Tenant's Rent Repayment Order Application Rejected by First-tier Tribunal

OUTCOME: Dismissed

© CROWN COPYRIGHT 2025

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00AE/HMF/2025/0616 Property : Flat 5, 56, [ADDRESS], London. [POSTCODE] Applicant : [redacted] : Not represented Respondent : [redacted] : [COUNSEL] of counsel, instructed by [COMPANY] of application : Application for a rent repayment order by tenant Sections 40, 41, 43, & 44 of the Housing and Planning Act 2016 Tribunal : Judge Adrian Jack, Tribunal Member [NAME] of Decision : 24th June 2025

DECISION

1. By an application dated 7th November 2024 the tenant applies for a rent repayment order against the respondent landlord for the period between 1st April 2024 and 30th October 2024. The preliminary application to strike out 2. At the commencement of the hearing Mr [RESPONDENT], who appeared on the landlord’s behalf, made an application to exclude the evidence in the applicant’s bundle, which was served on 29th May 2025. The application was on the basis that the tenant was in breach of the Tribunal’s directions that he serve his bundle by 20th March 2025. The directions, Mr [NAME]

2 submitted, warned that on a failure “to comply with these directions the tribunal may strike out all or part of their case pursuant to rule 9(3)(a) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013.” 3. In our judgment it was not appropriate to make such an order. The landlord had made no application for an “unless” order. The landlord had had adequate time to respond to the tenant’s evidence. The matter was capable of being heard in a manner which did not prejudice either party. In these circumstances, applying the Overriding Objective, we dismissed the application to strike out. The facts 4. There was little dispute as to outline facts. The property is a two bedroom flat. The landlord is a retired man, now aged 80. He is in poor health. As well as this property he has two other properties in Kensington and Chelsea. He has professional property managers for these two properties.

5. The tenant works as an estate agent, largely in the residential property market in Kensington and Chelsea. He played an active part in the drafting of the various agreements between the parties, as can be seen from the slightly idiosyncratic grammar used. (The tenant is of Italian origin.)

6. The landlord rented the flat to the tenant with effect from 25th January 2016 at a rent then of £1,430 per month. The rent was increased with effect from 25th February 2017 to £1,473.33, then from 25th February 2018 to £1,513.11 and from 25th February 2019 to £1,558.50.

7. From 25th February 2020 the rent increased to £1,605 per month, but in this year, the tenant carried out works in May 2020 said to have cost £1,600, so only £5 was paid in rent that month. In August 2020 the tenant failed to pay the rent, due, he said, to having lost his job. However, instead of paying the September rent on 25th of the month, he paid it on the first of the month. He had paid an extra £316.60 in July which he said was the rental for the period from 25 August to 1 September. The early payment of rent continues to date, even though the period of the tenancy throughout has and continues to run from 25th of the month.

8. The rent from February 2021 was increased to £1,653.15, then from February 2023 to £1,702.75 where it remains.

9. On 24th February 2022, the landlord and the tenant signed a “property management agreement”. By this the tenant agreed to manage the property on the landlord’s behalf. His duties included: “2. To act on the Landlord [sic] behalf in regards to any issues that might arises [sic] during the tenant period, all actions should be approved by the Owner.

3 3. To promptly inform the Landlord of any problems or repairing required reported to him by the tenant in order to take appropriate action in a timely manner” 10. The landlord agreed to pay the tenant £500 per annum for his services as manager, but the parties also agreed that this money would not in fact be paid on the basis “that the Manager can use the parking space at the back of the property for the sum of £500.00 per year.” 11. It is common ground that the tenant shares the flat with a friend, who pays half the rent. One of the complaints made by the landlord is that the tenant should not be subletting.

12. At the outset of the tenancy there was discussion about the tenant being entitled to provide housing for his sister (and possibly his mother) and the landlord agreed to that. Letting to friends was not discussed. The tenancy agreements, however, did not, and the current tenancy agreement does not, prohibit subletting or the taking in of lodgers.

Accordingly, there is nothing in the landlord’s complaint in this regard. Mr [RESPONDENT] submitted that such a term should be implied, but we do not accept that. It is not an obvious term, especially when sharing with at least his sister was expressly discussed.

