Landlord Ordered to Repay Rent for Operating Unlicensed House

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : LON/00AZ/HMF/2025/0671 Property : [ADDRESS], [ADDRESS], [NAME], London [POSTCODE] Applicants : [redacted] [NAME] [COUNSEL] [NAME] [COUNSEL] [NAME] : [COUNSEL] Respondents : [redacted] [NAME] :

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

Tribunal Judge H Lumby Ms R Kershaw BSc Venue : 10 [ADDRESS] [POSTCODE] (by CVP) Date of Hearing :

14th August 2025

Date of Decision : 20th August 2025

DECISION (taking the place of the decision issued on 15th August 2025)

2

Decisions of the tribunal

(1) The tribunal orders the Respondents to repay to the Applicants the sum of £12,172.50 by way of rent repayment, such repayment to be made within 28 days of the date of this decision.

(2) The tribunal also orders the Respondents to reimburse to the Applicants the [NAME] fee of £110 and the hearing fee of £227 (amounting to £337 to be reimbursed in total), such repayment to be made within 28 days of the date of this decision.

Introduction 1. The Applicants have applied for a rent repayment order against the Respondents under sections 40-44 of the Housing and Planning Act 2016 (“the 2016 Act”).

2. The basis for the [NAME] is that the Respondent were controlling and/or managing an unlicensed house 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 they were 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 31 January 2024 to 31 January 2025, amounting to £29,500.

4. The Property comprises a four bedroom house with communal kitchen and bathroom facilities.

5. The tribunal was provided with a bundle by the Applicants running to 235 pages, a further bundle by the Respondent consisting of 45 pages and a reply bundle by the Applicants of a further 5 pages. Skeleton arguments were also received from both parties. 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 Ms [COUNSEL] spoke on their behalf. Mr [COUNSEL] appeared for the Respondents. Mr [COUNSEL] appeared as a witness for the Respondents and answered questions about rewiring works carried out to the Property.

7. There were two technical malfunctions during the hearing but this did not affect the hearing or its completion. Both sides had a full opportunity to state their cases.

3 Relevant statutory provisions 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 house on the basis that it was rented to three or more people who form more than one household. The area in which the Property is located was designated by the London Borough of [NAME] as requiring additional licensing from 5 April 2022 (the “[NAME]”). This has been confirmed by the local council who have served a civil penalty notice on the Respondents as a consequence.

10. The Respondent accepts that the Property was caught by the [NAME] and so they should have obtained a licence. They say they did not know they required a licence until these proceedings but have subsequently applied for a licence and carried out fire safety works required by the council. The licence has been provided by the Respondents and runs from 29 May 2025 and covers one household or two individuals. A temporary exemption from the [NAME] was also granted on 19 February 2025.

11. It is accepted that there were four people in occupation of the Property throughout the period of the Applicants’ claim and that they formed three separate households at all times during that period. It is also agreed that the tenants shared kitchen and bathroom facilities. There was no dispute that the Applicants paid rent, occupied the Property as their main residence, that their occupation was the only use, they were not students and did not receive universal credit.

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

13. The Respondents accept that they did not have a licence at any time during the period covered by the Applicants’ claim.

14. The Respondents therefore accepted that they were 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 31 January 2024 and 31 January 2025 and that they were therefore committing an offence under section 95(1) of the 2004 Act during that period.

4 15. Section 44 of the 2016 Act prevents rent repayment orders for periods in excess of 12 months during which the offence was committed. The Applicants’ [NAME] covers the period 31 January 2024 to 31 January 2025; this is 12 months and one day. As a result, the tribunal has treated the applicable period applied for as being 31 January 2024 to 30 January 2025.

16. The amounts the Applicants say that they paid during the term are not disputed by the Respondents.

17. The Respondents received a financial penalty of £1,500 from the local authority as a result of their offence. Neither of them has previously been convicted of an offence identified in the table in section 45 of the 2016 Act. Reasonable excuse 18.

