10 things to consider if you receive an RRO application from your tenants

Since the law changed in 2016 it has been easier for tenants to make RRO applications as tenants can apply straight to the First-tier Tribunal (Property Chamber) without waiting for the local authority to obtain a conviction. Tenants have 12 months from the date of the offence to make an RRO application so landlords frequently receive applications from former tenants many months after they have moved out. In many cases, the first notice the landlord will receive is a letter from the Tribunal informing them that an application has been made. Although RRO applications can be made on the basis of a number of housing offences including unlawful eviction or harassment, the majority of applications relate to licensing offences: failure to obtain an HMO licence under mandatory licensing or a local authority’s additional licensing scheme or failure to obtain a selective licence for a house in a selective licensing area.

Here are 10 things to consider if you receive an RRO application:

1. Seek independent legal advice

An RRO application is a serious matter. In order to determine the tenants’ application the Tribunal will need to make a finding on whether a criminal offence has been committed. While the Tribunal case cannot lead to a criminal conviction (only the criminal courts can convict a landlord) it can result in a public decision that the landlord has committed a criminal offence. The local authority could rely on this when taking enforcement action against the landlord, for example, serving a financial penalty notice or starting a prosecution. Early, independent legal advice is therefore important so that full details of the offence and any defence can be explored.

2. Have the tenants made their application against the correct person?

RROs can only be made against a tenant’s landlord. They cannot be made against a tenant’s agent. The Court of Appeal case of Rakusen v Jepson [2021] EWCA Civ 1150 also confirmed that an RRO can only be made against the tenant’s immediate landlord and not a superior landlord, for example, in situations where the property owner has let their property to a tenant who has sublet the property to the occupiers claiming the RRO. However, the Rakusen case is being appealed to the Supreme Court with a decision expected next year.

3. Have the tenants applied in time?

Tenants have 12 months from the date of the offence to make a RRO application. The Tribunal does not have the power to extend this deadline. If the tenants do not apply in time their application will be statute-barred and they will not be able to claim an RRO.

4. Are the tenants entitled to make a RRO application?

The offence must relate to housing that, at the time of the offence, was let to the tenant. If the property was not let to the tenant, for example, they were living at the property without the landlord’s permission, then they may not be entitled to claim an RRO. Note, however, that the occupier does not need to be a tenant to apply for a RRO and licensees can also apply.

5. Has an offence been committed?

Tenants need to prove that an offence has been committed beyond reasonable doubt which is the criminal standard of proof. Some cases will be straightforward and tenants will be able to prove this relatively easily while other cases will be more complicated, for example, in HMO cases where occupants have individual agreements for different rooms in a property and there are disputes regarding how many people occupied at any given time. The legal rules governing whether a property is an HMO and/or whether a property requires a licence are complex. Each element of the offence will need to be considered and the tenants will need to provide evidence to demonstrate that the landlord has committed an offence. In a recent case, the Upper Tribunal was critical of the tenants relying on pro-forma witness statements that omitted to deal with a key component of the offence. The Tribunal could not be satisfied to the criminal standard that an offence had been committed and refused to make an RRO.

6. Is there a defence?

A landlord may have a defence to the claim. With licensing failures, the offence ceases once the landlord has ‘duly made’ an application for a licence. Licensing offences are strict liability offences which means the landlord does not need to have intended to break the law. However, the law does provide for a defence of ‘reasonable excuse’. A landlord may have a defence if they can prove, on the balance of probabilities (the lower, civil standard of proof), that they had a reasonable excuse for managing or being in control of an unlicensed HMO or house. There is no definition of what constitutes a reasonable excuse and each case needs to be considered on its own facts.

7. Have the tenants applied for the correct period?

If the tenants can prove that an offence has been committed and the Tribunal decides to make an RRO, it is important to assess whether the tenants have applied for the correct amount. The maximum amount the Tribunal can order is 12 months’ rent but with licensing offences, the amount must relate to rent paid in respect of the period during which the landlord was committing the offence. It is therefore important to consider carefully whether an offence was being committed for the whole period for which the tenants are submitting the RRO application. It may be that the offence had ceased because there were periods when the property’s occupancy changed so that it was no longer a licensable HMO or the offence had ended because the landlord had applied for a licence.

8. Will the Tribunal make an RRO application for 100% of the rent?

With tenant applications for licensing failure offences the Tribunal is not required to make an RRO application for the maximum amount: the full 12 months’ rent. The Tribunal retains discretion over the amount to be awarded and must take into account certain factors including the landlord’s and tenant’s conduct, the landlord’s financial circumstances and whether the landlord has ever been convicted of an RRO offence. In a recent case, the Upper Tribunal confirmed that considering the seriousness of the offence is a key part in assessing the level of the RRO.  All the circumstances of the case need to be considered.

9. Does the case have to go to a hearing?

Just because the tenants have commenced a claim in the Tribunal, this does not mean that it has to proceed to a final hearing. The Tribunal usually encourages the parties to communicate early in the claim process with the aim of trying to settle the dispute. The parties are free to negotiate and, in appropriate cases, early offers can be an effective way of settling the claim without incurring the time and cost of complying with Tribunal directions and attending a hearing.

10. What are the benefits of reaching a settlement?

There are benefits to both parties in reaching a settlement rather than proceeding to a Tribunal determination. The parties can agree terms that the Tribunal cannot order, for example, they can agree to keep the terms of settlement confidential. The parties can also settle without any admissions of liability and avoid a tribunal finding on whether an offence has been committed. Settlement also has advantages for tenants as they are likely to receive payment more promptly.

How Anthony Gold can help if you receive an RRO Application

Sarah Cummins is a senior associate based in our London Bridge office, specialising in residential landlord and tenant disputes. She has extensive experience of cases involving Houses in Multiple Occupation (HMOs) including property licensing, management and council tax. She has represented landlords in tribunal appeals relating to licence conditions, improvement notices, prohibition orders and rent repayment orders.

Anthony Gold has a team of experts in RROs and we are frequently approached to assist in settlement negotiations and representing parties in the Tribunal. If you are looking for help with an RRO application, please contact us.