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The Supreme Court has today handed down a landmark judgment holding that a rent repayment order cannot be obtained against a superior landlord.
The rent repayment order (“RRO”) was introduced by Parliament in the Housing Act 2004 to enable tenants and local housing authorities to recover payments of rent and housing benefit from the immediate landlord of occupiers of properties unlawfully let without an HMO licence or selective licence.
In England, the RRO regime was significantly expanded by the Housing and Planning Act 2016. The range of offences to which it applied was increased and the need for a prior conviction was replaced so that an RRO could be obtained if the First-tier Tribunal (“FtT”) was satisfied that the offence had been committed, even though there had not been any criminal proceedings.
RROs have proved very popular with both tenants and local authorities, with several hundred applications now considered by the FtT and awards totalling millions of pounds made each year.
The appeal turned on who can be the subject of an RRO application in the context of the recent growth in the “rent to rent” sector. The Respondent had granted a short lease to a company which then let out rooms within the property to occupiers, creating a house in multiple occupation without first obtaining a licence. The occupiers contended that the Respondent had committed the relevant offence and, notwithstanding that he was not their direct landlord, applied for a RRO against him. The Respondent, represented by Tom Morris, defended the application on the basis that the company and not he had committed the offence and also applied for it to be struck out on the basis that an RRO could not be made against a superior landlord.
The FtT refused to strike out the application, holding that it was bound by a decision of the Upper Tribunal handed down just after the application was made. Mr Rakusen appealed to the Upper Tribunal, which affirmed its earlier decision and dismissed his appeal. Mr Rakusen appealed again to the Court of Appeal, which agreed with Mr Rakusen’s interpretation of the Act, held that an RRO could only be made against an immediate landlord and struck out the application against him. The tenants appealed to the Supreme Court.
The Supreme Court today dismissed the tenants’ appeal. In a judgment given by Lord Briggs and Lord Burrows (with whom Lords Lloyd-Jones, Kitchin and Richards agreed), the court held that on a straightforward interpretation of the meaning of the words in the Housing and Planning Act 2016, section 40(2), an RRO cannot be made against a superior landlord. Their Lordships went on to consider additional relevant interpretative factors but found that they supported or, at least, were consistent with the straightforward interpretation. Their Lordships concluded that “although not always true in the law, in this case the simple answer to the question posed is also the correct answer”.
The appeal attracted significant media attention, including that of BBC News.
Tom Morris (instructed by Liam Hale at Winckworth Sherwood LLP) acted as sole counsel for the successful respondent landlord, as he did in the Court of Appeal, Upper Tribunal and First-tier Tribunal.
Justin Bates and Charles Bishop (instructed by Giles Peaker at Anthony Gold solicitors) made written submissions on behalf of Safer Renting, which intervened in both the Supreme Court and Court of Appeal.
The judgment is available here.
They analysed the key issues in the case in a video available on Landmark Chambers’ YouTube channel.
