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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

Smoke and Carbon Monoxide Alarm Regulations October 2022

5 things private landlords need to know about the new changes

From 1 October 2022 the Smoke and Carbon Monoxide Alarm Regulations in England will change. Private landlords will be required to comply with the new obligations from this date. Below are 5 key things private landlords need to know about the new regulations.

  1. Carbon monoxide alarms will now be needed in more rental properties

At present, under the existing 2015 Smoke and Carbon Monoxide (Alarm) Regulations landlords must install a carbon monoxide alarm in any room which is used wholly or partly as living accommodation and contains a solid fuel appliance, for example an open coal fire or log burning stove. This requirement is being extended so that from 1 October 2022 landlords will be required to provide carbon monoxide alarms in any room with a fixed combustion appliance. This will bring gas appliances such as gas boilers within the remit of the regulations, however, gas cookers are expressly excluded. This means that most properties save for those powered solely by electricity are likely to need carbon monoxide alarms.

 

  1. Landlords will now be responsible for repairing and replacing faulty alarms throughout the tenancy

Again, the Smoke and Carbon Monoxide Alarm Regulations are being extended by placing the responsibility on landlords to repair or replace faulty alarms throughout the tenancy. Under the current rules, after the landlord’s test at the beginning of the tenancy, responsibility passes to the tenants to carry out ongoing tests and arrange the replacement of batteries or faulty alarms with the landlord. This will no longer be the case and landlords will be under a new obligation to repair or replace any alarm found not to be in proper working order. The legal obligation will be triggered following receipt of a report from a tenant or their nominated representative. Once such a report is made, the landlord is under an obligation to determine whether the alarm is in working order and carry out any required repair or replacement as soon as reasonably practicable. What is “reasonably practicable” is not defined in the regulations but given the safety implications of a faulty alarm system it would be advisable for landlords to act promptly. The explanatory memorandum to the regulations state that local authorities should make “reasonable judgements” and consider factors such as the local availability of alarms, the granting of access by occupiers and any exceptional circumstances that have resulted in delays. Any difficulties in gaining access to properties to check the alarms and carry out repairs should be noted so that landlords have records if they are asked to justify the speed within which they responded to a report.

 

  1. Tenants will still need to report faulty alarms

When the rules change, tenants will no longer be responsible for arranging repairs or replacement of fire and carbon monoxide alarms. However, tenants are still required to notify landlords of the need to repair or replace alarms as it is this report to the landlord or their agent that triggers the duty to repair or replace the alarm as soon as they are found to be faulty.

 

  1. There are still tough sanctions for a breaching the Smoke and Carbon Monoxide Alarm Regulations but local authorities must consider a landlord’s written representations

As is the case under the current rules, if landlords do not comply with their duties set out in the Smoke and Carbon Monoxide Alarm Regulations, the local authority can serve a remedial notice on the landlord. A failure to comply with a remedial notice can lead to the local authority carrying out remedial works and imposing a financial penalty of up to £5,000. The new regulations, however, change the procedure in relation to the service of remedial notices. From 1 October 2022, local authorities will be under a new duty to consider written representations made by a landlord in response to a remedial notice. While the local authority is considering the representations the remedial notice is suspended until the local authority informs the landlord of its decision to either confirm the remedial notice or withdraw it.

 

  1. HMO and other property licence conditions will also be amended to reflect the changes

Where the property requires an HMO licence or a selective licence the Smoke and Carbon Monoxide Alarm Regulation’s requirements are set out in the licence conditions. There are mandatory conditions in HMO and selective licences that incorporate the duties set out in the smoke and carbon monoxide alarm regulations. The new regulations will therefore change the mandatory conditions in licences to reflect the new provision that carbon monoxide alarms must be installed in any room with a fixed combustion appliance (gas cookers excluded). Again, this will only apply to property licences in England and the conditions will only apply to licences that are granted on or after the 1 October 2022.

 

Sarah Cummins is a senior associate based in our London Bridge office, and a specialist in residential landlord/agent disputes. Our Housing & Property Disputes team are highly experienced in helping landlords who are in dispute with the local authority over their multiple occupancy (HMO) licence or fire safety obligations, including Smoke and Carbon Monoxide Alarm Regulations.

Rent Repayment Orders – how much will the Tribunal award?

On 5 September the Upper Tribunal issued its decision in a combined appeal case of Acheampong v Roman & Ors and Choudhury v Razak & Ors [2022] UKUT 239 (LC). This is an important decision as it is the latest in a series of appeals where the Upper Tribunal has sought to provide guidance on how Rent Repayment Orders (“RROs”) should be calculated.

