Tenants Win Rent Repayment Orders Against Unlicensed HMO Landlord

OUTCOME: Allowed

FIRST-TIER TRIBUNAL

[NAME_1] CHAMBER ([NAME_1])

Case Reference : LON/00AJ/HMF/2024/0678

[NAME_1] : 25a [ADDRESS] [POSTCODE]

Applicants : [redacted]

Respondent : [redacted]

Not represented at hearing (but assisted with written submissions by [NAME_14])

Type of Application :

Application for Rent Repayment Order under the Housing and Planning Act 2016

Tribunal Members :

Judge P Korn

Mr M [NAME_15]

Date of Hearing :

27 June 2025

Date of Decision : 24 July 2025

DECISION

Description of hearing

This was a face-to-face hearing.

Decisions of the tribunal

(1) The tribunal orders the Respondent to repay to the First Applicant ([NAME_16]) the sum of £4,650.78 by way of rent repayment.

(2) The tribunal orders the Respondent to repay to the Second Applicant ([NAME_17]) the sum of £5,370.78 by way of rent repayment.

(3) The tribunal also orders the Respondent to reimburse to the Applicants their application fee and hearing fee in the aggregate sum of £330.00.

(4) The above sums must be paid within 28 days after the date of this determination.

Introduction

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

2. The basis for the application is that the Respondent committed an offence of having control of and/or managing a house in multiple occupation (“HMO”) which was required to be licensed but was not licensed, contrary to section 72(1) of the Housing Act 2004 (“the 2004 Act”).

3. The First Applicant seeks a rent repayment order in the sum of £9,000.00 representing rent for the periods from 1 August 2022 to 31 August 2023.

4. The Second Applicant seeks a rent repayment order in the sum of £10,200.00 representing rent for the period from 1 August 2022 to 31 July 2023.

5. The Applicants attended the hearing and were represented by [NAME_8] of Justice for Tenants. The Respondent also attended the hearing. The Respondent was not represented at the hearing but had received assistance with her written submissions from [NAME_14].

Applicants’ case

6. In written submissions the Applicants state that the [NAME_1] was a three-bedroom flat with a shared kitchen and bathrooms in a converted house. The Applicants were tenants of the [NAME_1], and during the periods of claim the [NAME_1] was occupied by at least three persons living in two or more separate households and occupying the [NAME_1] as their main residence.

7. The Applicants state that the [NAME_1] was occupied as follows:

• [NAME_2] lived at the [NAME_1] from 1/09/2021 until 29/09/2023.

• [NAME_5] lived at the [NAME_1] from 12/02/2022 until 31/10/2023.

• [NAME_18] lived at the [NAME_1] from October 2021 until early January 2022.

• [NAME_21] lived at the [NAME_1] from July 2021 and continued to reside at the [NAME_1] after [NAME_5] moved out.

8. The [NAME_1] was situated within an additional licensing area as designated by London Borough of Ealing. The additional licensing scheme came into force on 1 April 2022 and will cease to have effect on 31 March 2027. The additional licensing scheme covers the whole area of the London Borough of Ealing as delineated and edged red on a map included within the hearing bundle. The [NAME_1] met all the criteria to be licensed under the said scheme and does not qualify for any licensing exemptions.

9. The appropriate HMO licence was not held during the relevant period, and the Respondent’s application for an additional HMO licence was not made until 8 November 2023.

10. The Applicants state that the Respondent is believed to be an appropriate Respondent for this application because she is listed as the immediate landlord in the tenancy agreements and is the beneficial owner of the [NAME_1] as shown by the land registry title deed. She was, therefore, a “person having control” of the [NAME_1] within the meaning of section 263(1) of the 2004 Act as she is the person who received or would so receive the rack-rent if the [NAME_1] was let. She is also believed to have been a “person managing” the [NAME_1] as defined by section 263(3) of the 2004 Act as she was the owner of the [NAME_1] who received or would so receive rent from tenants in the [NAME_1].

