Can a rent repayment order be paid in instalments?

A rent repayment order is an order made by the First-tier Tribunal requiring a landlord to pay back up to one year’s rent. Tenants (or local authorities where a tenant has received Universal Credit housing costs element or housing benefit) can apply to the Tribunal if they believe that the landlord has committed one of a number of criminal offences. If the Tribunal is persuaded to the standard of proof used in the criminal courts (“beyond reasonable doubt”) that the landlord committed the relevant offence, it can make a rent repayment order. The procedure incorporates aspects of a criminal prosecution, with elements of a civil law compensation claim mixed in.

Since the tenant must have paid rent in the first place before they can obtain a rent repayment order, sometimes the landlord will have the cash available to pay the order (or any out of court settlement) immediately, but this is not always the case. Buy-to-let landlords will have been using the rent to pay their mortgage, and landlords may have other debts or expenses. Rent repayment orders can sometimes be for a substantial amount of money, so it is sometimes impossible for the landlord to pay it in full straightaway.

Landlords might assume that they will be able to ask the Tribunal for time to pay any award but in Parker v Waller [2012] UKUT 301 (a decision made under the old legislation which has in other respects been overturned by Vadamalayan v Stewart [2020] UKUT 183 (LC)) the Upper Tribunal noted that there was simply no power to direct that a landlord should be given time to pay. That reasoning appears to still apply now that rent repayment orders in England are governed by the Housing and Planning Act 2016, as the new legislation does not give any specific power to the Tribunal to order payment by instalments.

So, on the face it, it might appear that landlords cannot pay rent repayment orders in instalments. However, the reality is that this is extremely common, and it can come about in two different ways: as a term of a settlement, or during the enforcement stage.

Settlement

Many applications for rent repayment orders are settled out of court, rather than determined by the Tribunal. In a settlement, the parties can agree terms which the Tribunal would not be able to order. This could include matters such as the return of a deposit, non-disclosure agreements or payment of a settlement sum by instalments. Most settlement agreements take effect as a form of contract, so within reason, the parties can agree to any terms they find acceptable. Tenants who will agree to give time for payments might find that they are rewarded with a more generous settlement.

Enforcement

Things are a little bit more complicated after the Tribunal has made a rent repayment order. Getting a rent repayment order is only the first step – if the landlord does not pay at that stage, tenants will have to enforce that award in order to see any money. Last year I discussed the difficulties tenants can have actually enforcing their awards with my colleague Eleanor Solomon, and Ben Reeve-Lewis from Safer Renting, recorded as a podcast. Tenants can enforce the order in the County Court, and they can use the full range of enforcement tools which the Courts offer. This is not straightforward, nor is it quick. Even after a rent repayment order is made, landlords and tenants can still make agreements about payment terms. For example, a tenant might agree not to proceed with obtaining a charging order (which secures the debt against the landlord’s property) if the landlord makes regular payments as agreed. If they payments are going to made within a reasonable timescale, that can be a win-win – the tenants get their money without too much fuss, and the landlord can avoid the additional problems and stress which accompany the enforcement of judgment debts against them.

What is a fair payment plan?

I have given advice to landlord and tenants on payment plans relating rent repayment orders, and what feels fair will often be a matter of perspective. It is important that both sides understand what is agreed, and what could happen if the agreed payments are not made – a payment schedule can be helpful to ensure that there are no misunderstandings. The rate of payment will depend on what the landlord can afford, and what the tenants are prepared to accept, but landlords are unlikely to get away with a merely token payment. It might be better for both sides to think about what is realistic, and what will give the other party sufficient protection, rather than what is ‘fair’.

Tenants can simply proceed with formal enforcement without offering to agree a payment plan, but that does not guarantee payment. Debt recovery is difficult work which requires persistence, and payment in instalments is certainly better than no payments at all.