First-tier Tribunal Denies Rent Repayment Order Due to Reasonable Excuse

OUTCOME: Dismissed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL [NAME] (RESIDENTIAL PROPERTY) Case Reference : LON/00BH/HMG/2025/0625 Property : [ADDRESS] [POSTCODE] Applicants : [redacted] (2) [NAME] : Justice for Tenants Respondents : [redacted] [NAME] :

[NAME] for Rent Repayment Order under the Housing and Planning Act 2016 Tribunal Members :

Tribunal Judge H [NAME] : 10 [ADDRESS] [POSTCODE] (by CVP) Date of Hearing :

13th October 2025

Date of Decision : 14th October 2025

DECISION

2

Decisions of the tribunal

The Applicants’ [NAME] for a rent repayment order is dismissed.

Introduction 1. The Applicants have applied for a rent repayment order against the Respondent under sections 40-44 of the Housing and Planning Act 2016 (“the 2016 Act”). The [NAME] was received on 17th March 2025.

2. The basis for the [NAME] is that the Respondent was controlling and/or managing an unlicensed property which was required to be licenced under Part 2 of the Housing Act 2004 (“the 2004 Act”) at a time when it was let to the Applicants but was not so licensed and that she was therefore committing an offence under section 95(1) of the 2004 Act.

3. The Applicants’ claim is for repayment of rent paid during the period from 1 July 2023 to 30 June 2024, amounting to £15,915.64. The amount claimed is the total rent paid after deducting Universal Credit received.

4. The Property comprises a two bedroom flat in an ex-council block located on the third floor above commercial premises.

5. The tribunal was provided with a bundle by the Applicants running to 259 pages, a further bundle by the Respondent consisting of 304 pages and a reply bundle by the Applicants of a further 95 pages. A skeleton argument was also received from the Applicants. The contents of all these documents were noted by the tribunal.

6. The hearing was held online, using the tribunal’s CVP system. Each of the Applicants attended and gave evidence; they were represented by Mr [NAME] of Justice for Tenants. The Respondent appeared in person and both gave evidence and made submissions. Mr [RESPONDENT] appeared as a witness for the Respondent and gave evidence. The parties had provided statements from other witnesses but they did not attend the hearing.

7. We found both the Respondent and Mr [RESPONDENT] to be credible witnesses. We found the Applicants to be less helpful. Ms [NAME] was open that she struggled with dates and was not able to give any guidance as to when she and Mr [NAME] became aware of the lack of a licence and their rights to apply for rent repayment order. Mr [NAME] was more definitive but contradicted himself as to the timeline of events. Relevant statutory provisions

3 8. The relevant statutory provisions are set out in the Schedule to this decision. Alleged Offence Licensing of Houses 9. The Applicants argue that the Property was an unlicenced flat when rented to them. The area in which the Property is located was designated by the London Borough of Waltham Forest as requiring selective licensing from 1 May 2020 until 20 April 2025 (the “[NAME]”). This has been confirmed by the local council. The Applicants rented the Property from 21 November 2021 until 30 June 2024. The local council have also confirmed that the Property was not licenced and no [NAME] for a licence was received during this period.

10. The Respondent accepts that the Property was caught by the [NAME] and so she should have obtained a licence but did not. She also accepts that she is the owner of the Property, rented it to the Applicants from 21 November 2021 until 30 June 2024 and was in receipt of the rent from them.

11. The parties and the Tribunal were satisfied that the Property required to be licenced pursuant to the [NAME].

12. The Respondent therefore accepted that she was controlling and/or managing an unlicensed house which was required to be licenced under Part 2 of the 2004 Act by virtue of the [NAME] but was not so licensed between 1 July 2023 and 30 June 2024. As such, she accepted that she had potentially committed an offence under section 95(1) of the 2004 Act during that period. Reasonable excuse 13.