11. The Applicants state that they have conducted themselves well, whereas the Respondent has potentially broken the law. She did not protect the Applicants’ deposits until after the 30-day deadline despite this issue having been brought to her attention several times. She failed to ensure that an electrical safety certificate was in place throughout the tenancy and did not provide the Applicants with a copy of the Energy Performance Certificate, and nor did she provide them with a copy of the How to Rent Guide at the outset of the tenancy. The [NAME_1] did not have a fire blanket despite one being requested, and the only fire alarm was located in the kitchen.

12. The Applicants further state that in November 2022 the bathroom windows were stuck shut and that this problem was reported to the Respondent at the time but no response was received. They also express concerns about the efficiency and controllability of the heating.

13. The Applicants have provided a calculation together with copy bank statements as evidence of the rental amounts paid. The Applicants did not receive any housing element of Universal Credit or Housing Benefit. The hearing bundle contains various relevant items in support of their application.

14. [NAME_16] states that she is entitled to recover any rent paid in any 12 months during which the offence was committed notwithstanding the fact that, in her case, the claim is in respect of two separate periods with a slight gap in the middle.

Respondent’s case

15. In written submissions the Respondent accepts that she was the Applicants’ landlord and that the [NAME_1] required a licence but did not have a licence throughout the period of claim. She also accepts that the tribunal is “likely” to make a rent repayment order against her.

16. In mitigation, she states that she is an amateur landlord. She bought the [NAME_1] in 2008 and it was her home for many years. She owns no other [NAME_1]. She is a self-employed therapist and has no regular salaried income. In 2015 she moved temporarily to the United States for personal reasons, and she intended to return to live in the [NAME_1] although that did not happen. Her witness statement sets out various health issues since moving to the United States, including multiple bouts of COVID combined with treatment for chronic and severe pain. She also went through a stressful divorce which further impacted on her physical and mental wellbeing and made it more difficult to manage the [NAME_1] from overseas.

17. The Respondent had tried to sell the [NAME_1] a few years ago but was unsuccessful. It was placed back on the market for sale last year. She rented out the [NAME_1] so that she could continue to pay the mortgage and avoid repossession.

18. The Respondent submits that the circumstances in this case are similar to those in [NAME_25] and others [2022] UKUT 165 ([NAME_27]). The Respondent had lived in the flat as her home and sometimes took in lodgers to help pay her mortgage. Throughout that time, no licence was required, as an owner-occupied [NAME_1] with up to two lodgers falls outside the HMO definition and is exempt from selective licensing. When the Respondent travelled to the United States, she let her third room in the [NAME_1] to help pay the mortgage. She did not use a letting or managing agent and did not realise that moving out and letting her bedroom to a third person required an additional licence. The failure to submit a licence application was a genuine error caused by a lack of understanding of the licensing rules, and the Respondent has expressed remorse and regret for that error of judgement. As soon as she realised her error she sought advice from the local housing authority and submitted a selective licence application. She has never been convicted of a relevant offence.

19. The [NAME_1] was maintained in a reasonable condition and was never overcrowded. It had been the Respondent’s home, and she had lived there happily for many years before she moved to the United States. She managed the [NAME_1] remotely using WhatsApp groups to keep in close and regular contact with the tenants, and all communications were good-natured. She notes that [NAME_16] has commented that the [NAME_1] had big windows that let in a lot of light on a tree-lined road and that she enjoyed living there. She also notes that [NAME_17] has described the [NAME_1] as a nice and clean [NAME_1] in a good location.

20. She notes that [NAME_16] has also referred to what the Respondent describes as some relatively minor and routine maintenance issues that occurred during the course of her tenancy – a loose hinge to the living room door, some storage in the separate toilet cubicle which was later removed, a patch of mould on the toilet cistern handle to the second toilet, a toilet seat that needed cleaning and a timber framed bathroom window that required slight adjustment. There is also mention of an extract fan that stopped working in the kitchen, and the Respondent states in response that she sent someone to check the fan and that a new one was installed some months later. She adds that [NAME_16] has acknowledged that a contractor visited to remove a light fitting in her room and to change a defective light switch and that a smoke alarm and carbon monoxide alarm were fitted in the [NAME_1].