13. As the rent was increased, so too was the money which the tenant paid by way of deposit. The deposit was protected under the Tenancy Deposit Scheme. Some small amounts of money went back and forth between the parties. The tenant says that there are discrepancies in the certificates provided for the deposit. These matters (and their effect, if any) are, however, due to be determined on Thursday 26th June 2025 in possession proceedings listed for hearing in the County Court sitting at Central London. It is in our judgment inappropriate for us to express a view about these.

14. By the time of the making of the last tenancy agreement, the landlord had made it clear to the tenant that he wished to sell the flat. The tenancy agreement provided: “5.2 The Tenants [sic] has agreed to provide access to the [COMPANY] and Applicants from 3 months prior to the end of the Renewal Tenancy Agreement. The Tenant has agreed with the Landlord to give his mobile phone number and email to [NAME] to arrange an appointment to get access to the property with applicant to view the property. The Tenant has agreed to co-operate with [NAME] in viewing the flat with [NAME] Applicants.” 15. The landlord complains that the tenant did not co-operate with his agents after the property was placed on the market on 16th January 2024. It is common ground that the tenant refused to allow the landlord’s [NAME] to have a set of keys. He also refused access whilst he was at work, so the only times made available were in the evening or at the weekend. It

4 is also common ground that on 27th February 2024 the tenant refused any access to applicants. This was an important period, because the landlord in his verbal evidence stated that the agents had found a [NAME] at £550,000. This [NAME] wanted a second viewing with his wife. As a result of the tenant’s refusal to allow the second viewing, he said that sale did not progress.

16. The tenant says that he was concerned that the flat did not have an electrical installation condition report. The flat, he asserted, was not safe, so he could not allow visits by [NAME] purchasers. We do not accept that this was any genuine concern. There was an EICR from 2021 which had a five year validity. It is true that there is an oddity about it in that it is dated 18th March 2021 but the inspection was 24th April 2021. This was not a matter which had been raised by the tenant earlier and would not have rendered the flat unsafe, as the tenant asserted.

17. The tenant had earlier made an offer for the flat of £400,000. We find as a fact that he was keen to discourage other buyers, so that the landlord might be more willing to entertain an offer by him for the flat at much less than the £600,000 offer price at which the flat had been placed on the market.

18. One of the duties of the tenant under the current tenancy agreement was “to make sure the shrubs in the garden are cut to 6 feet high.” The landlord complains that the tenant did not do this consistently. The tenant accepted that there was a time when he did not trim the shrubs (which look to be Leylandii), but said that this was because the [NAME] whose land abutted the shrubs refused access to her land. She apparently wanted to block the view from the landlord’s land. That evidence was not challenged. The shrubs have now been cut back. We consider this issue to be irrelevant to any of the matters which are before us for determination.

19. On 1st April 2024 the property became subject to a selective licensing requirement. The tenant learnt of the selective licensing requirement in July 2024, but did not inform the landlord of this until he had his solicitors send a letter dated 23rd August 2024 to him in the course of the County Court litigation. The landlord applied for a selective licence on 30th October 2024 and was granted it on 16th December 2024. The landlord, because he was selling the property, would have been entitled to a temporary exemption notice on 1st April 2024.

20. It is common ground that the landlord committed an offence between 1st April 2024 and 30th October 2024 contrary to section 95(1) of the Housing Act 2004. For completeness, we note that Mr [RESPONDENT] did not seek to argue that the landlord, under section 95(4) of the 2004 Act, had a reasonable excuse for the failure to obtain a licence or a temporary exemption notice.

21. We find beyond reasonable doubt that the landlord has committed the offence between those dates.

5 The law 22. Having found the landlord guilty of the offence under section 95(1) of the 2004 Act, we have the power to make a rent repayment order under section 43(1) of the Housing and Planning Act 2016. If we make a rent repayment order, the amount we can order is governed by section 44 of the 2016 Act, which provides: “(1) Where the First-tier Tribunal decides to make a rent repayment order under section 43 in favour of a tenant, the amount is to be determined in accordance with this section. (2) The amount must relate to rent paid during the [period of twelve months leading up to the date of 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.”

23. We note that it is not obligatory to make a rent repayment order when an offence has been committed. In deciding whether or not to make a rent repayment order, the considerations set out in section 44(4) are relevant.

