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Rent Repayment Order: Letting of property as House in Multiple Occupation without a licence (Williams v Parmar & others – 2021)

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Where a landlord lets bedrooms within a House in Multiple Occupation (“HMO”) without an HMO licence, and tenants subsequently vacate the property due to its poor condition, the Upper Tribunal considers calculation of Rent Repayment Orders in favour of the tenants.

The background

In Williams v Parmar & others [2021], the landlord owned a property which had been divided into 6 bedrooms, each of which was let on a 6-month Assured Shorthold Tenancy (“AST”) commencing on dates in September 2019. The property was operated as an HMO but the landlord did not have a licence to do so, an offence in contravention of the Housing Act 2004 and the Housing and Planning Act 2016. The landlord acknowledged the offence, accepting that the HMO had been operated unlicensed.

By the end of March 2020, all tenants had vacated due to the property’s poor condition. They brought claims in the First-tier Tribunal for Rent Repayment Orders (“RROs”), but each stated the relevant period for RROs as ending on 10th March 2020. The landlord disputed the amounts of the RROs, and the FTT was therefore asked to consider the appropriate deductions to be made to the RROs. The landlord had, in fact, made an application for a licence in February 2020 but this factor was not considered by the FTT. The landlord brought an appeal to the Upper Tribunal.

The decision

The Upper Tribunal considered two key issues, finding that the landlord’s appeal failed on the first but partly succeeded on the second:

1.Whether the FTT had considered the correct rental period when calculating RRO deductions

The landlord argued that she had made an application for a licence in February 2020, but a specific date was not given. As this could have been as early as 1st February, the FTT could not prove that an offence had been committed after 31 January 2020, and any RRO should be calculated by reference to this date, and not 10th March 2020.

The UT did not accept this argument, finding that an offence had been committed which was acknowledged by the landlord, giving the FTT jurisdiction to make RROs. The landlord had not raised any issue about the relevant periods before the FTT and had not raised this in evidence, only raising this new issue on appeal in the UT. The tenants were likely to have had views on when an application for an HMO licence was submitted, but did not address the point on appeal as it had not been raised before the FTT. The landlord’s appeal failed on this point.

2.Whether the FTT was right to reject factors other than those specifically referenced in the Housing and Planning Act 2016

The UT held that the FTT had interpreted its powers too narrowly, and was not limited to taking into account only those factors specified in the Act. The landlord’s offence constituted ‘conduct of the landlord’ which may lower the maximum starting point for rent, and the FTT did have jurisdiction to order rent repayment which was less than this maximum.

The UT found that the RRO figure determined by the FTT should take into account the amount of rent paid by tenants up until 10th March 2020. Modest reductions in the rent repayments were found to be appropriate, allowing the landlord’s appeal in part.

Advice and action for landlords

There are a number of key points raised by this decision for landlords, in particular the need for any HMO to be licensed before lettings are granted and for key issues of argument to be raised at the initial FTT hearing.

The lack of licence in this case, coupled with the late presentation of evidence regarding the February 2020 application for a licence, resulted in RROs being granted which were only modestly reduced on the landlord’s appeal as a consequence of the property’s serious defects and her status as a professional landlord.

The Upper Tribunal found that only modest reductions in the RROs were to be made on account of the landlord’s professional status and the serious defects in the property’s condition.

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