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Part 2 of the Housing Act 2004 makes provision for the licensing of certain HMOs. In general terms, a landlord of such a property must obtain a licence from the local authority. Part 3 of the 2004 Act allows a local housing authority to identify additional categories of property in their area which also require the landlord to obtain a licence from them, known as “selective licensing”. A landlord who fails to obtain a licence under either Part commits a criminal offence (ss.72, 95). A tenant may apply for a rent repayment order against “a landlord” who has committed such an offence (s.41, Housing and Planning Act 2016). The First-Tier Tribunal may make such an order if it is satisfied beyond reasonable doubt that the offence has been committed (whether or not the landlord has been convicted) (s.43, 2016 Act). In Goldsborough v CA Property Management [2020] HLR 18, the Upper Tribunal had held that a rent repayment order could be made against a superior landlord at the property and was not limited to the immediate landlord of the tenant.

In Rakusen v Jepsen, the appellant was the leasehold owner of a flat. He granted a tenancy of the flat to a property investment company for a term of 36 months, on terms which permitted that company to sub-let the whole or part of the flat. The property investment company let parts of the flat under at least four separate sub-tenancies; accordingly, it needed to be licensed under Part 2, 2004 Act, but no licence was obtained. The sub-tenants applied for a rent repayment order against the appellant. He applied to strike out that application, contending that a rent repayment order could only be made against the immediate landlord. The FTT refused to do so as it was bound by Goldsborough. The Upper Tribunal dismissed an appeal, finding that Goldsborough was correctly decided.

The Court of Appeal has today allowed a second appeal by the appellant. As a matter of statutory interpretation, the provisions of the Housing and Planning Act 2016 only allow a rent repayment order to be made against an immediate landlord.  Lord Justice Arnold and Lady Justice Andrews each gave judgments in which they held that the statutory language was clear, that it was irrelevant that the offences giving rise to a rent repayment order could be committed by a superior landlord, and that the legislative context and policy arguments did not justify any other interpretation of the statutory language.

The Court of Appeal therefore struck out the application against Mr Rakusen under rule 9(3)(e) of the First-tier Tribunal (Property Chamber) Rules.

Tom Morris acted for the successful Appellant, instructed by Winckworth Sherwood LLP.

Justin Bates and Charles Bishop acted for the intervenor, Safer Renting, instructed by Anthony Gold LLP.

The judgment is available here.

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