21. As regards the gas boiler, a fault was attended to and a bathroom radiator was replaced. A new gas boiler had been installed only in 2021. In relation to the suggestion by [NAME_17] in her witness statement that the Respondent put pressure on her to leave, the Respondent denies this. The Energy Performance Certificate for the [NAME_1] was last renewed in October 2023 and is valid for 10 years.

22. The Respondent contends that the circumstances in this case do not justify the most stringent penalty available to the tribunal. Rather, it should consider the findings by [NAME_29], Deputy Chamber President, at paragraphs 37 and 38 of [NAME_25], who recognised that the case before him was at the lower end of seriousness and ordered the repayment of only 25% of the sums paid by the tenants. The Respondent contends that there are sufficient similarities between the two cases to justify a similar level of award being made in this case, or even a lower award given the Respondent’s willingness to invest in the [NAME_1] and undertaken non-essential but costly work during the tenancy.

23. The Respondent accepts that the rent was paid in full and that there are no outstanding rent arrears. Both Applicants paid rent inclusive of all utility bills, and the Respondent has provided evidence of the amount paid by her in respect of utilities. The total paid during the relevant periods is £3,746.10, and as the [NAME_1] was occupied by three people she suggests that a third of the utility costs should be attributable to each Applicant. Therefore, the sum of £1,248.70 should be deducted from the maximum amount of rent repayment for each Applicant.

24. The Respondent also asks the tribunal to make a further deduction in respect of the Council Tax paid by her.

25. In addition, the Respondent asks that her financial circumstances be taken into account. From January 2022 to December 2023 the monthly mortgage payments increased incrementally from £229.16 per month to £1,184.88 per month, and the bank statements exhibited show that she was regularly becoming overdrawn. Financial returns in 2022 and 2023 show that she was making a loss from the [NAME_1] of over £10,000 per year, and the overarching tax returns which offset these losses against the Respondent’s self-employment income show a gross income of just under £10,000 in 2022 and a small loss in 2023.

Discussion at hearing

26. [NAME_31] for the Applicants said that they accepted that a sum representing the amount spent by the Respondent on utilities during the relevant period should be deducted from the maximum amount of rent repayable. The Applicants also accepted the Respondent’s calculations and apportionment in respect of the utilities, and therefore it was agreed between the parties that the sum of £1,248.70 should be deducted from the maximum amount of rent repayment for each Applicant.

27. The Applicants did not, though, agree that a further sum should be deducted to represent the cost of Council Tax.

28. As regards whether the circumstances of this case were analogous to those in the case of [NAME_25], as the Respondent had submitted, [NAME_31] argued that they were more analogous to those in the case of [NAME_33] and another (2024) UKUT 181 ([NAME_27]).

29. There was also some discussion about the period in respect of which [NAME_16] paid her rent, on which we will comment later.

30. The Respondent said that the Applicants had always been complimentary about the [NAME_1] and that at one point she had given [NAME_16] a rent reduction. She had responded to the Applicants’ security concerns by getting a video entry system, and they had helped to choose it. She had also refurbished the communal area on her own initiative.

Witness evidence

31. In [NAME_16]’s witness statement she states that the living room door was off its hinges and the second toilet was inaccessible as it was being used for storage. The windows in the bathroom did not open and the fan extractor in the kitchen was not working. The chandelier in her bedroom had to be removed as it was unsafe and hanging by the wire. The living room light was flickering when turned on. Aside from the kitchen there were no other alarms in the [NAME_1] and there was no centralised fire-detection 19 system. There were also no fire blankets or fire extinguishers in the [NAME_1]. The boiler frequently stopped working. The tenants had to consistently chase the Respondent and her handyman for repairs to be carried out. In addition, the Respondent was not progressing with the gas safety certificate, and following a boiler fault the Respondent was slow to comply with the recommendations of the gas engineer. There was a disconnected gas fireplace in the living room and as a result bird droppings would often fall through the chimney and onto the living carpet and the Respondent was not willing to resolve this issue. [NAME_16] does not recall being given a Gas Safety Certificate, a How To Rent Guide, an Energy Performance Certificate or an Electrical Safety Certificate upon moving into the [NAME_1].

