What you need to know about rent repayment orders
Posted by David Scarrott on 6th May 2022
What is a Rent Repayment Order?
Rent
Repayment Orders (RRO) are made by the First-Tier Tribunal (Property Chamber) when
a landlord has rented a property without the necessary licences in place. The Tribunal
may order the landlord to repay the tenant, or tenants, some or all of the rent
that has been paid over a period of up to twelve months. Maximum awards can often
be substantial.
How can I ensure I do not receive one?
The
primary reason a tenant (or tenants) may be entitled to bring an RRO
application, will be where a landlord has failed to obtain a licence for what
is known as a ‘House in Multiple Occupation’ (HMO). An HMO licence is automatically required
where any property:
- Is occupied by at least 5 tenants forming more
than one household; and
- Has shared facilities e.g. toilet, bathroom or
kitchen used by all tenants.
An
HMO will not apply where a family is renting a property and living as one
household. Instead, HMOs are those properties that are rented by a group of
separate individuals who have their own rooms but share common facilities between
them. This could apply to university accommodation or young professionals
sharing. It matters not whether the tenants have individual tenancies or one
joint tenancy, an HMO would still arise and the need for a licence would automatically
apply.
In
addition to mandatory licences as referred to above, individual local
authorities have the power to impose additional licencing schemes in relation
to specific geographical areas within their jurisdiction. This allows them to
require HMO licences to be obtained for properties with only 3 or 4 unrelated occupiers.
Such schemes bring many more properties into the ambit of the legislation.
As
landlords who are reading this will note, there is a substantial financial risk
if they choose to let to house-share occupants and do not obtain the necessary
licence from the local authority beforehand. We strongly encourage landlords to check with the local authority for
the area within which their rented properties are situated whether an
additional licensing scheme has been implemented, even if they have properties
with fewer than 5 sharing occupants.
Obtaining a HMO licence
Applying
for the licence is usually straightforward and requires a small amount of
documentation to be provided to the local authority with two fees being payable.
The licence itself will consider the size of the rooms and the quality of the
accommodation and is there to ensure that housing stock of this type is of an
adequate standard to provide suitable accommodation for those tenants who
choose to share in groups.
As
part of the application process, the council will request information about the
size of the rooms and the shared facilities available and may also instigate a
visit to check such things themselves. If satisfied, the council will grant the
licence and the property will be compliant for the duration of the licence
period. If unsatisfied, the council will refuse to grant the licence and will
recommend any alterations required for a licence to be granted.
Failure
to obtain a licence where one was required constitutes a criminal offence, and the landlord does not need be shown to have intended to commit the offence to
still be found liable. This means that an inadvertent failure to apply for a
licence prior to letting the property will automatically create liability for
the landlord and cause him or her to commit the offence.
What happens if my tenant makes a claim?
Should
tenants identify that they have been renting within an HMO that was unlicensed,
they are entitled to bring the application to the First-Tier Tribunal. Any
application they do bring must be within 12 months of the offence having been
committed. The maximum award is 12 months’ rent per tenant, which can amount to
a huge sum of money, particularly if it is multiplied across four, five or more
tenants.
Whilst
12 months is a maximum amount a tenant may be awarded, it may well be possible
to persuade the Tribunal to award less in those cases where the culpability of
the landlord is less. For example, there will be a significant difference in an
award made against a landlord who has inadvertently failed to obtain a licence
for a property that would always have been compliant with HMO licensing
requirements, as opposed to a landlord who wilfully failed to obtain a licence knowing
that the housing stock in question was of a sub-standard nature and would not
fit the criteria for the grant of the HMO licence.
Any
award made by the Tribunal will usually be for a proportion of the total amount
of rent paid over the 12 months with the most serious offences requiring the
full amount of rent to be repaid and the least serious being at the other end
of a sliding scale.
How can I get advice about Rent Repayment Orders?
Letting
agents will sometimes provide advice on this area of the law but not always and
should not be relied upon, as it is often considered the landlord’s
responsibility to ensure compliance with this particular legal duty.
At
Wolferstans Solicitors, we have experience of defending landlords who find
themselves the subject of an RRO application and our aim will always be to
reduce any award to the minimum amount possible, if not defend the application
altogether. Should you require any advice or assistance with defending such a
claim or regarding HMO licences generally, our Disputes and Litigation Team is
always available to help. Please call us on 01752 292201.