Accordingly, [NAME] established the ground for potentially [NAME] a rent repayment order, the tribunal considered whether the Respondent had a reasonable excuse for committing the offence. This would operate as a defence to the claim and mean that a rent repayment order could not be made.

14. The tribunal considered that the question of whether the Respondent had a reasonable excuse should be addressed as the first issue. This was because if the Respondent had a reasonable excuse, the Applicants’ [NAME] must fail. It was agreed that evidence would only be heard and submissions made on this issue, following which the tribunal would consider that issue alone. Other evidence would only be heard if the tribunal did not consider the Respondent had a reasonable excuse or could not reach a determination on the day of the hearing on that issue.

4 15. The Respondent set out three reasons why she believed she had a reasonable excuse for not [NAME] obtained a licence.

16. The first reason was that she was unaware of the requirement for a licence. Although she had lived in the Property, she was from Australia and they had no equivalent scheme. She was not a commercial landlord but had been forced to rent her flat out to return to Australia. She considered the letting was an informal arrangement between [NAME] and only produced a tenancy agreement as Ms. [NAME] had requested she do so in order to obtain Universal Credit; they were [NAME] before the letting began and she believed she was helping her out during Covid. She had enquired of [NAME] in the same blocks as to the requirements for lettings but was only told about paying a fee to the landlord, which she had done. She had not researched licensing further as she had no idea of the concept. She had considered getting a managing agent but did not do so because she was concerned about the additional cost which she argued neither she or the Applicants could afford, believing that Ms. [NAME] was a friend.

17. The second reason was her mental health. She claims to have ADHD, Complex PTSD, anxiety and other neurodiversity. She produced extensive medical reports and correspondence which she said demonstrated a previous suicidal ideation and still received weekly counselling and monthly GP meetings. Her statement of case set out the background to this as well as an explanation of various traumatic events. She explained that whilst she could react to requests, she struggled to deal with many matters. She had considered appointing a managing agent when she could not cope but did not do so for the reasons set out above.

18. The third reason was the behaviour of the Applicants. She argued that they were aware of the requirement for a licence from late 2022 but had not raised the requirement for one with her before bringing their claim in 2025. They likewise had not raised other issues pleaded such as the lack of an EPC or fire safety issues. If they had, she says she would have addressed them. Whilst acknowledging that the licence was her responsibility, she felt that the Applicants had acted in a vindicative way to extract money from her, deliberately concealing information in order to do so. She felt that people in her situation were not what the rent repayment legislation was designed to address.

19. The Applicants disagreed with the Respondent’s arguments.

20. They argued that ignorance of the law is not a defence, pointing to the Upper Tribunal’s decision in Thurrock Council v Daoudi [2020] UKUT 209 (LC) where it was held that ignorance does not provide a defence “no matter how genuine [NAME]’s ignorance” unless the failure to license is “reasonable in all the circumstances”. They reiterated that neither the council nor the tenants were obliged to inform her of the requirement for

5 a licence, citing Newell v Abbott [2024] UKUT 181 (LC). They also referred to a First Tier Tribunal (and so not binding) decision that held that being abroad is no defence as the internet enables research to be done wherever a landlord is located; they argued that she should have researched the position properly. Reference was also made to the Respondent [NAME] experience of being a landlord, as she had had [NAME] in the Property prior to the Applicants. Their case is that the Respondent’s ignorance of the licensing requirements is not reasonable, objectively or in all the circumstances.

21. The Applicants similarly questioned whether the Respondent’s mental health could amount to a reasonable excuse. They argued that she was clearly articulate, pointing to correspondence from her, and was able to address issues raised by the Applicants. She therefore demonstrated in their opinion capacity to deal with her personal affairs. If not, they questioned why she had not employed a managing agent, stating that these were readily available at what Mr [NAME] referred to as a de minimis increase in the rent. Again, they argued that reliance on the Respondent’s mental health as a reasonable excuse is not objectively reasonable.

