Rent Repayment Orders Awarded to Tenants in First-tier Tribunal Case

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL [NAME] CHAMBER ([NAME]) Case Reference : MR/LON/00AG/HMF/2018/2027 [NAME] : 49 [ADDRESS] [POSTCODE] Applicants : [redacted] (3) [NAME] [NAME] and (4) [COUNSEL] : In person Respondent : [redacted] (2) [COUNSEL] (3) [RESPONDENT] : Mr [COUNSEL] for Mr. [COMPANY] of Application : Rent Repayment Order Tribunal Members : Judge [NAME] and venue of hearing : 4 February 2019 and 1 [ADDRESS] [POSTCODE] Date of decision : 14 March 2018

DECISION

2 The tribunal’s summary decision

I The tribunal finds that Mr. [RESPONDENT] is liable to a rent repayment order as the landlord of [NAME] at 49 Cartmel, [ADDRESS], London NW3 to the Applicants in the following amounts:

[NAME]: £3,345 for the period 27/09/17 to 7/5/18.

[NAME]: £3,531 for the period 18/2/2018 to 26/09/18

[NAME] [NAME] and [NAME] [NAME]: £3,640 for the period 26/05/2018 to 26/09/2018 .

The application

1. This is an application by the four Applicants seeking a rent repayment order in varying amounts for the rent paid during their different periods of occupation of 49 [ADDRESS] [POSTCODE] (“the [NAME]”) under the provisions of sections 41 to 44 of the Housing Act and Planning Act 2016.

The background

2. The subject [NAME] comprises a four bedroom flat on the third floor of a purpose built block of flats. The long leaseholder is Mr. [NAME] hid [NAME] who by a written agreement dated 1/10/2017 Mr. [NAME] entered into a Guaranteed Rent Agreement (“the Agreement”) with [COMPANY] (“[NAME]”) whereby he agreed to the whole of the subject [NAME] to [NAME] for a term of 12 months at a guaranteed rent of £2500 per calendar month.

3. In this Agreement, [NAME] acquired the right to sublet the subject [NAME] to whoever it chose without recourse to Mr. [NAME]. Subsequently, [NAME] let the [NAME] to Mr. [NAME] for a period of 12 months from 25/09/2017 to 24/09/2018 under an Assured Shorthold Tenancy (AST) at a rent of £3,200 per calendar month with clause 1.7.4 prohibiting subletting and providing [NAME]’s address at [ADDRESS], N8 oDY as the address for services of notices as required by sections 47 and 48 of the Landlord and Tenant Act 1987. Mr. [APPELLANT] in turn entered into the following tenancy agreements with the Applicants.

(i) AST dated 27/9/17 made between Mr. [COUNSEL] as landlord’s agent for “[NAME]” and [COUNSEL] and [COUNSEL] [NAME] for the letting of a room at 49 Cartmel, for a term of 6 month from 27/9/17 at a rent of £900 per calendar month together

3 with an agent’s fee of £150 and a deposit of £200. Rent to be paid in the account of Mr. [NAME].

(ii)AST dated 14/02/18 made between Mr. [RESPONDENT] as Landlord’s agent and [RESPONDENT] for a room at 49 Cartmel from 18/2/18 for a period of 3 months at a rent of £650 per calendar month together with an agent’s fee of £100 and a deposit of £200. Rent to be paid to [NAME].

(iii)AST dated 19/5/18 made between Mr. [RESPONDENT] as landlord’s agent and [RESPONDENT] [NAME] and [RESPONDENT] [NAME] for a room at 49 Cartmel for a period of 6 months from 26/5/18 at a rent of £910 per calendar month together with an agent’s fee of £150 and a deposit of £200. Rent to be paid to [NAME].

4. On 13th August 2018 a new application for a ‘selective’ licence was received by the London Borough of Camden from Mr. [NAME] as set out in a letter dated 24/08/2018 from the London Borough of Camden.

The Applicants’ evidence – hearing of 4 February 2019

5. In addition to providing oral evidence to the tribunal, the Applicants relied upon a number of documents in support of their application which included copies of the tenancy agreements entered into by themselves and Mr. [NAME] together with a Statement in support. The Applicants told the tribunal that they had moved into the [NAME] at varying times and had each found the subject [NAME] through the internet on accommodation rental sites.