32. [NAME_16] adds that when the time came to for the renewal of their tenancies the Respondent informed the tenants that their rent would be increasing significantly and she did not follow the protocol for rent increases. They arranged a call with her to understand the increase but communication broke down and the Respondent refused to answer their questions. The Respondent then later demanded that they leave with less than one month’s notice, causing a lot of stress.

33. [NAME_17] raises some of the same issues in her own witness statement. In addition, she states that their deposits were not placed in a government approved deposit protection scheme until well beyond 30 days of receipt of the deposit and only after this was raised multiple times. There was also an incident in which the chandelier light in her room broke and fell whilst she was away.

34. At the hearing, the Respondent said that she had not been informed that the living room door was off its hinges and she also noted that the issue with the unsafe chandelier did get resolved. [NAME_16] accepted that [NAME_35] issues with the [NAME_1] did get resolved but she added that the Applicants often had to chase.

35. The Respondent’s own witness evidence is already summarised above in the summary of the Respondent’s case. In cross-examination she confirmed that she had not done any research into whether a licence was needed for the [NAME_1] because she had no idea that it was an issue. She also accepted that there was a significant delay in obtaining an Energy Performance Certificate.

Relevant statutory provisions

36. 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 a tenant ...

(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

6 section 95(1) control or management of unlicensed house

7 This Act section 21 breach of banning order

Section 41

(1) A tenant or a local housing authority may apply to the First-tier Tribunal for a rent repayment order against a person who has committed an offence to which this Chapter applies.

(2) A tenant 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 application 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 application 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 application is made by a tenant) ...

Section 44

(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 mentioned in the table.

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) A person commits an offence if he is a person having control of or managing an HMO which is required to be licensed under this Part … but is not so licensed.

(5) In proceedings against a person 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 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.

(2) In subsection (1) “rack-rent” means a rent which is not less than two-thirds of the full net annual value of the premises.

(3) In this Act “person managing” means, in relation to premises, the person who, being an owner or lessee of the premises – (a) receives … rents or other payments from … persons who are in occupation as tenants or licensees of parts of the premises, or of the whole of the premises; or (b) would so receive those rents or other payments but for having entered into an arrangement … 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 ...

Tribunal’s analysis

37. The Applicants’ uncontested evidence is that the [NAME_1] was an HMO which was required to be licensed (by virtue of the local housing authority’s additional licensing scheme) but was not licensed at any point during the period of the claim. Having considered that uncontested evidence we are satisfied beyond reasonable doubt that for the whole period of claim the [NAME_1] required a licence and it was not licensed.

38. We are also satisfied that the Respondent was a “landlord” for the purposes of sections 40 and 43 of the 2016 Act. She was named as landlord in the tenancy agreements and is shown as the registered proprietor in the Land Registry title document, and there is also clear evidence that she received rent from the Applicants. The Respondent does not contest these points.

39. We are also satisfied that the Respondent was a “person having control of or managing” the [NAME_1] within the meaning of section 263 of the 2004 Act. The evidence shows that she received the rack-rent of the [NAME_1] and received rents or other payments from the occupiers. Again, the Respondent does not contest this point.

The defence of “reasonable excuse”

40. Under section 72(5) of the 2004 Act, it is a defence that a person who would otherwise be guilty of the offence of controlling or managing an HMO which is licensable under Part 2 of the 2004 Act had a reasonable excuse for the failure to obtain a licence. The burden of proof is on the person relying on the defence.

41. In this case, the Respondent has stated that she is an amateur landlord and owns no other [NAME_1]. In 2015 she moved temporarily to the United States for personal reasons intending to return to live in the [NAME_1] although that did not happen. Her witness statement sets out various health issues since moving to the United States, including multiple bouts of COVID combined with treatment for chronic and severe pain. She states that she also went through a stressful divorce which further impacted on her physical and mental wellbeing and made it more difficult to manage the [NAME_1] from overseas. She adds that she tried to sell the [NAME_1] a few years ago but was unsuccessful and is renting it so that she can continue to pay the mortgage.