Background

RRO applications are made, in the first instance, to the First-tier Tribunal (Property Chamber) (“the FTT”). Once the tribunal is satisfied that the applicant is entitled to a RRO the
tribunal must determine the amount to be awarded. Most RRO applications are applications made by tenants for offences relating to being in control of or managing an unlicensed house or house in multiple occupation (HMO) under the Housing Act 2004. RRO applications in England are governed by the Housing and Planning Act 2016 (HPA). Section 44(4) of the HPA requires the tribunal to take into account the following factors when determining the RRO amount:

(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 the RRO provisions apply.

It is important to note that with tenant applications for licensing failures, the Tribunal retains discretion in setting the level of the RRO. They are not restricted to ordering the maximum amount of rent for the relevant period. However, recent cases, including decisions from the Upper Tribunal, show that the tribunals have struggled to formulate a consistent approach to applying this discretion.

The Upper Tribunal’s Decision

This latest decision concerns two appeals both involving tenant applications for landlord licensing offences. The facts of each case were different but the legal point on appeal was the same: what approach should the tribunal have taken in determining how much a landlord should pay by way of RRO?

After reviewing earlier authorities, Judge Cooke sets out a paragraph on “practical points for decision making.” She starts by stating:

“It is easy to say what the FTT should not do: it should not take the whole rent (less any payment for utilities) and regard that as the starting point subject only to deductions made in light of the factors in section 44(4) of the 2016 Act.”

This was the approach that was commonly applied by the FTT following the 2020 case of Vadamalyan v Stewart and which frequently resulted in tenants being awarded 100% of the rent. This was held to be an incorrect approach in Williams v Parmar. (My colleague Nikki Basin has written about this further here.) As Judge Cooke explains, the problem with that approach is that no consideration is given to the seriousness of the offence meaning that absent evidence of good conduct by the landlord, poor conduct by the tenant or financial difficulties of the landlord, the result is a 100% RRO. This is regardless of the type of offence and where it sits on the seriousness scale. Therefore, a landlord who has inadvertently failed to licence a property but otherwise provided satisfactory accommodation could receive the same RRO as one who has used violence to secure entry to a property. Without being able to adjust the RRO to reflect the seriousness of the offence, the tribunal will have fettered its discretion.

Turning to what the FTT should do, Judge Cooke sets out the four-stage approach:

  • a. Ascertain the whole of the rent for the relevant period;
  • b. Subtract any element of that sum that represents payment for utilities that only benefited the tenant, for example gas, electricity and internet access. It is for the landlord to supply evidence of these, but if precise figures are not available an experienced tribunal will be able to make an informed estimate.
  • c. Consider how serious this offence was, both compared to other types of offence in respect of which a rent repayment order may be made (and whose relative seriousness can be seen from the relevant maximum sentences on conviction) and compared to other examples of the same type of offence. What proportion of the rent (after deduction as above) is a fair reflection of the seriousness of this offence? That figure is then the starting point (in the sense that that term is used in criminal sentencing); it is the default penalty in the absence of any other factors but it may be higher or lower in light of the final step:
  • d. Consider whether any deduction from, or addition to, that figure should be made in the light of the other factors set out in section 44(4).

The first stage should be straightforward. With licensing offences the relevant period only extends to a period during which the landlord was committing the offence but in all cases the relevant period cannot exceed 12 months.

The second stage should also not be problematic. Where utilities are included in the rent the tribunal has long allowed deductions for this as these are sums that benefit the tenant not the landlord.

The third stage is where the Tribunal will need to consider more explicitly the seriousness of the offence. As Judge Cooke comments this is not a new element. It forms part of what is required under the statutory factor at s44(4)(a): the conduct of the landlord. It is an examination of the conduct of the landlord within the context of the actual offence. It therefore involves looking at all the circumstances of the offence: how serious is it, how culpable is the landlord, what harm has been caused? Once that assessment has been carried out the tribunal can arrive at a figure for the RRO which is the starting point.

Finally, the Tribunal must consider whether any deduction from, or addition to, that figure should be made in light of the other factors in s44(4) above. For example, there may be poor conduct on the part of the tenant which justifies the making of a lower RRO. Or there may be other bad conduct on the part of the landlord which means the RRO should be increased. It seems that here the tribunal will also consider poor conduct on the part of the landlord which is not directly connected to the offence. For example, we have seen tribunals take into account a landlord’s failure to comply with other statutory obligations such as failing to protect a tenant’s deposit.

Judge Cooke’s four-stage approach does not appear to be add anything new to how the tribunal should measure RROs. The requirement to consider the seriousness and circumstances of the offence are not new criteria but part of the landlord’s conduct. There is also the point made by the Chamber President, Fancourt J, in Williams v Parmar that the statutory factors are not the only factors that a Tribunal can take into account and any other relevant factors will also need to be considered.

