in Guardians Limited confirmed that property guardians, even if a licensee rather than a tenant, could obtain a RRO where the landlord had failed to obtain the necessary HMO licence.

Obtaining a Rent Repayment Order

A tenant need not necessarily have suffered any harm to be able to apply for a Rent Repayment Order. The aim is to encourage landlords to comply with their statutory obligations and act lawfully in dealing with tenants. Where they do not, RROs are a potential penalty.

Tenants must ensure they make their application for a RRO within 12 months of the offence being committed/ceasing. Provided they have done so, s44(2) HPA 2016 allows tenants to apply for the rent they paid during a period, not exceeding 12 months, during which the landlord was committing the offence. See the First-tier Tribunal’s review decision in LON/00AJ/HMF/2018/0053 for further clarity on this point. Note: where the relevant offence is that in either the Criminal Law Act 1977 or Protection from Eviction Act 1977 the rent must have been paid in the 12 months up to the date of the offence.

However, the Tribunal will not necessarily award the full 12 months rent. There is a significant amount of judicial discretion afforded in RRO cases and no two judges I have spoken to have approached the question of what percentage of the rent to award from the same starting point. In LON/00BD/HMK/2017/0012 no consideration was given to awarding less than the full rent claimed. The Upper Tribunal have referred several cases back to the First-tier Tribunal having found that the Tribunal had not exercised its discretion appropriately. See this case for example, where the Upper Tribunal found the First-tier Tribunal’s decision had not given sufficient weight to the mitigation evidence on behalf of the landlord. Section 44(4) Housing and Planning Act 2016 instructs the Tribunal to take into account –
a) the conduct of the landlord and the tenant,
b) the financial circumstances of the landlord, and
c) whether the landlord has at any time been convicted of an offence to which this Chapter applies.

Except in the case of an application by a tenant on the basis of an unlicensed HMO or house, the Tribunal must award the maximum amount within the Tribunal’s power where the landlord has been convicted of the offence or a financial penalty has been imposed and there is no prospect of an appeal against that penalty.

Whilst there is no guidance given to tenants applying for a RRO, local housing authorities and Tribunals are required to have regard to the guidance given by the Secretary of State. That guidance is instructive and tenants applying for a RRO ought to read it: https://tinyurl.com/y7kt8uv3
However: Beware the tenant who looks to occupy an unlicensed HMO to be able to obtain a RRO! The Tribunal is instructed to take tenants behaviour into account. The Upper Tribunal found that questions of conduct ought to be put to you at a hearing – see this article on Nearly Legal, which is another useful research source.

Rent Repayment Orders are a useful tool for tenants to use in challenging difficult landlords and are worth bearing in mind where multiple households live under one roof. If you would like advice about applying for a RRO please contact BPP’s Legal Advice Clinic (Housing) on 02074305668 or via blac@bpp.com.

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