24. If the Tribunal decides to make a rent repayment order, the relevant principles are summarised in the Upper Tribunal decision in Newell v Abbott [2024] UKUT 181 ([NAME]), where the [NAME] held: “33. In determining the amount to be repaid under a rent repayment order the FTT is required by section 44(4) of the 2016 Act to take into account, in particular, (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 Chapter 4 applies. Where the landlord has been convicted of one of five different housing offences or has been the subject of a financial penalty other than on conviction (i.e. under section 249A, 2004 Act) the FTT is required by section 46(1) to order repayment of the maximum amount permitted by section 44. Parliament appears to have taken the view that (in the absence of exceptional circumstances) the fact that one of these five offences has already resulted in a conviction or a civil financial penalty justifies the additional imposition of the maximum possible rent repayment order. But section 46(3)(a), 2016 Act excludes licensing offences

6 from the five housing offences for which this maximum penalty is mandated.

34. Since its decision in Ficcara v James [2021] UKUT 38 ([NAME]) the Tribunal has emphasised the seriousness of the offence which has been committed as a significant factor to be taken into account when determining how much of the rent paid by a tenant should be ordered to be repaid. At paragraph [32] of that decision, I said this about the factors identified in section 44(4), 2016 Act, as those which the FTT must in particular take into account: ‘First amongst those relevant factors is the conduct of the landlord, which must include the conduct which amounts to the relevant housing offence or offences. One would naturally expect that the more serious the offence, the greater the penalty.’ Later in the same decision, at paragraph [50], I drew attention to the relevance of section 46(1) in setting the framework within which the FTT is required to exercise its discretion. Section 46(1) provides that where the landlord has already been convicted, other than of a licensing offence, in the absence of exceptional circumstances the amount to be repaid is to be the maximum that the Tribunal has power to order. The exclusion of licensing offences, including the offence of managing an unlicensed Part 3 house contrary to section 95(1), 2004 Act, may be taken to indicate the relative seriousness which Parliament attributes to the different housing offences for which a rent repayment order may be made.

35. In Williams v Parmar [2021] UKUT 244 ([NAME]) Fancourt J, Chamber [NAME], reiterated, at paragraph [41], that ‘the circumstances and seriousness of the offending conduct of the landlord are comprised in the “conduct of the landlord”, so the FTT may, in an appropriate case, order a lower than maximum amount of rent repayment, if what a landlord did or failed to do in committing the offence is relatively low in the scale of seriousness, by reason of mitigating circumstances or otherwise.’ 36. In Hallett v Parker [2022] UKUT 165 ([NAME]) I referred to statements made in Parliament about the purpose of the rogue landlord provisions in Part 2 of the 2016 Act and said this, at paragraph [25]: ‘This explanation of the purpose of Part 2, with its battery of measures against “rogue landlords”, suggests that the power to make rent repayment orders should be exercised with the objective of deterring those who exploit their tenants by renting out substandard, overcrowded or dangerous accommodation. The differential treatment of licensing offences and more serious offences in section 46, and the greater flexibility given to tribunals

7 when ordering rent repayment in the former category, are likely to be a reflection of that objective.’ 37. In Acheampong v Roman [2022] UKUT 239 ([NAME]) at paragraph 15, the Tribunal (Judge Cooke) concluded in the light of these decisions that ‘an order in the maximum possible amount would be made only in the most serious cases or where some other compelling and unusual factor justified it’. With that calibration in mind, the Judge then suggested at paragraph 20(c) that having determined the upper limit of what might be ordered to be repaid, decision makers should adopt the following approach when assessing the seriousness of an offence: ‘Consider how serious this 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.’ 38. Acheampong was the first occasion on which the Tribunal had referred specifically to the need to consider the seriousness of the offence relative to ‘other types of offence in respect of which a rent repayment order may be made’ and not just to ‘other examples of the same type of offence’, which is the exercise Mr [NAME] complains was not undertaken by the FTT in this case. The Tribunal has nevertheless commented on a number of occasions (and particularly in [NAME] v Parker at paragraph [30]) that, in a list of housing offences which includes the use of violence to secure entry, unlawful eviction, and failure to comply with an improvement notice, a prohibition order or a banning order, licensing offences are relatively of lesser seriousness. It did so again in Daff v Gyalui [2023] UKUT 134 ([NAME]) where, at paragraphs [48]-[49], I tried to rank the housing offences by references to their general seriousness, as follows: ‘48. The seven offences in respect of which a rent repayment order may be made are identified in section 40(3), 2016 Act. Two are offences of violence or intimidation (the use of violence for securing entry contrary to section 6(1), Criminal Law Act 1977, and eviction or harassment of occupiers contrary to section 1, Protection for Eviction Act 1977). Those offences are plainly the most serious of those listed in section 40(3) and in the Magistrates Court they punishable by a fine and a term of imprisonment of up to six months (up to two years in the Crown Court). The offence of breaching a banning order contrary to section 21, 2016 Act, is also particularly serious and is punishable by a term of imprisonment of up to 51 weeks or a fine or both. These three offences are at the upper end of the range of seriousness covered by section 40(3).