42. However, and as she appears herself to accept, this explanation is insufficient to form the basis of a reasonable excuse defence. The case law clearly shows that ignorance is not a defence, and nor is the fact that the landlord was out of the country or was going through some personal difficulties. We therefore agree with the Applicants that the Respondent’s explanations for her failure to obtain a licence do not amount to an objectively reasonable excuse pursuant to the three-stage test in Marigold & Others v Wells [2023] UKUT 33 ([NAME_27]).

43. Therefore, we do not accept that the Respondent had a reasonable defence excuse under section 72(5) of the 2004 Act. However, the points that she has made are potentially relevant as mitigation (as distinct from a complete defence), and we will return to the issue of mitigation later).

The offence

44. Section 40 of the 2016 Act confers power on the First-tier Tribunal to make a rent repayment order where a landlord has committed an offence listed in the table in sub-section 40(3), subject to certain conditions being satisfied. An offence under section 72(1) of the 2004 Act is one of the offences listed in that table. Section 72(1) states that “A person commits an offence if he is a person having control of or managing an HMO which is required to be licensed under this Part … but is not so licensed”.

For the reasons given above we are satisfied beyond reasonable doubt (a) that the Respondent was a “landlord”, (b) that she was a “person having control” of and a “person managing” the [NAME_1] for the purposes of section 263 of the 2004 Act, (c) that the [NAME_1] was required to be licensed throughout the period of claim and (d) that it was not licensed at any point during the period of claim.

45. Under section 41(2), a tenant may apply for a rent repayment order only if the offence relates to housing that, at the time of the offence, was let to the tenant and the offence was committed in the period of 12 months ending with the day on which the application is made. On the basis of the Applicants’ uncontested evidence on these points we are satisfied beyond reasonable doubt that the [NAME_1] was let to the Applicants at the time of commission of the offence and that the offence was committed in the period of 12 months ending with the day on which their application was made.

Process for ascertaining the amount of rent to be ordered to be repaid

46. Based on the above findings, we have the power to make a rent repayment order against the Respondent.

47. The amount of rent to be ordered to be repaid is governed by section 44 of the 2016 Act. Under sub-section 44(2), the amount must relate to rent paid by the tenant in respect of a period, not exceeding 12 months, during which the landlord was committing the offence. Under sub-section 44(3), the amount that the landlord may be required to repay in respect of a period must not exceed the rent paid in respect of that period less any relevant award of housing benefit or universal credit paid in respect of rent under the tenancy during that period.

48. In this case, [NAME_16]’s claim appears at first sight to relate to 13 months of rent. However, this point was discussed at the hearing and we are satisfied that [NAME_16] paid 12 months of rent during that 13 month period as she accidentally missed a month and paid that month’s rent at a later stage. It is also not a problem that the 12 month period of claim is not a continuous period, as confirmed by the Upper Tribunal in Irvine v Metcalfe & Ors [2021] UKUT 0060 ([NAME_27]). We are therefore satisfied that both Applicants’ respective claims relate to a period not exceeding 12 months.

49. The evidence before us also indicates that no part of the rent was covered by the payment of housing benefit, and the Respondent has not disputed that the rental amounts claimed were in fact paid by the Applicants.

50. We are satisfied on the basis of their uncontested evidence that the Applicants were in occupation for the whole of the period to which their respective rent repayment applications relate and that the [NAME_1] required a licence for the whole of that period. Therefore, the maximum sums that can be awarded by way of rent repayment are the sums referred to in paragraphs 3 and 4 above, namely £9,000.00 for [NAME_16] and £10,200.00 for [NAME_17], these being the amounts paid by the Applicants by way of rent in respect of the period of claim.

51. Under sub-section 44(4), in determining the amount of any rent repayment order 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 the relevant part of the 2016 Act applies.

52. The Upper Tribunal decision in Vadamalayan v Stewart (2020) UKUT 0183 ([NAME_27]) is one of the authorities on how a tribunal should approach the question of the amount that it should order to be repaid under a rent repayment order if satisfied that an order should be made. Importantly, it was decided after the coming into force of the 2016 Act and takes into account the different approach envisaged by the 2016 Act.