Outcome of the Appeal

In the case of Acheampong, Judge Cooke decided to remit the matter back to the FTT for determination as there were findings of fact that needed to be made and the Upper Tribunal was not able to substitute its own decision. In the case of Choudhury, Judge Cook reduced the RRO from 100% to 75% of the rent. In her assessment of the seriousness of the offence Judge Cooke referred to the fire safety failings being a significant factor and failure to protect the deposit as a significant breach of duty. However, she considered it was not the most serious offence of its kind.

Comment

Will this lead to a more consistent approach in Tribunal decisions? The guidance is helpful and should put an end to the practice of taking the full rent as the starting point and making deductions based on the statutory factors. While it had already been confirmed in Williams v Parmar that this was the wrong approach, Judge Cooke’s methodology should assist tribunals with their assessments particularly with ensuring the seriousness of the offence is properly considered before determining the starting point for the RRO. Whether this will lead to more consistent RRO awards is a different matter. The Tribunal will need to evaluate the factors in the individual case and reach a conclusion on where on the scale of seriousness the offence lies. No doubt there will be differing views on this and future appeals may revolve around whether the tribunal has carried out that assessment correctly.

HPLA Intervention in Khan v Mehmood

The Housing Law Practitioners’ Association (HLPA) intervened in the Court of Appeal in Khan v Mehmood.

Simmons v Castle

The case of Simmons v Castle established that Claimants in personal injury, defamation, and other torts which cause suffering, inconvenience or distress to individuals, should be 10% higher than previously. This was to partially compensate Claimants for legislative changes which limited legal aid and meant that success fees in cases funded by Conditional Fee Agreements (CFAs) could no longer be paid by the Defendant and must be taken from Claimant’s damages. Simmons v Castle is routinely used by housing practitioners in housing disrepair and other cases to justify a 10% uplift on damages.

Khan v Mehmood

The landlord in Khan v Mehmood argued that the 10% uplift should not apply to disrepair cases because damages in those cases are calculated by reference to a reduction in rental value rather than by tariff.

HLPA intervened, and Eleanor Solomon of Anthony Gold Solicitors submitted witness evidence on HLPA’s behalf. HLPA’s submissions set out that the 10% uplift was routinely awarded in disrepair cases, that the uplift was intended to apply to this kind of case, and that Claimants in disrepair cases receive modest levels of damages, meaning that the 10% uplift is necessary and has a significant affect on the level of compensation they receive. HLPA also set out that the number of legal aid practitioners specialising in disrepair is falling. Representation by CFA is therefore increasingly common and necessary for potential claimants. The success fee is a vital part of the sustainability of representation for tenants, particularly for those in social housing or at the lower end of the private housing market who are unable to afford legal fees out of their own resources. Removing the Simmons v Castle uplift, and thereby reducing the level of general damages, would have an adverse impact on success fees and the availability of legal representation for such claimants.

HLPA’s submissions were accepted and the 10% uplift will continue to apply to damages in disrepair claims.

Why the Khan v Mehmood Judgment Matters

This is an important judgement, firstly because it safeguards levels of damages for tenants and leaseholders in disrepair cases. If the landlord had been successful then damages in disrepair cases would have fallen. Secondly, it recognises the issues with funding disrepair and other housing claims, and the shortage of practitioners in this area as a result. Funding of housing claims is massively threatened by Fixed Recoverable Costs, which are due to apply to most housing cases from April 2023. The judgement in Khan v Mehmood recognises that further cuts to costs or damages in disrepair cases will make funding many disrepair cases unviable, which will be a huge loss to tenants living in poor housing conditions.

 

Eleanor Solomon is a specialist in housing and property disputes. She advises tenants and leaseholders on forcing landlords to comply with their legal obligations, including making repairs. She also helps clients who are facing possession orders, homelessness or have bought a defective new build property.

Recovering possession to sell properties after section 21 notices are abolished for private landlords

Along with a number of other changes to the private rented sector including the scrapping of section 21 notices, the Government has announced that a new ground for possession will be available for landlords who wish to evict their tenants if they intend to sell their property. At the moment, there are various ways in which a landlord can obtain possession of their property through the existing Section 8 and Section 21 notice procedures. Where a landlord wants to serve a section 8 notice they must demonstrate that one of the grounds for possession applies. Currently, there is no specific ground for obtaining possession in relation to a sale of a property.

Current Procedure to recover possession

At the moment, landlords who intend to sell their properties can serve a section 21 notice on their tenants. Some landlords may wish to inform their tenants of their intentions to sell a property so that a notice seeking possession does not come as a surprise to the tenant, but when giving a section 21 notice the landlord does not need to give any reason to their tenant.

