Positive RRO Decision for Landlords

The Supreme Court has ruled that Rent Repayment Orders (‘RROs’) cannot be made against a superior landlord. This is great news for those who find their property has been unknowingly sublet...

The Facts

The superior landlord was Mr Rakusen, the leaseholder of a flat in North London. In May 2016, he granted a tenancy to Kensington Property Investment Group Ltd (‘KPI’). KPI then entered into separate agreements with Mr Jepsen and others (the tenants), granting them each possession of one room of the flat.

As a result, the flat was deemed a house in multiple occupation (‘HMO’), which therefore should have been licenced. However, the flat was never licenced as an HMO.

In September 2019, Mr Jepsen and others applied to the First-tier Tribunal for a RRO against Mr Rakusen pursuant to Section 41 of the Housing and Planning Act 2016 (the ‘Act’). It was asserted that he had committed the offence because he was ‘a person having control of or managing’ an HMO which was not licenced when it should have been.

Mr Rakusen denied that he committed an offence, stating that a RRO can only be made against the immediate landlord of the person making the application. The First-tier Tribunal refused, holding that Mr Rakusen was “a” landlord of the flat, albeit not “the” landlord of Mr Jepsen and others.

Appeals

On appeal to The Upper Tribunal, it was again held that a RRO can be made against a superior landlord.

However, the Court of Appeal held that a RRO could not be made against a superior landlord.

Supreme Decision

The Supreme Court was unanimous in its decision that a RRO cannot be made against a superior landlord, but only against the immediate landlord of the tenancy that generates the relevant rent.

This was held on the basis that the purpose of the Act was to restrict RROs to those who directly benefit from the payment of rent.

The full judgment in the case is here: Rakusen v Jepsen.

Comment

This is great news for superior landlords who have been punished for offences they have not committed – and sometimes were not even aware of!

It is clear that a common-sense approach was taken by the Supreme Court in holding that the contract and its benefit of receiving rent was made between KPI and Mr Jepsen and others and that the Act should be interpreted accordingly.

Of course, we wait to see whether changes will be made to this currently binding approach under the terms of the Renters Reform Bill…

If you need support with a RRO or HMO issue, then get in touch with us for some free and friendly initial advice followed by fixed fee support throughout your case:

01704 790 532

hello@landlord-support.co.uk

www.landlord-support.co.uk