53. In her analysis in [NAME_36], Judge Cooke states that the rent (i.e. the maximum amount of rent recoverable) is the obvious starting point, and she effectively states that having established the starting point one should then work out what sums if any should be deducted. She departs from the approach of the Upper Tribunal in Parker v Waller (2012) UKUT 301, in part because of the different approach envisaged by the 2016 Act, [NAME_26] v [NAME_37] having been decided in the context of the 2004 Act. Judge Cooke notes that the 2016 Act contains no requirement that a payment in favour of a tenant should be reasonable. More specifically, she does not consider it appropriate to deduct everything that the landlord has spent on the [NAME_1] during the relevant period, not least because much of that expenditure will have repaired or enhanced the landlord’s own [NAME_1] and/or been incurred in meeting the landlord’s obligations under the tenancy agreement. There is a case for deducting utilities, but otherwise in her view the practice of deducting all of the landlord’s costs in calculating the amount of the rent repayment should cease.

54. In Judge Cooke’s judgment, the only basis for deduction is section 44 of the 2016 Act itself, and she goes on to state that there will be cases where the landlord’s good conduct or financial hardship will justify an order less than the maximum.

55. Since the decision in [NAME_36], there have been other Upper Tribunal decisions in this area, notably those in [NAME_38] and others v [NAME_39] (2021) UKUT 0038 (LC) and Awad v Hooley (2021) UKUT 0055 ([NAME_27]). In [NAME_38] v [NAME_39], in making his decision [NAME_28] QC stressed that whilst the maximum amount of rent was indeed the starting point the First-tier Tribunal (FTT) still had discretion to make deductions to reflect the various factors referred to in section 44(4) of the 2016 Act. In addition, he stated that neither party was represented in [NAME_36], that the Upper Tribunal’s focus in that case was on the relevance of the amount of the landlord’s profit to the amount of rent repayment and that [NAME_36] should not be treated as the last word on the exercise of discretion required by section 44.

56. In [NAME_40] v [NAME_41], Judge Cooke agreed with the analysis in [NAME_38] v [NAME_39] and said that it will be unusual for there to be absolutely nothing for the FTT to take into account under section 44(4).

57. In Williams v Parmar & Ors [2021] UKUT 244 ([NAME_27]), Mr Justice Fancourt stated that the FTT had in that case taken too narrow a view of its powers under section 44 to fix the amount of the rent repayment order. There is no presumption in favour of the maximum amount of rent paid during the relevant period, and the factors that may be taken into account are not limited to those mentioned in section 44(4), although the factors in that subsection are the main factors that may be expected to be relevant in the majority of cases.

58. Mr Justice Fancourt went on to state in [NAME_42] that the FTT should not have concluded that only meritorious conduct of the landlord, if proved, could reduce the starting point of the (adjusted) maximum rent. The circumstances and seriousness of the offending conduct of the landlord are comprised in the “conduct of the landlord”, and 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 was relatively low in the scale of seriousness, by reason of mitigating circumstances or otherwise.

59. In [NAME_25] and others [2022] UKUT 165 ([NAME_27]), the Upper Tribunal did not accept a submission that the fact that the local authority has decided not to prosecute the landlord should be treated as a “credit factor” which should reduce the amount to be repaid.

60. In its decision in [NAME_43] v Roman and others [2022] UKUT 239 ([NAME_27]), the Upper Tribunal recommended a four-stage approach to determining the amount to be repaid, which is paraphrased below:-

(a) ascertain the whole of the rent for the relevant period;

(b) subtract any element of that sum that represents payment by the landlord for utilities that only benefited the tenant;

(c) 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 compared to other examples of the same type of offence; and

(d) 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).

61. Adopting the [NAME_43] approach, the whole of the rent means the whole of the rent paid by the Applicant out of her own resources, which is the whole of the rent in this case as no part of the rent was funded by housing benefit.