6. The Applicants told the tribunal that on taking up occupation, the subject [NAME] was arranged as five bedrooms with locks on each of the bedroom doors and the occupiers shared a kitchen bathroom and w.c. and that there were two broken windows that required repair and a missing bedroom door. Mr. [NAME] also stated that as at the date of taking up his tenancy on 27/9/17 there were already other occupiers in the [NAME] but who are not part of this dispute. The deposit, agent’s fee and monthly rent were paid to Mr. [NAME] account (as evidenced by the bank statements provided to the tribunal) or as directed on the tenancy agreements, as he throughout their tenancies represented himself as the landlord’s agent, although [NAME] had been dissolved on 28/03/17 according to HM Companies House registry. The Applicants stated that they communicated with Mr. [NAME] through text messages and reported items of disrepair in that way. In return appointments for contractors to attend the [NAME] to carry out items of repair were communicated by Mr. [NAME] to the applicants.

7. At the first hearing held for the determination of this application it was accepted by the Applicants that they had not been able to send or arrange to have sent the application and related documents to Mr. [NAME] as they were unaware of his address.

4 The second and third respondent’s evidence – hearing of 4 February 2019

8. At this hearing Mr. [NAME] attended and was represented by Mr. [NAME] who represented both Mr [NAME] and [COMPANY]. In addition to oral evidence from Mr. [NAME], the respondents also relied on a number of documents provided to the tribunal.

9. The tribunal was provided with a statement dated 11 January 2019 signed by Mr. [RESPONDENT] in which it was stated “The position of the [NAME] Mr [RESPONDENT] hid [RESPONDENT] and the Agent is already set out in a [COMPANY] letter dated 07 Dec 2018 signed by both the Agent and also the Landlord and sent to the [NAME] Chamber.” This statement went on to state [COMPANY] did their usual assessment at the time of the Tenancy commencement* and did not perceive any particular reason to be ‘on enquiry’ as to the credibility of the Tenant* at that time. This statement also informed the tribunal that “[RESPONDENT] are not the Owner or Landlord and receive only fees for professional services and do not have significant profits.

*Mr. [NAME]

10. The tribunal was provided with a copy of the AST agreement dated 25/09/2017 entered into by [NAME]: [APPELLANT] and [APPELLANT] (Lead Tenant) for a “Furnished House” at 49 Cartmel for a term of 12 months from 25/09/2017 to 24/09/2018 at a rent of £3200 per calendar month with rent to be paid to the Agent/Landlord. The tribunal noted that his agreement did not identify Mr. [RESPONDENT] as the landlord.

11. The tribunal was also provided with a document headed “Guaranteed Rent Agreement” (“the Agreement”) made between [COMPANY] (“the Company”) and Mr. [NAME] (“the Owner”) and dated 10/10/2017. This agreement provided that for the period of 10/08/2017 until 10/08/2018 that:

“5. The company will seek and find tenants 6. The Company may grant tenancies in its own name and have the right to sublet. The subletting will create either an Assured Short Hold Tenancy or a Formal License in accordance with the occupation by the licensee residents 7. The Company has absolute discretion as to whom they may let/provide accommodation for in The [NAME]** 8. The company will pay the guaranteed rent in 1 month advance.

9. The Company will pay the agreed sum of £2500 per calendar month. This is a net figure into [NAME] specified account…….” 25. If the [NAME] falls under the Multiple Occupation under the Housing Act 2004. [NAME] will work with the Agent i.e. given the agent sufficient time to resolve this issue. The Owner will be responsible for all cost related to Multiple Occupations Act…….

5 26.The Owner may inspect the [NAME] periodically but only in accordance with the terms of the subletting agreement…….”

**defined as 49 Cartmel, [ADDRESS], NW1 3sH

12. The tribunal noted that there was no provision in the Agreement for Mr. [NAME] to be paid in excess of £2500 per calendar month should the rental achieved be in excess of that sum. Similarly, the tribunal noted that Mr. [NAME] was not required to pay any sum to [NAME] for their services during the period of this Agreement and there the Agreement provided no definition of the “Agent.”

