Home > News > Court of Appeal gives further guidance on Rent Repayment Orders

Kowalek v Hassanein Ltd

[2022] EWCA Civ 1041

Newey, Coulson, Warby LJJ

Part 3, Housing Act 2004, makes provision for the licensing of certain residential property which is not an HMO (HMOs are governed by Part 2, 2004 Act). In general terms, a landlord of such a property must obtain a licence from the local authority; it is an offence (subject to a defence of reasonable excuse) for a person to operate or manage a property which requires a selective licence but does not have one (s.95).

Where the First-Tier Tribunal (Property Chamber) is satisfied beyond reasonable doubt that a landlord has committed an offence under, inter alia, s.95, Housing Act 2004, it may require the landlord to repay some or all of the rent to the tenant (s.40, Housing and Planning Act 2016). In deciding the amount to be repaid, the FTT must take into account, inter alia, the conduct of the landlord and tenant (s.44(4)).

The appellant tenants had applied for a rent repayment order because they contended that the respondent landlord had been required to have a selective licence but had not done so. The FTT found that the offence had been committed. The FTT found that the rent paid was £23,819.98 and that a rent repayment order should be made for £11,909.99 (i.e. 50% of the rent paid). The reduction was to reflect the FTTs disapproval of the tenants’ behaviour in allowing rent arrears to accrue.

The tenants appealed to the Upper Tribunal. They contended that: (a) a payment of £2000 made after the landlord had obtained a licence but which was attributable to rent arrears which arose during the period when he was committing the offence could be the subject of a rent repayment order and should have been included in the award so that the rent paid was £25,819.98; and, (b) the FTT was wrong to reduce the award by reference to their conduct in allowing arrears to accrue. The Upper Tribunal dismissed an appeal ([2021] UKUT 143 (LC)).

The Court of Appeal dismissed a further appeal. A rent repayment order could only be made in respect of rent paid during the time when the landlord was committing the offence and the £2,000 was therefore correctly excluded. The FTT was required to take into account the conduct of the landlord and tenant and there was no reason why that should not include failure to pay rent.

Justin Bates and Brooke Lyne appeared pro bono for the tenants, instructed by Mishcon De Reya LLP.

The judgment can be found here.

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