62. In relation to utilities, we are satisfied on the evidence before us that the Respondent paid for utilities and that the amount paid should be deducted from the maximum amount of rent repayable. The parties have agreed between them that an amount of £1,248.70 should be deducted for each Applicant in respect of utilities and we are content to use this agreed figure having no basis to depart from it.

63. The Respondent submits that a further sum should be deducted for Council Tax, but this is not an item of expenditure that only benefits the tenants, as the landlord would have to pay it anyway, and therefore it is not appropriate to deduct it. Therefore, the result of going through the first two of the above stages is that the maximum amount of rent repayment due to [NAME_16] is £7,751.30 (£9,000.00 minus £1,248.70) and the maximum amount of rent repayment due to [NAME_17] is £8,951.30 (£10,200.00 minus £1,248.70)

64. As regards the seriousness of the type of offence, whilst it could be argued based on the maximum criminal penalty available that there are offences covered by section 40(3) of the 2016 Act which can give rise to a greater criminal sanction, a failure to license is still a serious offence. Failure to license leads – or can lead – to significant health and safety risks for often vulnerable tenants, and sanctions for failure to license have an important deterrent effect on future offending as well as encouraging law-abiding landlords to continue to take the licensing system seriously and inspiring general public confidence in the licensing system.

65. In addition, there has been much publicity about licensing of privately rented [NAME_1], and there is an argument that good landlords who apply for and obtain a licence promptly may feel that those who fail to obtain a licence gain an unfair benefit thereby and therefore need to be heavily incentivised not to let out licensable properties without first obtaining a licence. Furthermore, even if it could be argued that the Applicants did not suffer direct loss through the Respondent’s failure to obtain a licence, it is clear that a large part of the purpose of the rent repayment legislation is deterrence. If landlords can successfully argue that the commission by them of a criminal offence to which section 43 of the 2016 Act applies should only have consequences if tenants can show that they have suffered actual loss, this will significantly undermine the deterrence value of the legislation.

66. As for the seriousness of the offence in this particular case compared to others of the same type, the Respondent submits that the circumstances of this case are analogous to [NAME_25] whilst the Applicants submit that they are more analogous to [NAME_33].

67. In [NAME_25], the landlord was a private individual who had let his former family home while he was working abroad. In his absence it was re-let by an agent in circumstances which required that it be licensed as an HMO, but the agent did not advise the landlord of that fact and no licence was obtained by the landlord for seven months. The [NAME_1] was in fairly good condition and a licence was granted without the need for improvements as soon as the landlord became aware that it was necessary. The Upper Tribunal decided that the appropriate order in the circumstances was for the repayment of 25% of the rent received.

68. [NAME_33] was a case where the offence was committed by the landlord of a single [NAME_1] and was the result of inadvertence, or lack of attention, rather than being deliberate, although the failure was prolonged. The accommodation provided was generally of a good standard which attracted long term residents and which the tenants were disappointed to leave. There was insufficiently persuasive information on the parties’ conduct for this to be taken into consideration and no evidence of the landlord’s financial circumstances. The Upper Tribunal decided that the appropriate order in the circumstances was for the repayment of 60% of the rent received.

69. In our view, the big difference between [NAME_25] and [NAME_33] is that in [NAME_25] the landlord relied on an agent and did so in circumstances which – whilst not amounting to a complete ‘reasonable excuse’ defence – were relatively understandable. There was no reliance on an agent in the present case, and in our view the present case is much more analogous to [NAME_33]. The Respondent was a landlord of a single [NAME_1] and there was an inadvertent but prolonged failure to license. As the Upper Tribunal, for the reasons that it gave, did not make any adjustments for conduct or financial circumstances we consider that 60% is an appropriate baseline subject to any adjustments needed for any aggravating or mitigating factors.

70. Turning now to the question of aggravating or mitigating factors, we consider the Respondent’s personal circumstances in this case to be a mitigating factor. We note her evidence that she suffered from various health issues since moving to the United States, including multiple bouts of COVID combined with treatment for chronic and severe pain. We also note that she went through a stressful divorce which further impacted on her physical and mental wellbeing and made it more difficult to manage the [NAME_1] from overseas. In our view this justifies reducing the amount of the repayment from 60% to 50%.