22. They also argued that the Applicants’ knowledge of the lack of a licence and the failure to inform of this was not a relevant consideration as obtaining the licence was her responsibility. They also argued that their reasons for staying in the Property in spite of the purported issues was similarly irrelevant. Their knowledge and decision not to inform the Respondent was in their contention not a factor in determining whether she had a reasonable excuse.

23. The tribunal considered the Upper Tribunal guidance on what amounts to a reasonable excuse defence in the cases of [NAME] v Wells [2023] UKUT 33 (LC) and [NAME] v D’Andrea & ors [2021] UKUT 144 (LC). The offence in question here is managing or controlling a house without a licence, not the failure to apply for a licence. The Upper Tribunal held in Marigold that [NAME] wishing to utilise a section 95(4) reasonable excuse defence must show that they had a reasonable excuse for the whole period in question. That period in this case is from 1 July 2023 to 30 June 2024.

24. In Marigold the Upper Tribunal approved a test for assessing reasonable excuse, set out in the case of Perrin v HMRC [2018] UKUT 156 (TCC). That test comprises first setting out the facts asserted by the landlord that give rise to a reasonable excuse, secondly deciding which of the facts are proven and finally establishing objectively whether these facts amount to an objectively reasonable excuse for the default and the time when that objectively reasonable excuse ceased.

25. The facts relied on by the Respondent are set out in paragraphs 16 to 18 above. For the purposes of deciding which of those facts are proven, we have considered each of those paragraphs in turn.

6 26. Beginning with paragraph 16, the tribunal accepts that the Respondent was unaware of the requirement for a licence throughout the relevant period; she says she first became aware of the requirement when she received the Applicants’ [NAME] and this is also accepted. It is similarly accepted that she was not aware of the existence of licence schemes and was not put on notice of their existence. It is proven that this is her only property and that she is not a commercial or experienced landlord. It is evident from the Applicants’ statement of case that she and [NAME] were [NAME] before the arrangement started and equally clear from the correspondence that the Respondent still considered the two as [NAME] throughout the letting. Her view that the letting was an informal arrangement between [NAME] and that she was helping Ms [NAME] is consistent with this. We also accept that she made enquiries of [NAME] in the same blocks as to the requirements for lettings but was only told about paying a fee to the landlord, which she had done. We also accept her explanation that she did not get a managing agent because she was concerned about the additional cost and the cost consequence for herself and Ms [NAME].

27. We next turn to paragraph 17 and the Applicants’ mental health. The tribunal considers it proven that she has ADHD, Complex PTSD, anxiety and other neurodiversity and that she has had suicidal ideations at times. We consider that these amounted to a disability for the purposes of section 6 of the Equality Act 2010 and lasted throughout the relevant period. We accept the background to this and the explanation of various traumatic events set out in her statement of case. We also consider it proven that whilst she could react to requests, she struggled to deal with many matters.

28. The tribunal finally considered the facts referred to in paragraph 18. It is evident from the correspondence in the bundles provided and the Applicants’ answers in giving evidence that they were aware of the requirement for a licence from late 2022. It is also clear that they did not raise the requirement for a licence with the Respondent before bringing their claim in 2025. They likewise had not previously raised other issues pleaded such as the lack of an EPC or fire safety issues. What is less clear is the point in time that the Applicants knew they could apply for a rent repayment order. It is likely that Justice for Tenants would have advised them about this right when it informed them of the lack of a licence in late 2022. Correspondence was intermittent after this but the tribunal considers on the balance of probabilities that they would have been aware of their rights to apply for rent repayment order by 1 July 2023, which is the start of the relevant period. We also consider on the balance of probabilities that the reason they did not inform the Respondent of the need for a licence was to keep their powder dry for a rent repayment [NAME].

29. The tribunal has in the past been reluctant to accept ignorance of the requirement for a licence as a reasonable excuse. The Applicants referred to the case of AA v Rodriguez & Ors [2021] UKUT 0274 (LC), where the

7 Upper Tribunal held that it will not usually constitute a reasonable excuse defence. By the same token, it accepted that it could succeed, based on a careful evaluation of the facts.

