Defending a Rent Repayment claim for HMO Licensing in London

Defending a Rent Repayment claim for HMO Licensing in London

1. • Vadamalayan v Stewart & Ors (2020) UKUT 0183 (LC) – Emphasised total rent as the starting point for RRO calculations.
   • Goldsbrough & Anor v CA Property Management Ltd & Ors [2019] UKUT 311 (LC) – Demonstrated that compliance with other obligations could reduce RRO amounts.
   • Fallon v Wilson & Ors [2014] UKUT 0300 (LC) – Limited the RRO to months when the property was unlicensed.
   • London Borough of Waltham Forest v Marshall (2018) – Highlighted the impact of deliberate non-compliance on penalties.
   • 1. Reasonable Excuse Defence
        • Section 72(5) of the Housing Act 2004 allows landlords to argue they had a “reasonable excuse” for failing to obtain an HMO licence. Examples include:
          • Misleading council advice: Rogue Landlord Project v Jhooti (2019) accepted incorrect local authority guidance as a defence.
          • Illness or incapacity: Holland v Colchester Borough Council (2016) acknowledged health issues as a reasonable excuse.
          • Licensing delays beyond the landlord’s control.
        • Ignorance of the law is not a valid excuse (Partridge v Gupta (2020)).
     2. Lack of Knowledge of Licensing Requirements
        • While landlords may claim unawareness, tribunals rarely accept this as a defence unless exceptional circumstances exist.
     3. Procedural Errors in the RRO Application
        • Landlords can challenge RROs on procedural grounds, such as failure to meet submission criteria or insufficient evidence of rent paid.
     4. Licence Application in Progress
        • If the landlord applied for a licence before enforcement action began, this could be a mitigating factor but not a full defence.Partridge v Gupta (2020) – Reinforced that ignorance of licensing laws is not a defence.Rent Repayment Orders (RROs) are a key enforcement measure for breaches of housing law, particularly where landlords fail to comply with licensing requirements for Houses in Multiple Occupation (HMOs). Understanding how tribunals assess RROs, the available defences, and what qualifies as a “reasonable excuse” is crucial for landlords navigating housing regulations.This guide explores RROs, tribunal considerations, relevant case law, and common defences to equip landlords with the knowledge needed to handle such cases effectively.What is a Rent Repayment Order (RRO)?An RRO is a financial penalty allowing tenants or local authorities to reclaim up to 12 months’ rent from a landlord who has violated specific housing laws. Under the Housing and Planning Act 2016, RROs can be issued when a landlord has:
          • Failed to obtain a mandatory HMO licence (Housing Act 2004, Section 72)
          • Conducted an illegal eviction or harassment
          • Breached a banning order
          • Violated improvement or prohibition notices

          For HMOs, the most frequent reason for an RRO is the failure to obtain the required licence under Part 2 of the Housing Act 2004.

          How Tribunals Assess Rent Repayment Orders

          The First-tier Tribunal (Property Chamber) (FTT) decides whether to grant an RRO and determines the amount to be repaid. Key factors considered include:

          1. Extent of the Breach
             • Tribunals examine whether the landlord’s failure to obtain an HMO licence was deliberate, negligent, or an oversight.
             • London Borough of Waltham Forest v Marshall (2018): Deliberate breaches attracted the highest penalties, while unintentional failures led to lower repayments.
          2. Financial Gain
             • The tribunal assesses the landlord’s financial benefit from renting an unlicensed property.
             • Vadamalayan v Stewart & Ors (2020): The full rental income during non-compliance was the starting point for the RRO calculation.
          3. Tenant Conduct
             • Tenant behaviour is considered but rarely influences the tribunal’s decision unless exceptional circumstances exist.
          4. Landlord’s Compliance with Other Obligations
             • If the landlord met other legal requirements, such as health and safety regulations, the tribunal might reduce the repayment amount.
             • Goldsbrough & Anor v CA Property Management Ltd (2020): Compliance with property standards was a mitigating factor.
          5. Period of Non-Compliance
             • The RRO typically applies only to the months when the property was unlicensed.
             • Fallon v Wilson (2018): Rent was reclaimed only for the specific period of non-compliance.

          Defences Available to Landlords

          While RROs are a powerful enforcement tool, landlords can present defences to mitigate or nullify their liability, including:

     Key Case Law on Rent Repayment Orders

   What Constitutes a Reasonable Excuse Defence?

   To successfully claim a reasonable excuse, landlords must demonstrate:

   • Genuine Effort to Comply: Attempts to obtain a licence but hindered by external factors.
   • Exceptional Circumstances: Health issues, incorrect advice, or administrative delays.
   • Lack of Malice or Negligence: Honest mistakes rather than deliberate breaches.

   Tribunals interpret “reasonable excuse” narrowly, and landlords bear the burden of proof.

   Conclusion

   Rent Repayment Orders are a significant enforcement tool ensuring compliance with HMO licensing laws. Tribunals assess them based on landlord conduct, the severity of the breach, and mitigating factors.

   Landlords facing RRO claims need a carefully prepared defence addressing procedural requirements and potential reasonable excuse claims. For expert advice on RROs, HMO licensing, or landlord defence strategies, contact London Tenant Evictions today.