The Upper Tribunal recently decided the case of Hallett v. Parker in which the landlord, represented by Michael Field and Karol Hart of Freemans, appealed the decision of the First-Tier Tribunal to impose a large Rent Repayment Order upon him. The appeal was successful, and the award made reduced from 100% to 25%, saving the landlord thousands of pounds.
Rent Repayment Orders are an order which can be made by the First-Tier and Upper Tribunal when a landlord has committed one of a specified list of property offences, often related to HMO licensing. Rent Repayment Orders are usually sought by tenants, but can occasionally be sought by a local authority. Mr Hallett’s case was brought by his tenants following just such an HMO licensing issue.
Mr. Hallett was a busy music promoter, and turned to letting out his London home. His business increasingly took him abroad for long periods of time. He employed agents, who found families to rent out the property. In 2019, he let the property (via his lettings agent) to the three tenants who brought the case. This made it an HMO in need of a licence within the terms of the Additional Licensing Scheme introduced by the local authority. Mr. Hallett had no licence, as he was not aware of the Additional Licensing Scheme, meaning he was committing an offence while the tenants continued to live at the property
The tenants found out about the unlicensed status of the property and brought a Rent Repayment Order claim, asking for an award of 100% of the rent paid during the period of the offence. The First-Tier Tribunal made an award of 100%, relying on the older case of Vadymalayan v. Stewart. The Upper Tribunal then decided another case, Williams v. Parmar, which changed the law so 100% awards for a Rent Repayment Order were no longer the standard. Mr. Hallett appealed against the amount of the award, arguing that it was too high after Williams and did not take all the relevant factors into account. The tenants argued that even considering the relevant factors, the discount from 100% should be very little, if anything.
The Upper Tribunal preferred the arguments of the landlord, concluding that the First-Tier Tribunal was wrong to set the amount of the award at 100%, and that considering the factors advanced by the landlord, a lower award should be made instead. The Upper Tribunal also made clear that “[T]he power to make rent repayment orders should be exercised with the objective of deterring those who exploit their tenants by renting out substandard, overcrowded or dangerous accommodation.” and, agreeing with the landlord, “an order requiring repayment of the full amount of the rent received by a landlord should be reserved for the most serious offences justifying the most exemplary sanction. Where the offence concerned is a failure to licence an HMO… it was not Parliament’s intention that the maximum penalty should usually be imposed. Circumstances may exist where such an order may be appropriate (for repeat offending, for example) but they will be the exception, not the rule.”
This case marks a clear shift; landlords should only face large Rent Repayment Order awards in HMO licensing cases where there are significant aggravating factors. Although Hallett suggests the example of repeat offending, other aggravating circumstances, such as very poor repair, could perhaps lead to a much higher award.
Turning to consider some of the factors Hallett suggests will reduce the seriousness of the sentence, the Upper Tribunal considered “that Mr Hallett is a small landlord, letting out a single property, and that the FTT accepted that he was unaware of the need to obtain a licence”. Although ignorance is not an excuse, it may reduce the penalty imposed by the Upper Tribunal. Similarly, one-off landlords can expect to receive a reduction to any Rent Repayment Order made against them.
The Upper Tribunal also considered that the property’s ““fairly good condition” is capable of providing mitigation. The object of HMO licensing is to contribute to the achievement of satisfactory housing standards. If a landlord has provided accommodation of a decent standard, despite failing to obtain a necessary licence, the punishment appropriate to the offence ought to be moderated.” A landlord with a well-maintained property should see a lower Rent Repayment Order than one with a property with maintenance and repair issues.
Another factor in the Upper Tribunal’s determination was the fact that the landlord spent time abroad and relied on an agent for the selection of tenants of the property, even though the landlord oversaw some elements of the day-to-day management of the property once the tenants had moved in. The Upper Tribunal took the view that the reliance the landlord had placed on his agents should be a factor in reducing the amount of the award to be made.
Following Hallett it is clear that landlords can expect the maximum award in Rent Repayment Orders for HMO licensing offences to be made only in extreme circumstances, with more factors taken into account by tribunals. Identifying the factors most likely to lead to a reduction in the award will be important, and expert advice the surest means of identifying these factors.
How can we help?
Expert advice in this case helped this landlord significantly reduce the size of the award made against him. Freemans Solicitors are a leading provider of Rent Repayment Order advice and our experienced team will be happy to help with your enquiry. Contact Michael Field, Karol Hart or Julian Hunt in our Crime Team on 020 7935 3522 or crimelawyers@freemanssolicitors.net or in an emergency please call our 24/7 number 07973 259382 and let us help. We can advise on investigations , diversion from prosecution, prosecutions of HMO Offences and ancillary matters such a Rent Repayment Orders.
Whatever your personal circumstances the above is only a guide and we would advise you to contact us to obtain definitive advice as you will appreciate that each person’s circumstances are unique to them.