30. The Applicants have argued that the purported facts do not constitute an objectively reasonable excuse. They contend that there is no obligation on the council or the tenants to notify the Respondent of the need to licence the Property, she failed to take reasonable steps to identify her licensing obligations and her mental health did not prevent her from doing so.

31. The tribunal has considered these various facts and arguments as a whole.

32. We have taken into account the fact that the Respondent had no idea even of the concept of housing licensing and had no awareness whatsoever of the need to obtain a licence. We have noted that she is not a professional landlord and this is her only property. We accept that she genuinely had no knowledge of the requirement to obtain a licence, even after [NAME] reasonable enquiries of what was required to let her property. The tribunal considers that this view was not unreasonable. As such, we accept that she should not have been expected to investigate further without some sort of external prompt. This applied throughout the relevant period.

33. We have also considered the impact of her mental health. We accept that the Respondent was strongly affected by her conditions during this period. The Applicants argued that she was fully capable of managing her affairs and we consider this is incorrect. The conditions meant that she could respond to requests and indeed did so but imposed a narrowness on her approach that limited her perspective. In this situation, it would have been better had she appointed a managing agent. She chose not to so out of a desire to help someone she viewed as a friend and due to their mutual financial constraints. By the time of the start of the relevant period, there was hostility between the Respondent and Mr [RESPONDENT] and we have found that both Applicants were aware of the potential for a rent repayment claim. However, from the Respondent’s perspective (which would have been affected by her mental health), she believed that her friendship with Ms [NAME] was continuing and so mistakenly allowed that to prevent her appointing a managing agent. We do not agree that the cost of a managing agent would have a de minimis impact on the rent to enable its recovery.

34. Taking these factors into account, the tribunal finds on an objective basis that until she had an external prompt as to the need for a licence, she was reasonable in relying on her ignorance of the requirement to obtain a licence.

8 35. The Applicants were not obliged to inform the Respondent that she needed to obtain a licence. The tribunal is concerned at their motivation in failing to do so but accepts that this of itself would not give the Respondent a reasonable excuse. However, the tribunal finds that had they done so, this would have given the Respondent the external prompt required to alert her to the need for a licence and so removed her reasonable excuse from that point.

36. Taking all of this into account including the Respondent’s mental health, the tribunal finds, on the balance of probabilities, that the Respondent’s ignorance of the need for a licence constituted a reasonable excuse for her failure to have a licence. This reasonable excuse covers the whole of the relevant period. We therefore find that the Respondent had a reasonable excuse for the purposes of section 95(4) of the 2004 Act. This operates as a defence to the claim.

37.

Accordingly, [NAME] determined that the Respondent has a reasonable excuse for failing to license the Property, the tribunal does not have the power to make a rent repayment order. As a result, the Applicants’ [NAME] must be dismissed. Tribunal determination 38. The tribunal determines that the Respondent has not committed the offence under section 95(1) of the 2004 Act of managing a house which was required to be licenced under Part 2 of the 2004 Act but was not so licensed between 1 July 2023 and 30 June 2024.

39. The Applicants’ [NAME] for a rent repayment order is therefore dismissed. Cost applications 40. The Applicants have applied under paragraph 13(2) of the Tribunal Procedure (First-tier Tribunal) ([NAME]) Rules 2013 for an order that the Respondent reimburse the [NAME] fee of £110.00 and the hearing fee of £227.00.

41. As the Applicants have been unsuccessful in this claim, the tribunal is satisfied that it is not appropriate in the circumstances to order the Respondent to reimburse these fees and this [NAME] is dismissed. Name: Judge H Lumby Date: 14 October 2025

9

Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) ([NAME]) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written [NAME] for permission must be made to the First- tier Tribunal at the regional office which has been dealing with the case. The [NAME] for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28-day time limit, such [NAME] must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party [NAME] the [NAME] is seeking. If the tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).