13. Mr. [NAME] told the tribunal that he had entered into similar agreements with [NAME] over the previous three or four years and renewed these when necessary with the intention that the subject [NAME] be let by [NAME] to a single household. Mr. [NAME] stated that he had not installed either directly or indirectly individual locks on the bedroom doors and had given all of his ‘fob’ keys to the communal front entrance door to the block to [NAME]. Mr. [NAME] stated he had applied for an HMO licence in August 2018 with a view to increasing the rental income in the future. Mr. [NAME] told the tribunal that he had let the [NAME] to [NAME] in order to guarantee an income of £2,500 per calendar month and that that in allowing [NAME] to sublet it, [NAME] became the landlord and looked after the [NAME] on a day to day basis.

14. In light of the integral role played by Mr. [NAME] and the conflicting position emerging between Mr. [RESPONDENT] and [NAME], as to who was the landlord of this [NAME] at any given time, with [NAME] asserting it was only ever the agent whilst continuing to purport to represent Mr. [NAME] interests, the tribunal decided that the matter should be adjourned part- heard with a view to Mr. [NAME] being sent the application and all supporting documentation, as he had already been joined as a party to these proceedings together. A search of the publicly available companies’ data base gave an address for Mr. [NAME] at [ADDRESS], and subsequently the tribunal sent the application, the documents and notice of the new resumed hearing date to that address. The tribunal of its own motion joined [NAME] to the application as a respondent and also gave further directions for the production of documents relating to inspections and inventories carried out by [NAME] and the checks carried out on Mr. [APPELLANT] regarding his financial suitability as a tenant during the period of his tenancy.

1 March 2019 – the adjourned hearing

15. Mr. [NAME] did not appear and was not represented although the tribunal was told that he had in recent weeks tried to contact the Applicants. A document from the third Respondent in the form of an internet news document from [NAME], revealed [COMPANY] and its director Mr. [NAME] had been fined £30,000 on 7 February 2019 in the Highbury Corner Magistrate’s Court for failing to license three houses in multiple occupation in Camden and

6 located in [ADDRESS], [ADDRESS] and [ADDRESS], with his personal address recorded as [ADDRESS], London. Therefore, the tribunal was satisfied that Mr. [NAME] had been sent and received all of the relevant documents and was aware of the resumed hearing date.

16. At the resumed hearing, three of Applicants appeared in person (Ms [NAME] being unable to attend), and Mr. [NAME] represented the second and third Respondents, with Mr. [NAME] in attendance and with Mr. [NAME] a director of [NAME], also being present. The Applicants provided a further statement in which they described furniture being moved in and out of the subject [NAME] throughout their tenancies and a tenant being unlawfully evicted by Mr. [APPELLANT].

17. At the hearing [NAME] again took the position that it was only ever the agent for the subject [NAME] and Mr. [COUNSEL] remained throughout the landlord. In a statement dated 27 February 2019 signed by [RESPONDENT], director and [NAME] on behalf of [NAME], it was stated that Mr. [RESPONDENT] was the owner and landlord and that [NAME] as a Letting and Management Agent acted as his agents with the fees received for professional services provided to Landlords/[NAME] as set out in the accompanying documents and that in his witness statement dated 11 January 2019 Mr. [NAME] had accepted in a letter dated 7 December 2018 that [NAME] was his agent. The letter of 7 December 2018 from [NAME] to the tribunal stated “We as the agent to [APPELLANT] let the [NAME] to a single tenant Mr. [APPELLANT] who then in breach of Cause (sic) 1.7.4 of the Assured Shorthold Tenancy Agreement apparently engaged in a sub-let arrangements with the Tenants who have now pursued a Rent Repayment Order Claim……The [NAME] was let and managed by our Agency did not require a License under any of the Licensing Schemes operated by LB of Camden and hence there is no breach on the part of [COMPANY] in any event, as they merely received fees for services rendered to [NAME], as set out in the attached Financial Schedule.”

18. At the resumed hearing Mr. [NAME] produced the Financial Schedule which stated that rent had been paid by Mr. [NAME] to [NAME] in the total sum of £38,400, that that residual profit received by [NAME] was nil (£0). However, a brief financial statement from Mr. [NAME] stated he received £2,500 rent in respect of the subject [NAME] on which he had outgoings of £1563.43 in respect of mortgage payments, loan payments of £366.81 and buildings insurance of about £400 per year. Mr. [NAME] told the tribunal he had not received rental income for the subject [NAME] of |£38,400 as claimed in [NAME]’s financial statement.

