Superior landlords not liable for Rent Repayment Orders

In an earlier blog “Who can a tenant bring a rent repayment order application against?” I discussed who the ‘landlord/respondent’ may be in application for a rent repayment order brought by a tenant. This question is of importance as we live in a private letting world where we have various letting set-ups which may not make it easy for the tenant to identify their landlord. It is particularly relevant in rent-to-rent set-ups where you may have a chain of landlords; an intermediary business takes over the letting of the Property in return for a guaranteed rent to the individual/entity letting the Property. This individual/entity is usually the owner of the Property, but this may not always be the case.

The Housing and Planning Act 2016 (“the Act”), which is the relevant legislation governing rent repayment orders, does not define the term ‘landlord’. The Act allows a tenant to make a rent repayment order application if an offence listed in Chapter 4 of the Act has been committed by ‘a landlord’. In both Goldsbrough v CA Property Management Ltd and others [2019] UKUT 311 (LC)  and Rakusen v Jepsen (2020) UKUT 298 (LC) the Upper Tribunal held that ‘landlord’ was not limited to the applicants’ immediate landlord. The consequence of this was that a tenant could make an application against any landlord higher up the chain, including the owner of the Property providing that they can prove that the landlord had committed a relevant offence. One reason this was particularly welcomed by tenants was that it would often be much easier to enforce a rent repayment order against someone with substantial assets (the owner of the Property) than the intermediary – often a limited company with no assets.

This interpretation of the law was considered by the Court of Appeal in Rakusen v Jepson & Ors, Safer Renting Intervenor (2021) EWCA Civ 1150. The Court considered in this appeal whether a rent repayment order can be made against a superior landlord of the tenant or whether it can only be made against an immediate landlord of that tenant. The answer to this question is quite clearly an important one.

Background and Appeal Decision

Mr Rakusen and his partner Ms Sarah Field owned the lease of Flat 9 Mandeville Court in Finchley. They granted a tenancy of the flat to a company known as Kensington Property Investment Group Ltd (“KPIG”). The terms of the tenancy allowed KPIG to sublet each unit of the flat individually or the whole of the flat. In return, Mr Rakusen and his partner received rent of £2643.33 a month.

In around 2016, KPIG let individual rooms in the flat to the Respondents in the appeal. The rooms were let on a licence agreement with the payment of a licence fee of £2297.00 per month. The flat was occupied by more than 3 people forming two or more households and accordingly required to be licensed under Part 2 of the Housing Act 2004. Neither party had obtained a licence.

The Respondent’s made an RRO application against Mr Rakusen and his partner on the grounds that they were in “control or management of an unlicensed HMO”.  The First-tier Tribunal being bound by the Upper Tribunal decision in Goldsbrough v CA Property Management Ltd and others [2019] UKUT 311 (LC)  made an order for a RRO against Mr Rakusen. The claim against his partner was struck out.

Mr Rakusen appealed to the Upper Tribunal, but his appeal was dismissed. Mr Rakusen then took this matter to the Court of Appeal.

The Court of Appeal carefully considered this matter and the interpretation of section 40(2)(a) which provides that “A rent repayment order is an order requiring the landlord under a tenancy of housing in England to— (a) repay an amount of rent paid by a tenant”. It was submitted by Mr Rakusen’s representative that an RRO could only be made against the immediate landlord of the tenant and not against a superior landlord and that the Court ought to have regard to the language, context and purpose of the section in the absence of a definition of “landlord”. It was further submitted that the language of the section implies a direct relationship between the parties, and in the absence of this any tenant could apply against any landlord. The Court of Appeal allowed the appeal.

This means that a tenant seeking to apply for a rent repayment order can do so against their immediate landlord rather than looking to the superior landlord.

If you are a landlord seeking advice on a rent repayment order claim that has been brought by your tenant and require advice, then please do not hesitate to contact us. Our team would be happy to discuss your case with you.