How much the First-tier Tribunal will award successful applicants for a Rent Repayment Order is not always certain. Still, as a recent blog post considered, guidance has recently been developed.
In Rent Repayment Order cases, landlords usually seek a reduction in any award, and tenants are looking to achieve the maximum award. The Tribunal determines an amount of rent to be repaid, usually expressed as a percentage of the total rent paid during the period that a relevant offence was committed, frequently failure to have an HMO licence when one was required. Percentages awarded in cases have varied from low (5-25%) to high (80-100%). Although 100% awards are much less common now than they once were, high awards are not entirely a thing of the past. One case where a relatively high award was made was Simpson House 3 Limited v. Osserman & Ors. [2022] UKUT 164 (LC).
Simpson House
As the name of the company involved suggests, this case related to a flat at Simpson House, part of a complex of flat buildings owned by the same large corporate landlord. The tenants had occupied the flat for a number of years until they were evicted in early 2021 by a s.21 Housing Act 1988 eviction notice. The tenants argued that this resulted from them raising various complaints about conditions at the property, including by interviewing national newspapers. In the course of being evicted, the tenants sought advice from the local housing authority. They were told the property was an unlicensed HMO. The tenants applied for, and received, a Rent Repayment Order, with the First-tier tribunal deciding that 65% was an appropriate award. The landlord appealed, arguing that the First-Tier tribunal had failed to properly account for their “reasonable excuse” argument. In response, the tenants cross-appealed, arguing that 65% had been too low an award, considering all the relevant factors. The landlord withdrew its appeal before it was heard by the Upper Tribunal, so its arguments were not considered, but the tenants still argued their case before the Upper Tribunal.
They submitted that the First-tier Tribunal had failed to properly consider the “bad conduct” of the landlord in their case when deciding on the amount of the Rent Repayment Order, instead only considering the landlord’s “good conduct” to justify a significant reduction. In particular, the tenants focussed on non-compliance with fire safety regulations and the eviction made apparently in response to the complaints raised by the tenants.
The Upper Tribunal’s decision
The Upper Tribunal considered that the First-Tier tribunal had failed to consider the factors outlined by the tenants and decided to set aside and re-make the decision of the First-Tier tribunal as to the amount of the Rent Repayment Order. Ultimately, the Upper Tribunal settled on repayment of just under 80%.
One important factor to the Upper Tribunal was that the landlord was a property investment company. It was “not in the same position as a private landlord with a small number of properties who does not have the skills, experience, time or inclination to manage them personally to a high standard and who instead employs an agent to do so. Smaller landlords should be encouraged to seek the assistance of professional managing agents, because in general their tenants are likely to benefit; that encouragement should be reflected in appropriate cases in the rent repayment order regime…”. This passage suggests that smaller landlords may face lower Rent Repayment Order awards, particularly those whose rental properties make up only a small percentage of income.
Another factor considered significant by the Upper Tribunal was the timing of the eviction. Although the Upper Tribunal recognised that the landlord had the right in law to terminate the tenancy under section 21, it continued, “Nevertheless, the purpose of the rent repayment order regime is to secure compliance with the law on housing standards, one object of which is to ensure that HMOs are safe and free from serious defects. For a landlord to respond to legitimate requests by its tenants concerning repairs and the condition of the building by vindictively terminating the tenants’ right of occupation can only deter the making of such requests thereby putting the achievement of satisfactory housing standards at risk. If such behaviour goes unmarked it may discourage these or other tenants from requesting that repairs be carried out and encourage this or other landlords to avoid their obligations. For that reason I take it into account.” This is important as it shows that even legal behaviour, albeit running counter to the purposes of the Rent Repayment Order regime, can be seen by the Upper Tribunal as a reason to increase the amount of any award.
The Simpson House case is an example of different kinds of HMO properties may be subject to large Rent Repayment Orders and of the wide range of factors the Tribunal will consider when deciding on the amount of any Rent Repayment Order. It also highlights that a smaller landlord may be subject to a smaller Rent Repayment Order.
How can we help?
Expert advice is the best way to find out how much you might have to pay in a Rent Repayment Order proceeding and to assist you in putting forward the best evidence you can to reduce that amount. Freemans Solicitors provide expert advice on Rent Repayment Orders. Our experienced team will be happy to help with your enquiry. Contact Michael Field, Karol Hart or Julian Hunt on 020 7935 3522 or hmolawyers@freemanssolicitors.net. We can advise on investigations, diversion from prosecution, prosecutions of HMO Offences and ancillary matters such as 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.