Accordingly, having established the ground for potentially [NAME] a rent repayment order, the tribunal considered whether the Respondents 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.

19. The Respondents explained that the failure to obtain a licence was as a result of misunderstanding of the law by them. The Applicants argued that this should not amount to a reasonable excuse, as a failure to licence a house was a strict liability offence, citing [NAME] v London Borough of Waltham Forest [2020] EWHC 1083 20. The tribunal considered the Upper Tribunal guidance on what amounts to a reasonable excuse defence in the cases of Marigold & ors v Wells [2023] UKUT 33 (LC) and D’Costa 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. Mistakes as to a house that requires to be licensed will rarely if ever amount to a reasonable excuse, although may impact on the level of any subsequent rent repayment order (as per [NAME] v Waltham Forest).

21. As a result, the tribunal finds that the Respondents do not have a reasonable excuse to the offence. Consideration of grounds 22. The Respondents have accepted that they committed an offence under section 95(1) of the 2004 Act throughout the relevant period. The tribunal is satisfied beyond all reasonable doubt that the offence was committed and that the relevant dates when the offence was committed

5 for these purposes were prior to 31 January 2024 and after 30 January 2025. Rent Repayment Order 23. Section 43 of the 2016 Act provides that where a tribunal is satisfied beyond reasonable doubt that a landlord has committed a relevant offence, it may make a rent repayment order. The tribunal does therefore have a discretion as to whether to make an order although it has been established that it would be exceptional not to make a rent repayment order (Wilson v Campbell [2019] UKUT 363 (LC)).

24. In this case, the tribunal is satisfied beyond reasonable doubt that an offence has been committed and that there is no reasonable excuse for the offence. It does not consider that there are any exceptional circumstances preventing it [NAME] an order and therefore determines that a rent repayment order should be made. Submissions on amount of order 25. Having determined that a rent repayment order should be made, the tribunal next considered what the amount of such order should be.

26. The Applicants argue that the Property never had appropriate safety certificates (especially an EICR certificate) and was therefore never in a condition where it was capable of being licensed under the [NAME]. They contend that this was a serious failure, going beyond a mere failure to obtain a piece of paper but placing the tenants at serious risk; they point to the lack of a fire risk assessment and fire prevention measures in the Property. If the landlords had obtained an EICR certificate upfront, these defects and the requirement to rewire the Property would not have arisen.

27. They also point to the disruption and impact on their wellbeing caused by rewiring works carried out for eight weeks from mid-December 2024. They found these works intrusive, with the kitchen or bathroom incapable of use at times, also referring to the dishwasher and oven being incapable of use at times, the power being off one Friday to 10pm and masonry falling from the ceiling. The rewiring began seven days after one of the tenants got an electric shock from a tap and contend this prompted the Respondents to do the works.

28. The Applicants therefore argue that between 90 to 100% of the rent paid should be refunded.

29. The Respondents accept that they should have obtained a licence but argue that this was an inadvertent mistake which should be taken into account in assessing the level of any repayment. They also contend that

6 they acted responsively to requests for repairs and carried out the safety works required by [NAME] as well as promptly applying for a licence once aware of the need.

30. They acknowledged that the rewiring works caused disruption but said a rent discount was given in January and in February 2025 to account for this. In addition, they argue they should not be punished twice as they had already received the civil penalty notice from the council. They suggest that the level of the notice was low compared to potential penalties (£1,500 as against up to £30,000). They are not professional landlords, this being their only UK property, and have not received a penalty before.

31. As a result, they suggest a repayment of between 0 and 25%.

32. The Respondents made no submissions in relation to the Applicants’ conduct. They also provided no evidence of financial circumstances or submissions on these. Method of assessing amount of order 33. Section 46 of the 2016 Act specifies circumstances where a tribunal is obliged to make a rent repayment order in the maximum amount (subject to exception circumstances). These do not apply where the tenant is seeking to rely on offences under section 95(1) of the 2004 Act, as is the case here. The tribunal therefore has discretion as to the percentage of the rent it can order be repaid.