However, this process can be complicated. There are various requirements that a landlord has to satisfy before serving a valid section 21 notice on the tenant, including the need to ensure that a valid gas safety certificate, Energy Performance Certificates and How to Rent Guides were served on the tenant and if a deposit was acquired, it was protected by the landlord or their agent with a Government-backed deposit protection scheme.

This can often make it difficult for landlords or cause substantial delay in obtaining possession of a property particularly if any of the prescribed requirements have not been complied with prior to the service of a section 21 notice. It is therefore anticipated that the proposed new ground will remove any difficulties associated with the current section 21 possession procedure where the landlord wishes to sell their property.

The Government’s Proposals

Some details about how this new ground might work were published last week. The Government’s response to a consultation on the abolition of section 21 notices provides a summary of how the new ground would work. The ground would be a ‘mandatory’ ground meaning if it applies, the court dealing with a landlord’s possession claim must order the tenants to leave the property. The amount of notice landlords have to give would be two months, and in almost all circumstances, notice could not be given in the first 6 months of a new tenancy. To prevent misuse of the ground, the response says: “We will prevent the original landlord marketing and reletting the property for 3 months following the use of this ground.”

What evidence is required and is there a possibility that landlords may misuse this process?

It is not clear what evidence will be required to prove a sale of the property. The White Paper makes reference to the landlord “intending” to sell a property and it could be that a landlord may only have to demonstrate their intentions by showing that the property has been marketed for sale by an estate agent. However, this could potentially lead to a misuse of the new ground – some landlords might regard this ground to be the easier option in getting possession and falsely serve a notice citing this ground, but they may then take their properties off the market once a possession order is made.

The White Paper does state that “misuse of the system or any attempt to find loopholes will not be tolerated” and the Government will look to extend the “power for councils to issue Civil Penalties Notices for offences relating to the new tenancy system”. Therefore, it is likely that the Government will introduce additional penalties or strengthen existing penalties for landlords who abuse this procedure. Landlords will still be subject to the rules relating to contempt of court where they have commenced a court claim for possession but dishonestly signed a statement of truth.

Conclusion

This details of this proposed new ground for possession will become clear when the draft text of the Renters Reform Bill has been published and it is interesting to see how the drafters of the Bill attempt to prevent abuse of this ground. We also wait to see what restrictions will be imposed on landlords when relying on this ground and the extent of evidence required to bring a successful claim.

Tamanna Begum assists with complex disputes regarding private residential property; including landlord and tenant possession proceedings, bringing appeals to the First Tier Tribunal (Property Chambers) and defending landlords and agents in property licencing and trading offences. Contact her at tamanna.begum@anthonygold.co.uk or on 020 7940 4060.

Good News for Pet Lovers – Blanket Ban on Pets to be Removed

The much-awaited fairer private rented sector white paper (“the white paper”) has finally been published. The white paper comes with good news for pet lovers who live in the private rented sector as it intends to remove the blanket ban on pets.

The white paper has set out proposals to provide tenants with a positive renting experience by allowing tenants to treat their private rented property as their own home whilst in occupation. This includes giving them the right to request to have their pet living with them and thereby giving them more freedom and choice in their own home. The government intends to bring in legislation which will prevent landlords from withholding consent for a pet to be brought into rented accommodation without a good reason. Landlords will not be able to unreasonably withhold consent when a tenant requests to rent with their pet or bring in a pet. If such a request is made, then the landlord will need to provide reasoning for any such refusal. Tenants will also be given the opportunity to challenge any refusal for permission without a good reason.

However, there is still currently a lot of uncertainty with these proposed changes. It is not clear whether the proposals will allow for just one pet or multiple pets. Furthermore, it remains to be seen what sort of process will be introduced to challenge any refusal to allow a pet at the property. It is not clear whether that will be an internal process with the landlord or a more formal route to challenge any such decision by the landlord through the Ombudsman and/or Courts.

In addition to the above, changes will also be introduced to the Tenant Fees Act 2019 to allow landlords to require any tenant who makes a request to have a pet in the Property to take out pet insurance. The purpose of this is to cover landlords for any damage to the Property by the pet under the terms of the pet insurance. Again, there is uncertainty on how this will work in practice and whether the landlord can insist on specific cover amounts to be taken out under the policy.

There is still a lot of uncertainty on how this proposed change will work in practice and whether there will be categories of pets which are more likely to be accepted by landlords than other pets. It is also not clear on what kind of reasoning will be considered a reasonable refusal by the landlord not to allow the pet. This remains to be seen.

Overall, the proposed changes are good news for tenants as those who have been unable to rent with a pet in the past will now be able to do so.