71. However, there is also evidence of various problems which constitute aggravating factors, including the problems with the gas safety certificate, the absence of a fire blanket and fire alarms in bedrooms and the failure for an extended period to protect the Applicants’ deposits and to obtain an Energy Performance Certificate. Response times to Applicants’ concerns also seem to have been mixed. Yet there is also some evidence that problems were dealt with and that the Applicants were happy in the [NAME_1]. Overall, the problems identified by the Applicants in our view justify increasing the amount of repayment back to 60%.

72. As regards the specific matters listed in section 44, the tribunal is particularly required to take into account (a) the conduct of the parties, (b) the financial circumstances of the landlord, and (c) whether the landlord has at any time been convicted of a relevant offence. We will take these in turn.

Conduct of the parties

73. There is no evidence before us that the Applicants’ conduct has been anything other than satisfactory. The Respondent’s own conduct has already been referred to above in the context of the problems experienced by the Applicants, and it would not be appropriate to increase the amount of the rent repayment further to reflect any concerns about her conduct as this would constitute double counting.

Financial circumstances of the landlord

74. The tribunal is required to take the Respondent’s financial circumstances into account when making its decision. The Respondent has provided information on her financial circumstances with a view to demonstrating hardship, but none of that information is current and therefor its relevance is limited. In addition, it became apparent at the hearing that there is substantial equity in the [NAME_1], estimated by the Respondent herself to be in the order of £200,000. There is therefore no proper basis for reducing the award on the basis of the Respondent’s financial circumstances but neither are her financial circumstances such that the award should be increased on the basis of those circumstances.

Whether the landlord has at any time been convicted of a relevant offence

75. The Respondent has not been convicted of a relevant offence, but it is clear from the Upper Tribunal decision in [NAME_25] that this by itself should not be treated as a credit factor.

Other factors

76. It is apparent from the wording of sub-section 44(4) itself that the specific matters listed in sub-section 44(4) are not intended to be exhaustive, as sub-section 44(4) states that the tribunal “must, in particular, take into account” the specified factors. However, in this case we are not aware of any other specific factors which should be taken into account in determining the amount of rent to be ordered to be repaid.

Amount to be repaid

77. The four-stage approach recommended in [NAME_43] has already been set out above. The amounts arrived at by going through the first three of those stages is to reduce them to 70% of the maximum amount payable to each Applicant, subject to any adjustment for the section 44(4) factors referred to above.

78. As noted above, in part to avoid double counting, there is nothing to add or subtract for any of the other section 44(4) factors.

79. Therefore, taking all of the factors together, the rent repayment order should be for 60% of the maximum amount payable to each of the Applicants, namely for £4,650.78 in respect of [NAME_16] and £5,370.78 in respect of [NAME_17].

Cost applications

80. The Applicants have applied under paragraph 13(2) of the Tribunal Procedure (First-tier Tribunal) ([NAME_1] Chamber) Rules 2013 for an order that the Respondent reimburse their application fee and the hearing fee in the aggregate amount of £330.00.

81. As the Applicant’s claims have been successful, albeit that there has been a deduction from the maximum payable, we are satisfied that it is appropriate in the circumstances to order the Respondent to reimburse these fees.

Name:

Judge P Korn

Date:

24 July 2025

RIGHTS OF APPEAL

A. If a party wishes to appeal this decision to the Upper Tribunal (Lands

Chamber) a written application for permission must be made to the First-tier Tribunal at the regional office dealing with the case.

B. The application for permission to appeal must arrive at the regional office within 28 days after the Tribunal sends written reasons for the decision to the person making the application.

C. If the application is not made within the 28 day time limit, such application must include a request for extension of time and the reason for not complying with the 28 day time limit; the Tribunal will then look at such reason and decide whether to allow the application for permission to appeal to proceed despite not being within the time limit.

D. The application for permission to appeal must identify the decision of the Tribunal to which it relates (i.e. give the date, the [NAME_1] and the case number), state the grounds of appeal, and state the result the party making the application is seeking.