34. Section 44 of the 2016 Act specifies the factors that a tribunal must take into account in [NAME] a rent repayment order. This has been qualified by the Upper Tribunal in guidance given in the case of [NAME] [2022] UKUT 239. That guidance is summarised as follows: (i) ascertain the whole of the rent for the relevant period; (ii) subtract any element of that sum that represents payment for utilities that only benefited the tenant, e.g. gas, electricity and internet access; (iii) consider how serious the offence was, both compared to other types of offence in respect of which a rent repayment order may be made (and whose relative seriousness can be seen from the relevant maximum sentences on conviction) and compared to other examples of the same type of offence. What proportion of the rent (after deduction as above) is a fair reflection of the seriousness of this offence?

7 (iv) finally, consider whether any deduction from, or addition to, that figure should be made in the light of the other factors set out in section 44(4), namely the matters the tribunal must 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 identified in the table at section 45 of the 2016 Act. Tribunal assessment of amount of order 35. The tribunal has followed the guidance in [NAME] set out above.

36. The Applicants’ claim is for £29,500, which they say is all the rent paid by them for the period 31 January 2024 to 31 January 2025. As referred to above, this is a period of 12 months and one day, whilst only 12 months may be taken into account. The tribunal has therefore only considered the period of 12 months from 31 January 2024 to 30 January 2025.

37. Section 44(2) of the 2016 Act makes it clear that the amount to be taken into account is the rent paid by the tenant during the period not exceeding twelve months when the offence was being committed. The important distinction here is between the rent actually paid in the period of 12 months from 31 January 2024 and the rent due for that period; the tribunal must calculate the former, not the latter.

38. The tribunal therefore has considered the rent payment schedule provided by the Applicants (on pages 124 and 125 of their bundle). The first payment in that period was paid on 1 March 2024 and was for £2,450 (the payment before was made on 30 January 2024 and so before the period started). A total of seven payments were made at that level, giving a total of £17,150. The rent then increased to £2,600 a month with the first payment being made on 30 September 2024; three payments were made at this level, giving £7,800. £2,100 was paid on 30 December 2024. The next payment was made on 31 January 2025 and so was made outside the 12 month period. This gives a total paid in the relevant period of £27,050. This is the starting point for the tribunal, being the amount of rent paid in the relevant 12 month period.

39. The Respondents confirmed that the tenants were responsible for paying utilities and that there were no further services paid for by the Respondents. The Applicants confirmed that none of them had received

8 universal credit.

Accordingly, no deductions should be in made in respect of these items.

40. The tribunal did not consider that the offence was a serious one when compared to the other offences in respect of which a rent repayment order could be made. It had occurred inadvertently, due to a misunderstanding by the Respondents. They had taken prompt steps to mitigate the position by applying for a licence and an exemption and carrying out the required safety works.

41. The tribunal noted the case of Hallet v Parker [2022] UKUT 165 (LC); in that case, the tribunal made a rent repayment order equal to 25% of the total rent paid where this was a first offence by the landlord, in circumstances where the landlord was not told by his agent he needed to be licensed and applied immediately on being told of the issue. The parallels in that case suggest a large discount is appropriate here.

42. However, a key difference between that case and this is that the Respondents here had failed to obtain an EICR certificate for the Property prior to letting it to the Applicants. Evidence was not provided either way whether an EICR certificate would have been granted had the Respondents made an [NAME] for one at the time and the tribunal cannot make any findings on that. Similarly, it cannot be determined what caused the electric shock from the tap, Mr [NAME] suggesting in evidence that static rather than an electrical fault was the likely cause. However, notice must be taken of the failure to obtain such a certificate as well as the fire hazards identified by the council when they inspected. All of this makes the offence here more serious when compared to similar offences pursuant to section 95(1) of the 2004 Act. As a result, an order materially higher than 25% is appropriate.