Nikki Basin specialises in property litigation including residential possession claims, deposit protection claims, breach of contract, disrepair, new build claims, co-ownership disputes, claims under Trust of Land and Appointment of Trustees Act (TOLATA) 1996 and professional negligence claims. Contact her at nikki.basin@anthonygold.co.uk or on 020 7940 4060.

Should tenants be advised to remain in unlicensed HMOs to maximise rent repayment orders?

When a tenant discovers that they are living in an unlicensed HMO it is usually not long before they realise that they can make an application to the First-tier Tribunal for a rent repayment order (RRO) against their landlord. At this point, one of the first questions to consider is when should the tenants make that application?

When should a tenant make an application for a rent repayment order?

There is no need to apply straight away – tenants have until one year from the date of their landlord’s criminal offence to make their application to the Tribunal. Many tenants choose not to apply for an RRO until they have moved out.

Reasons tenants delay making a rent repayment order

There are sensible reasons to do that. Often tenants would prefer not to start legal proceedings against their landlord while they are still living in the Property. That might be out of fear of eviction or mistreatment, or simply to avoid the awkwardness of having to interact with someone you are suing.

But there is another reason for delaying – the tribunal can award tenants up to one year’s rent, but the amount awarded will not exceed the rent paid by the tenant during the period in which the property is unlicensed. If the tenant is alleging that their landlord has committed the offence of managing or being in control of an unlicensed house in multiple occupation, the longer the property is unlicensed, the better the chances that the tenant will recover a whole year’s rent.

This means that there is a completely rational reason for tenants to keep quiet and live in an unlicensed HMO for at least 12 months before complaining to the landlord and applying for a rent repayment order – complain any earlier and the landlord will be ‘tipped off’ about their mistake. A sensible landlord would immediately apply for a licence, and that could reduce the amount of any rent repayment order.

This should make us uncomfortable. Licensing exists in part at least to ensure that rented properties are safe. The conditions of a licence will include requirements to ensure that the landlord has carried out proper safety checks, and tenants who live in an unlicensed property might not have the benefit of fire detection and alarm systems suitable for their property.

 

 

What should advisers be telling tenants?

The starting point has to be that any type of legal adviser should tell tenants the truth. That means being honest about the possible benefits of not telling the landlord about their mistake straight away, and being honest about the possible safety risks of living in an unlicensed HMO. After that, it is for tenants to decide for themselves how they want to proceed.

Legal advisers need to be careful about advising about fire safety. Most of us are not experts in fire safety, but experienced housing advisers might know something about the legal framework for fire safety in HMOs and how to interpret fire safety guidance. We might be able to point out ways in which landlords are breaching the law, but for most legal advisers it is well beyond our expertise to conduct a fire risk assessment.

For solicitors, our duty of confidentiality to our clients means that if tenants choose not to notify anyone that they are living in an HMO, we could not go against the wishes of the tenants. Most advisers will be subject to similar confidentiality obligations.

What should local authorities be telling tenants?

For local authorities, the position is very different. If local authority officers decide to write to the landlord and tell them they are managing an unlicensed HMO, they are entitled to do so.

There is a statutory duty on local authorities in section 61(4) of the Housing Act 2004 to “take all reasonable steps to secure those applications for licences are made to them in respect of HMOs in their area which are required to be licensed under this Part but are not”. A council officer knowing that an HMO is unlicensed but choosing to not do anything about that does not sit easily with that duty.

From the point of view of overstretched local authorities, Rent Repayment Orders provide a cost-effective way of ensuring that there are consequences for landlords who do not obtain a licence. This is one reason why local authorities often assist tenants who are applying for an RRO.

There are some reports of council officers agreeing not to notify landlords that they are breaching a licensing requirement. For example, in this article, a tenant describes being told by council officers that “they could apply for a Rent Repayment Order which would allow them to take their landlord to court – only if they continued living in the unfit accommodation for the year.”

It is one thing for an adviser to give this advice, but for an officer of a local housing authority to agree to allow a property to continue to be unlicensed for several months to maximise the tenant’s size of a rent repayment order is troubling to me. Local authorities are meant to enforce the law and encourage landlords to apply for licences.

How should the Tribunal respond to this?

It is the First-tier Tribunal which decides whether to make a rent repayment order and how much should be awarded.

I can think of one example of a case where the Tribunal determined that a tenant knew the property they were living in was unlicensed – in Wilson v Campbell [2019] UKUT 363 (LC) the applicant was apparently employed by Newcastle City Council as a Senior Environmental Health Technician. The landlord argued that the tenant had “made an informed decision to continue residing in a property that she was aware was unlicensed with the sole intention of being able to apply for a rent repayment order.” The First-tier Tribunal was mostly convinced, finding “the Applicant chose to live in premises that fell short of legal requirements, possibly with the intention to apply for a rent repayment order in the future”. Unimpressed by this or by the absence of any details about the tenant’s profession in their evidence, the Tribunal made only a token rent repayment order of £1.