10 SCHEDULE Relevant statutory provisions Housing and Planning Act 2016 Section 40 (1) This Chapter confers power on the First-tier Tribunal to make a rent repayment order where a landlord has committed an offence to which this Chapter applies. (2) A rent repayment order is an order requiring the landlord under a tenancy of housing in England to – (a) repay an amount of rent paid by [NAME] ... (3) A reference to “an offence to which this Chapter applies” is to an offence, of a description specified in the table, that is committed by a landlord in relation to housing in England let by that landlord.

Act section general description of offence 1 Criminal Law Act 1977 section 6(1) violence for securing entry 2 Protection from Eviction Act 1977 section 1(2), (3) or (3A) eviction or harassment of occupiers 3 Housing Act 2004 section 30(1) failure to comply with improvement notice 4

section 32(1) failure to comply with prohibition order etc 5

section 72(1) [NAME] or management of unlicensed HMO

11 6

section 95(1) [NAME] or management of unlicensed house 7 Housing and Planning Act 2016 section 21 breach of banning order

Section 41 (1) [NAME] or a local housing authority may apply to the First-tier Tribunal for a rent repayment order against [NAME] who has committed an offence to which this Chapter applies. (2) [NAME] may apply for a rent repayment order only if – (a) the offence relates to housing that, at the time of the offence, was let to the tenant, and (b) the offence was committed in the period of 12 months ending with the day on which the [NAME] is made. Section 43 (1) The First-tier Tribunal may make a rent repayment order if satisfied, beyond reasonable doubt, that a landlord has committed an offence to which this Chapter applies (whether or not the landlord has been convicted). (2) A rent repayment order under this section may be made only on an [NAME] under 41. (3) The amount of a rent repayment order under this section is to be determined in accordance with – (a) section 44 (where the [NAME] is made by [NAME]) ... Section 44 (1) Where the First-tier Tribunal decides to make a rent repayment order under section 43 in favour of [NAME], the amount is to be determined in accordance with this section. (2) The amount must relate to rent paid during the period mentioned in the table.

12 If the order is made on the ground that the landlord has committed the amount must relate to rent paid by the tenant in respect of an offence mentioned in row 1 or 2 of the table in section 40(3) the period of 12 months ending with the date of the offence an offence mentioned in row 3, 4, 5, 6 or 7 of the table in section 40(3) a period, not exceeding 12 months, during which the landlord was committing the offence

(3) The amount that the landlord may be required to repay in respect of a period must not exceed – (a) the rent paid in respect of that period, less (b) any relevant award of universal credit paid (to any person) in respect of rent under the tenancy during that period. (4) In determining the amount the tribunal must, in particular, take into account – (a) the conduct of the landlord and the tenant, (b) the financial circumstances of the landlord, and (c) whether the landlord has at any time been convicted of an offence to which this Chapter applies. Housing Act 2004 Section 95 (1) [NAME] commits an offence if he is a [NAME] of or managing a house which is required to be licensed under this Part … but is not so licensed. (4) In proceedings against [NAME] for an offence under subsection (1) … it is a defence that he had a reasonable excuse … for [NAME] [NAME] of or managing the house in the circumstances mentioned in subsection (1) … . Section 263 (1) In this Act “[NAME]”, in relation to the premises, means (unless the context otherwise requires) the person who receives the rack rent of the premises (whether on his own account or as agent or trustee of [NAME]), or who would so receive it if the premises were let at a rack rent.

13 (3) In this Act “person managing” means, in relation to premises, the person who, being an owner or lessee of the premises –

(a) receives (whether directly or through an agent or trustee) rents or other payments from –

(i) in the case of a house in multiple occupation, persons who are in occupation as tenants or licensees of parts of the premises …

(b) would so receive those rents or other payments but for [NAME] entered into an arrangement (whether in pursuance of a court order or otherwise) with [NAME] who is not an owner or lessee of the premises by virtue of which that other person receives the rents or other payments