Case Study: London State Ltd. Rent Repayment Order
1. Case Overview:
This case involves a rent repayment order (RRO) granted by the First-Tier Tribunal (Property Chamber) against London State Ltd. in favour of two tenants, Mr Daniel Naptali Jackson French and Ms Elena-Adelina Astancai. Dr R. Mohan of Legal Road Ltd represented the applicants. The key issue was the landlord’s failure to obtain a necessary House in Multiple Occupations (HMO) license under the Housing Act 2004, leading to a successful tenant claim for a rent repayment order.
2. Key Parties:
- Applicants:
- Mr. Daniel Naptali Jackson French (Tenant 1)
- Ms. Elena-Adelina Astancai (Tenant 2)
- Representative of Applicants: Dr. R. Mohan of Legal Road Ltd.
- Respondent: London State Ltd. (Landlord/Property Management Company)
- Representative of Respondent: Mr. H. Talat – Manager
- Tribunal:
- Tribunal Judge S.J. Walker
- Tribunal Member Mrs. L. Crane MCIEH
3. The Property:
- The property in question was a 5-bedroom HMO located at 273, Fulham Palace Road, London, SW6 6TL.
- The property had a shared kitchen and two shared bathrooms.
4. Issue at Hand:
- The core issue was that London State Ltd., as the landlord, had failed to obtain the required HMO license from the London Borough of Hammersmith and Fulham.
- An additional licensing scheme was in place in the area, requiring properties containing 3 or more people comprising 2 or more households to be licensed. This was the applicable standard and it applied to this property.
- The Applicants sought a rent repayment order under sections 43 and 44 of the Housing and Planning Act 2016, due to the landlord operating an unlicensed HMO.
5. Timeline:
- Offence Period: 29 August 2020 to 28 August 2021.
- Application Date: 16 December 2021
- Hearing Date: 5 April 2022 (remote video hearing)
- Decision Date: 12 April 2022
6. Evidence and Arguments:
- Applicants’ Case: The applicants asserted that the property was an HMO and rented out to them during the period that an HMO license was required. They argued the landlord failed to apply for and obtain an HMO license during this period. They sought a total of 12 months’ rent repayment.
- Respondent’s Defence: London State Ltd. initially claimed it had made an online application for an HMO license on 10th January 2020, and this was the basis of their defence. The defence based on s.72(4)(b) of the 2004 act was that an application had been made and should have offered a defense. They also asserted that a 25% reduction to any order should be made due to the rent covering utilities and some cleaning and that the starting point of the full rent should not be used. The Respondent also accepted that they were the sole landlord and responsible for the collection of rent.
- Tribunal’s Findings:
- The Tribunal found, based on evidence from the local authority, that the actual successful application was only received on 29 September 2021, after the period in question.
- The Tribunal did not accept the evidence that the original application had been made.
- The Tribunal was not persuaded by the inconsistent and often non credible evidence that an application had been made in January 2020.
- The Tribunal did not agree that a reasonable excuse existed.
- It was concluded that the Landlord was in breach of s72(1) of the Housing Act 2004.
- The Tribunal confirmed that there was jurisdiction to make a decision.
- The Tribunal found that a 10% discount on the rent was appropriate to account for utilities that were included in the rent. It found that £866.67 x 12 (months) x 90% (£9,360).
- Taking into account the lack of any previous convictions and the small scale of business the Tribunal found that a further deduction of 25% from the total sum was appropriate.
7. Outcome:
- The Tribunal granted a Rent Repayment Order requiring London State Ltd. to pay the Applicants a total of £7,020.
- The Tribunal also granted the Applicants an order for the re-imbursement of the fees of £300 paid for bringing the application. Payment to be made within 28 days.
- The Tribunal did not grant any application for legal costs.
8. Legal Principles and Significance:
- HMO Licensing: The case highlights the importance of landlords complying with HMO licensing regulations, with non-compliance leading to rent repayment orders.
- Burden of Proof: Landlords are expected to comply with regulations and ensure they have the correct licensing. Landlords also have to be able to prove that they have complied with legal requirements and in the case above were unable to do so.
- Standard of Proof: The Tribunal must be satisfied “beyond reasonable doubt” that an offence has been committed for a rent repayment order to be made.
- Section 72(4)(b) Defence: The Tribunal’s analysis shows that the making of an application has to be proved and that the defence is available only where it can be shown that an effective application was made prior to the commission of any offence.
- Relevant Factors in RRO Amount: The case demonstrates that courts take into account evidence provided by both parties and the personal and financial circumstances as well as the overall nature of any wrongdoing. It is not a simple calculation of maximum rent payable.
- Conduct of Landlord: The conduct of the landlord is a factor that should be considered when determining what is appropriate and this can include previous good character. In this case it was an important factor for reducing the overall amount.
9. Analysis and Discussion:
- The case illustrates how the First-Tier Tribunal can be used as a tool for tenants to pursue legal action against landlords that have failed to comply with the law.
- The case also showed how important it is for landlords to understand the law and their duties and obligations to their tenants.
- It also highlighted how important it was for landlords to keep all the necessary paperwork and proof of application for licences etc as required.
- The case also showed the importance of a witness statement being accurate and for an individual who has made an application to be brought forward to give evidence and to be cross examined if required.
- Finally the case showed the importance for any landlord to understand the requirement to produce evidence that an application has been made and not simply to rely on the assumption that an application has been made.
This case study provides a concise and informative overview of the proceedings, the legal issues involved, and the outcome of the rent repayment order case between London State Ltd. and their tenants. It emphasizes the importance of proper licensing and adherence to housing laws for landlords.