That decision was overturned by the Upper Tribunal on the grounds that there had been a breach of natural justice because she had not been given an opportunity to explain why she did not mention her job in her application. The Upper Tribunal also queried, without making any definitive finding, whether the tenant’s failure to mention her job, her alleged knowledge that the house was unlicensed, and her alleged motivation for staying on in the property were relevant factors which did justify reducing an award.

A commenter on the Nearly Legal blog article about this case gave this update on the result of this case after it was re-heard by the First-tier Tribunal: ‘the Tribunal made an RRO of approximately £3,200 (being the full rent paid less utilities). The allegation that the applicant had moved into the property to secure an RRO was rejected having heard the “convincing” oral evidence and it was held that it would be in any case “inequitable if the Applicant was not entitled to an RRO due to any knowledge of housing law”.’

That result meant there was no need for the Tribunal to tackle head-on the question of whether consciously moving in an unlicensed HMO with the intention of applying for an RRO later is ‘misconduct’ or not. For now, at least, there is no clear indication from the Tribunal that tenants who ‘keep quiet’ to maximise their award would be doing anything wrong.

Concluding thoughts

I do see it as a problem that the rent repayment orders can incentivise tenants to tolerate potentially unsafe conditions to secure a windfall. This is bad public policy, even if it is also just a logical consequence of the way rent repayment orders operate. It would be far better if tenants did not have to make any sort of trade-off between their comfort and safety and their potential return under a rent repayment order.

Robin Stewart specialises in property litigation, especially landlord and tenant disputes, and the regulatory law relating to rented property. Contact him at robin.stewart@anthonygold.co.uk or on 020 7940 4060.

Reforming Private Renting in England

The Government published its long-awaited White Paper on reforms to the private rented sector on 16th June. Described as marking ‘a generational shift,’ the paper set outs an ambitious 12-point plan of action to reform the sector and re-balance the rights of landlords and tenants to create a fairer private renting system in England. The proposals are due to form part of the Renters’ Reform Bill that is expected to be introduced this Parliamentary session. Below we take a look at the key proposals set out in the Government’s paper. These will be explored in more detail in future blog posts.

Key proposals in the Government’s paper White Paper on reforms in Private Renting:

  1. Abolition of section 21 ‘no fault’ evictions and a new modern tenancy system

Abolishing section 21 notices, which allow landlords to evict without giving a reason, has been one of the most prominent and divisive proposals in the anticipated Renters’ Reform Bill. Despite the upheaval of the pandemic, the Government remained committed to scrapping s21 notices but little detail was provided on how this would be done and what this would mean for private sector tenancies. The White Paper reveals the Government’s plans to completely overhaul the assured tenancy regime by moving all tenants who previously had an assured tenancy or assured shorthold tenancy onto a single system of periodic tenancies. This new ‘modern tenancy system’ will give tenants greater security by preventing landlords from evicting without a reason. Furthermore, tenants will no longer be locked into fixed-term contracts but will be able to end their tenancies on two months’ notice. ASTs will be phased out with all tenants eventually transitioning to the new system following a staged implementation process. This is an ambitious proposal and suggests the Government is committed to comprehensive reform of private renting, creating a whole new tenancy regime rather than tweaking the assured tenancy system currently in place.

  1. New grounds for possession and a more efficient court process

Coupled with the Government’s plan to end no fault evictions has always been the promise to strengthen possession grounds to ensure responsible landlords are able to regain possession of their properties swiftly when they need to. The White Paper therefore sets out the Government’s aim to reform grounds for possession including introducing a new ground for landlords who wish to sell or who wish to move themselves of their family in. There are also proposals to accelerate a landlord’s ability to evict tenants causing anti-social behaviour and strengthen rent arrears grounds, including a new mandatory ground for tenants who repeatedly fall into serious arrears.

The Government has also committed to providing a more efficient court process so landlords who have a legitimate reason for gaining possession can do so more quickly. Rather than proceed with a new housing court, the Government has decided to reform the existing court system. Procedural changes adopted during the pandemic including the prioritisation of certain cases and a mediation scheme look set to become permanent features of this reformed possession process.