49. The remaining four offences all involve breaches of provisions of the 2004 Act (failure to comply with an improvement notice or

8 a prohibition order, and control or management of an unlicensed HMO or Part 3 house) and are generally of a less serious type. That can be seen by the penalties prescribed for those offences which in each case involve a fine rather than a custodial sentence. Although generally these are lesser offences, there will of course be more or less serious examples within each category. The circumstances relating to a failure to comply with an improvement notice, for example, may vary significantly. So too may be circumstances pertaining to a licensing offence.’” Conclusion 25. The striking feature of this case is that the tenant was also the landlord’s managing agent. The caselaw shows that a landlord cannot escape the making of a rent repayment on the sole ground that he employed a managing agent. However, the current case is unusual in that it is the tenant himself who was the managing agent. As such he was for him to warn the landlord of developments such as the introduction of a selective licensing scheme. As such, the tenant here singularly failed. Indeed, even once he knew of the selective licensing requirement, he delayed from July until 23rd August 2024 to inform his principal of the requirement and then only in the context of the pending possession proceedings (in other words solely in his own interests).

26. In our judgment, this is one of the rare cases in which it would not be appropriate to make a rent repayment order. To make an order would reward the tenant for his breach of duty as the landlord’s manager of the premises.

27. Another way in which the same result can be reached is to reflect on the tenant’s liability to the landlord in the former’s capacity as manager. Where a manager breaches his obligations to his principal, for example, by failing to inform the latter of a licensing requirement, the landlord will generally have a contractual claim against the manager for the amount of any rent repayment order made against the landlord. Here that would mean that the manager had to repay any monies which the landlord was ordered to pay him by way of a rent repayment order. The Tribunal should avoid such circularity of actions and exercise its discretion against making a rent repayment order.

28. Yet another way of reaching the same result is to note that the offence under section 95(1) applies to those “having control of or managing a house which is required to be licensed.” Here the tenant is guilty of that offence as well as the landlord because he was managing the premises. That is a very material consideration in deciding whether to make a rent repayment order.

29.

Accordingly, we refuse to make a rent repayment order.

9 Alternative conclusion 30. If we are wrong in this, then we would consider that a very limited rent repayment order was appropriate. Firstly, half the rent was being paid by the tenant’s friend. Although the Tribunal has jurisdiction to award the full amount of rent, it would in our judgment only be appropriate to take the maximum payable as half the rent over the seven month period. To take the full rent as the maximum would be to give the tenant a windfall over and above the benefit of having a rent repayment order made at all, because there is no legal basis we can see for making an order against the tenant for the benefit of the friend.

31. Secondly, the refusal to allow a [NAME] to inspect the premises with his wife was a serious breach of contract. That also goes to reduce the amount. (The other breaches alleged by the landlord are either not breaches or are trivial.)

32. Thirdly, we take into account the poor health of the landlord and his vulnerability. We also note the fact that there are mortgages amounting to £500,000 on the property, so that the landlord is under financial stress. 33. £1,702.75 for seven months is £11,919.25. Half of that is £5,959.62. We would not award more than 20 per cent, which gives a figure of £1,191.92. However, for the reasons we have given we award nothing. Costs 34. The Tribunal has a discretion as to the fees payable to the Tribunal. The tenant has paid a total of £330. Since he has lost, in our judgment we should make no order for costs.

DECISION (a) The application for a rent repayment order is dismissed.

(b) There shall be no order for costs. Name: Judge Adrian Jack Date: 24th June 2025