43. When considering how much higher is appropriate, the tribunal was cognisant that the level of civil penalty imposed by [NAME] council was relatively low, especially given how long the offence had been continuing and the fire safety issues raised by them. This would indicate that the officers who had inspected the Property and dealt with the penalty did not consider it too serious. In addition, a high rent repayment order would mean that the Respondents could be punished twice.

44. The tribunal considered the conduct of the Respondent. The failure to obtain a licence and the EICR and fire safety issues were not taken into further account, having already been considered. The tribunal focused here on the disruption caused by the rewiring works and we are grateful for the evidence of Mr [NAME] on this. It is clear that, despite the best efforts of Mr [NAME], the works did cause disruption to the tenants and that this was to a level that adversely affected their quiet enjoyment of the Property. It is noted, however, that they did receive a rent discount to reflect this and that the works were partially carried out after the relevant period to which this claim relates. By carrying out the works, the

9 Respondents have to accept responsibility for this. This should be taken into account in setting the repayment level.

45. There was discussion during the hearing as to use of the garage at the Property. The tribunal finds no adjustment is appropriate in relation to this, as no evidence of prejudice to the Applicants was provided.

46. Overall, the tribunal considered that there was evidence of poor conduct but it was certainly not in the most serious categories. In this regard, the tribunal noted the case of Dowd v Martins [2022] UKUT 249 (LC), where a similar level of poor conduct led to an order of 45% of the total rent as the rent repayment amount. The tribunal considers that an order around this level would be appropriate here, when taking into account the EICR and fire safety issues.

47. The tribunal noted that there had been no question raised of misconduct by the Applicants and concluded that it was therefore inappropriate to make any adjustments as a consequence.

48. No evidence was received or submissions made in relation to the Respondent’s financial circumstances. The tribunal therefore concluded that no adjustments for his financial circumstances were appropriate.

49. The tribunal noted that the Respondent had not previously been convicted of an offence identified in the table in section 45 of the 2016 Act (which is set out in the Schedule to this decision). No adjustment for this was therefore appropriate.

50. Taking all these factors into account, the tribunal determined that the amount payable by the Respondents should be reduced by 55%, leaving the amount to be repaid as £12,172.50. Tribunal determination 51. The tribunal determines that it is satisfied beyond all reasonable doubt that the Respondents were managing a house which was required to be licenced under Part 2 of the 2004 Act but was not so licensed between 31 January 2024 and 30 January 2025 and that they were therefore committing an offence under section 95(1) of the 2004 Act during that period. It also determines that the Respondents had no reasonable excuse for that offence.

52. The tribunal has determined that it should make a rent repayment order in respect of that offence and has calculated the amount of that order as £12,172.50.

10 53.

Accordingly, the tribunal orders the Respondents to repay to the Applicants the sum of £14,877.50 by way of rent repayment, such repayment to be made within 28 days of the date of this decision. Cost applications 54. The Applicants have applied under paragraph 13(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 for an order that the Respondents reimburse the [NAME] fee of £110.00 and the hearing fee of £227.00.

55. As the Applicants have been successful in this claim, the tribunal is satisfied that reimbursement of these fees should be made.

56. The tribunal therefore orders the Respondents to reimburse to the Applicants the [NAME] fee of £110 and the hearing fee of £227 (amounting to £337 to be reimbursed in total), such repayment to be made within 28 days of the date of this decision. Name: Judge H Lumby Date: 20 August 2025

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Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) 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).

12 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) control or management of unlicensed HMO

13 6

section 95(1) control 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.

14 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 72 (1) [NAME] commits an offence if he is [NAME] having control 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 having control of or managing the house in the circumstances mentioned in subsection (1) … . Section 263 (1) In this Act “person having control”, 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 another person), or who would so receive it if the premises were let at a rack rent.

15 (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 having entered into an arrangement (whether in pursuance of a court order or otherwise) with another person who is not an owner or lessee of the premises by virtue of which that other person receives the rents or other payments