  1. Improving housing conditions by applying the Decent Homes Standard to the PRS

The Decent Homes Standard is a standard that applies to the social rented sector. It requires homes to be free from category 1 hazards, in a reasonable state of repair, have reasonably modern facilities and services and provide a reasonable degree of thermal comfort. The Government now intends for homes in the PRS to meet this standard. Local authorities are already under a duty to take enforcement action in relation to properties with category 1 hazards but in practice this often works reactively with tenants involving the local authority if they are unhappy with the condition of their property. It will be interesting to see how the Government proposes to enforce this standard and whether there will be a more pro-active approach to ensuring the standard is met. The White Paper refers, in the longer term, to considering whether there is scope to introduce a system of regular, independent checks, possibly even an independent regulator for the PRS. However, in the short term, it seems the Government is focused on ensuring local councils have the tools to enforce the standard and extending existing measures such as Rent Repayment Orders to include non-decent homes.

  1. New Property Portal and stronger enforcement powers for councils

The Government’s proposes to introduce a new digital Property Portal where all landlords will be required to register their properties. The Portal will then provide a single ‘front door’ for landlords to both learn about their legal responsibilities and also demonstrate their compliance. The idea is that responsible landlords will be able to easily show they are compliant and this will help them attract good tenants who will be able to carry out due diligence on their prospective landlords through the Portal. Equally, the Portal will expose landlords who fail to comply with their obligations and this will assist Councils take more effective enforcement action.

Local authorities are to be given stronger enforcement powers and, longer term, the Government’s aim is to incorporate some of the functions of the Rogue Landlord database into the Portal making details of offences publicly available. The Government also wants to address the variation in enforcement action between local councils, the so called ‘postcode lottery,’ by having greater national oversight of local authority enforcement and creating a national framework for setting fines so there is a more consistent approach to private renting.

  1. New PRS Ombudsman

Again, in an attempt to give private tenants the same rights as social tenants the Government intends to introduce a new single government-approved Ombudsman that all private landlords in England, even those who instruct agents, will be required to join. The Ombudsman’s remit will be wide dealing with complaints ranging from landlord behaviour to repairs not being carried out within a reasonable timeframe. The Ombudsman will have a range of powers including the power to compel a landlord to take remedial action and pay compensation of up to £25,000. The aim is to provide quicker and cheaper dispute resolution (use of the service will be free) and reduce the number of complaints that end up in Court. The Government states that it will retain discretionary powers to enable these decisions to be enforced through the Courts if compliance becomes a concern but ultimately there will need to be effective processes in place for tenants to enforce awards if this is to provide a realistic alternative to Court.

  1. Restricting rent increases

The Government proposes to end rent review clauses and restrict the circumstances when a landlord can increase the rent. Rent increases will only be allowed to take place once a year and the notice period will be increased to two months. Tenants will continue to be able to challenge rent increases in the Tribunal but the Tribunal will not be allowed to increase rent beyond the amount the landlord initially sought. Interestingly, the Government is also considering introducing a power limiting how much rent landlords can ask for in advance. While seeking large upfront payments may be uncommon in the sector as a whole it is a practice regularly seen in the student rental market particularly with international students.

  1. Blanket bans on letting to tenants with families and to those on benefits to be made illegal

The Government recognizes that the profile of those living in the PRS has changed significantly in the last 30 years. The PRS is now home to many people on lower incomes and households with young children. Blanket bans on renting to people on benefits, also known as ‘No DSS,’ have been declared unlawful and in breach of the Equality Act in recent county court cases but the Government now intends to legislate to make such blanket bans illegal.

  1. Giving tenants the legal right to keep pets

This is an issue that has frequently made newspaper headlines in recent years. The Government now proposes to change the law so that a landlord cannot unreasonably withhold consent when a tenant requests a pet. To allay landlord concerns, landlords will be able to require tenants to obtain pet insurance to cover pet damage and the Tenant Fees Act will be amended to make this a permitted payment. This is another component of the Government’s wider strategy to improve private tenants’ renting experience, enabling them to make their house their home.

  1. Lifetime deposits

Lifetime deposits, also known as passporting deposits, is an initiative designed to improve affordability and mobility in the sector combating the problem many tenants experience when moving of having to find a second deposit while they wait for their existing deposit to be returned. The idea of passporting deposits between tenancies has been around for a while and the Government ran a call for evidence on tenancy deposit reform in 2019. The Government’s current proposal is to monitor the development of market-led solutions in this area. It seems, therefore, that the Government is unlikely to take immediate steps to reform deposits, rather this will be kept under review with the possibility of further action in the future.

Conclusion

We will have to see how many of the Government’s proposals make it into the Renters’ Reform Bill and how many go on to become law. However, this is not the piecemeal approach to PRS reform that we have been used to seeing in recent years. This is an ambitious, even radical, agenda designed to bring about substantial change to the PRS, shifting the balance between landlords and tenants and creating a fairer tenancy system that works for the diverse range of people it serves today. There is plenty to absorb in the Government’s White Paper. Working out how to implement the proposals, considering the knock-on effect on other legislation and transitioning to a new tenancy regime will not be straightforward. Things rarely stand still in the PRS but now it seems major change is on its way.

