Rent repayment orders represent a potentially expensive sting in the tail for a landlord where they are proven to have committed one of the offences that permit a Tribunal to make such an order. In Newell v Abbott, [2024] UKUT 181 (LC) the Upper Tribunal looked at two broad considerations frequently examined in applications for a rent repayment order. Firstly, the parameters of the statutory defence of ‘reasonable excuse’, which, if successful, avoids liability, and secondly, where liability cannot be avoided, the quantum of such orders.
Mr Newell, a landlord in London, managed a three-bedroom flat located in a selective licensing area under the Housing Act 2004. Unaware of the licensing requirement, Mr. Newell failed to secure a license. His tenants, Mr. Abbott and Mr. Okrojek, applied to the First-tier Tribunal (FTT) for a rent repayment order, claiming partial repayment of the rent they had paid. The FTT ruled against Mr Newell, ordering him to repay 80% of the rent, totalling £5,760, to each tenant. Dissatisfied, Mr Newell appealed to the UT on two grounds: the rejection of his reasonable excuse defence and errors in the rent calculation
1. Reasonable Excuse Defence
Under section 95(1) of the Housing Act 2004, landlords can avoid liability for a rent repayment order if they demonstrate a ‘reasonable excuse’ for non-compliance. Mr. Newell argued that his ignorance of the licensing requirement constituted such an excuse. The UT, however, upheld the FTT’s ruling, emphasising that:
- Landlords have a duty to stay informed about their legal obligations, including licensing requirements.
- Mr. Newell’s efforts, such as limited online searches, were insufficient.
- His professional background as a solicitor and lack of engagement with professional landlord organisations further undermined his defence.
The UT concluded that Mr. Newell’s ignorance did not meet the threshold for an objectively reasonable excuse.
2. Calculation of the Rent Repayment Amount
The UT agreed that the FTT had erred in assessing the seriousness of Mr. Newell’s offence. While the FTT characterised the violation as “serious,” the UT highlighted that:
- Licensing offences, though significant, vary in gravity compared to other housing violations.
- Factors such as Mr. Newell’s small-scale operation and the good condition of the property warranted a more lenient approach.
Ultimately, the UT reduced the rent repayment order to 60% of the rent received, aligning with precedents in similar cases. Each tenant was awarded £4,320.
This case underscores the importance of proportionality in enforcing housing regulations. While the selective licensing scheme promotes good housing standards, not all violations warrant maximum or very high penalties. The UT’s decision highlights that tribunals must properly weigh mitigating factors, such as the landlord’s limited scale of operation and the property’s good condition.
Additionally, the case serves as a reminder that ignorance of the law, even when genuine, is rarely sufficient as a defence. Landlords are generally expected to proactively educate themselves or risk severe financial repercussions. This obligation reflects the societal expectation that property owners prioritise tenant safety and comply with housing standards.
This case reflects the complexities of rent repayment order litigation and landlords’ challenges navigating regulatory frameworks. For landlords, the decision reinforces the need for diligence and engagement with professional resources. For tenants, it highlights the protections available under the Housing Act, ensuring landlords are held accountable.