19. The tribunal was also provided with a landlord gas safety record dated 08 May 2018; an electrical condition report dated 13/09/2018 together with a pre and post tenancy inventory, an employment and financial statement in respect of Mr. [NAME] who recorded his annual salary as £25,000 as an office manager. The tribunal noted that the inventory for the subject [NAME] signed by the first and third Respondents dated 25/09/17 and

7 29/09/18 indicated that it was set up as a five bedroomed [NAME] and without a living room throughout the period of Mr. [NAME] tenancy.

The tribunal’s decision and reasons

20. The tribunal makes the following factual findings:

(i) The Guaranteed Rent Agreement entered into by Mr. [NAME] and [RESPONDENT] creates an agreement, whereby [NAME] becomes the landlord of the [NAME] for the duration of the agreement, as it controls who the occupiers are to be, under what rent and what terms without having to defer to Mr. [NAME] for his approval.

(ii) Mr. [NAME] received the guaranteed rent of £2,500 per calendar month and was not the beneficiary of any sum in excess of that figure paid to [NAME] by Mr. [NAME].

(iii) The subject [NAME] was let to Mr. [NAME] as a five bedroom [NAME] as set out in the inventory.

(iv) The agreement to sub-let to Mr. [NAME] for use as an HMO was within the knowledge of [NAME], as the rental figure of £3,200 per calendar month (£38,400 per annum) could not have been paid in its entirety from the annual salary of £25,000 declared to [NAME] by Mr. [NAME] and no further enquiries were made as to his ability to meet the monthly rental commitment.

(v) The subject [NAME] was subject to some disrepair (broken windows and a missing door) before the [NAME] was let to the Applicants.

(vi) Mr. [NAME] was the Applicant’s landlord, as his purporting to be an agent for a company that no longer existed ([NAME]) or any other company was a sham. Rent was paid directly into Mr. [NAME] personal bank account or an account controlled by him.

(vii) Throughout the period of the Applicants’ tenancies, the subject [NAME] was required to be licensed as an HMO by the London Borough of Camden’s additional licensing provisions.

(viii) Throughout the periods of the Applicants’ tenancies, Mr. [NAME] was not the holder of a licence to let this [NAME] to tenants as an HMO.

(vix) The tribunal is satisfied beyond reasonable doubt that Mr. [NAME] has committed an offence (although not convicted) to which the provisions of Chapter 4 of the Housing and Planning Act apply.

(xx) The monthly rental payments due from the Applicants was paid in full to Mr [NAME] throughout the period of their occupancy (with £450 paid by Mr. [NAME] representing 50% of the £900 payable).

8 The relevant legislation

20. Sections 43 of the Housing and Planning Act 2016 states:

(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 application under section 41.

(3)The amount of a rent repayment order under this section is to be determined in accordance with—

(a)section 44 (where the application is made by a tenant);

(b)section 45 (where the application is made by a local housing authority);

(c)section 46 (in certain cases where the landlord has been convicted etc).

21. Section 44 of the Housing and Planning Act 2016 requires the tribunal when considering the amount of the rent repayment order, the rent paid by the Applicants during the relevant period, being not in excess of a 12 month period ending with the date of the application to the tribunal. The tribunal also has a regard to the amount of rent paid and takes into account the conduct of the landlord and tenants; the financial circumstances of the landlord and whether the landlord has at any time been convicted of an offence to which Chapter __ applies.

22. In the absence of any evidence from Mr. [NAME] and in light of his conduct, in pretending to be an agent in respect of the Applicants’ tenancies and his conduct throughout and without evidence of his financial circumstances, the tribunal finds it appropriate to award the following sums by way of rent repayment orders:

[NAME]: £3,345 for the period 1/10/17 to 7/5/18.

[NAME]: £3,531 for the period 17/2/2018 to 26/09/18

[NAME] [NAME] and [NAME] [NAME]: £3943.40 for the period 3/4/2018 to 26/09/2018 .

23. The tribunal directs that Mr. [NAME] is to pay the sums as set out in paragraph 22 above within 21 days of the date of this decision.

Signed: Judge Tagliavini Dated: 14 March 2019