Sarah Cummins is a specialist in residential landlord and tenant disputes. Contact her at sarah.cummins@anthonygold.co.uk or call us on 020 7940 4060.

Eleanor Solomon is now a Partner in the Housing team

Anthony Gold is delighted to announce that Eleanor Solomon has accepted an offer to become a Partner at the firm with immediate effect.

Eleanor Solomon New partner

Eleanor becomes a Partner in the Housing team, specialising in housing and property disputes.  She advises tenants and leaseholders on forcing landlords to comply with their legal obligations.  She acts for clients in claims brought against their housing associations and local authorities, with particular strength in claims relating to building safety and disrepair and offering experience of unlawful eviction and nuisance matters.

Eleanor has expertise in contentious and non-contentious work for social landlord housing co-operatives.

Having trained at Anthony Gold and qualifying in 2016, she became a Senior Associate in 2020 and is mentioned as an ‘Associate to Watch’ in the current Chambers & Partners 2022.

This move sees Anthony Gold building on its strengths in Housing law, with its lead rankings in Chambers (Social Housing: Tenant – Band 1) and Legal 500 (Social Housing: Tenant – Tier 1).

Head of Housing, Andrew Brookes, said: “Eleanor manages a complex caseload effortlessly, passionate about housing law and helping people and always goes the extra mile for her clients.”

Managing Partner, David Marshall, said: “I am delighted Eleanor has made Partner at the firm. This is part of a concerted effort to consolidate and solidify our leading position in Housing and ensure the firm has talented practitioners in place for its future growth.”

Supreme Court refuses further appeal in gas safety certificate case Trecarrell House Limited v Rouncefield

The Supreme Court has refused to grant permission to appeal to the tenant in the important section 21 notice case Trecarrell House Limited v Rouncefield.

In June 2020 the Court of Appeal ruled in a 2-to-1 majority decision that late service of a gas safety certificate does not prevent a landlord from serving a section 21 notice on their tenant, provided the certificate has been given to the tenant before service of the section 21 notice.

The tenant in Trecarrell House Limited v Rouncefield had sought to overturn the Court of Appeal’s decision in the Supreme Court. A panel from the Supreme Court consisting of Lord Briggs, Lord Stephens and Lady Rose have now rejected the tenant’s application on the basis that the application does not raise a point of general public importance.

Where does this leave landlords?

The Supreme Court’s decision means that the interpretation of the law accepted by Court of Appeal’s in June 2020 remains binding on District Judges hearing possession claims.

The Court of Appeal’s decision was greeted as a good outcome for landlords. It has meant that where a landlord has failed to provide a new tenant with the last gas safety certificate before occupation they are able to remedy this by providing the certificate late. That was a welcome relief to the many responsible landlords fearful that accidental mistakes in providing tenants with certificates could result in them permanently losing the ability to serve a section 21 notice.

Furthermore, a failure to complete a subsequent annual check on time will not bar the landlord from serving a section 21 notice provided the certificate is given to the tenant prior to serving the section 21 notice. Again, this will be reassuring to landlords particularly in present circumstances where arranging gas safety inspections has been a challenge.

Unresolved Questions

The Court of Appeal’s decision, however, did not resolve all the issues that have arisen since gas safety was linked to the section 21 procedure in 2015. There are still difficult questions left unresolved. For example, what does this mean for a landlord who has failed to carry out a gas safety check at all before the tenant goes into occupation? Are they able to rectify this breach and serve a valid s21 notice? While the Court of Appeal determined that late provision of the initial gas safety certificate is remediable, they do not go so far as to say that all historic gas safety breaches, including failing to actually have a certificate before the commencement of the tenancy, are capable of remedy.

In addition, the gas safety regulations only require landlords to retain the gas safety certificate for two years from the date of the check which means even where a check has been carried out before the start of the tenancy, landlords may face difficulties remedying the breach later or proving that they have done so.

The Supreme Court’s refusal of a further appeal marks the end of one chapter of litigation concerning section 21 notice and gas safety certificates, but this issue is not going away for landlord and agents. It is almost certain that Trecarrell will not be the last of the cases on these issues because there is still significant uncertainty about how to interpret parts of the law concerning section 21 notices.

Anthony Gold Solicitors together with barristers Justin Bates and Brooke Lyne of Landmark Chambers acted for the landlord in the Court of Appeal and the Supreme Court. The landlord’s successful appeal to the Court of Appeal was supported by the National Residential Landlords Association.