98 Cranford Street Smethwick B66 2RT BIR/00CS/HMK/2019/0032

FIRST-TIER TRIBUNAL

PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case No BIR/00CS/HMK/2019/0032

Between

Ms Naomi NewhillApplicant

Mr Yousaf Usman t/a Pioneer LettingsRespondent

Before

Robert Chumley-Roberts MCIEH, J.P

Date 28 October 2019

Type of application: Rent Repayment Order Housing and Planning Act 2016

DECISION

[19]The Tribunal considered the application in four stages –(i) Whether the Tribunal was satisfied beyond reasonable doubt that the Respondent had committed an offence under section 72(1) of the 2004 Act in that at the relevant time he was a person who controlled or managed an HMO that was required to be licensed under Part 2 of the 2004 Act but was not so licensed.

(ii) Whether the Applicant was entitled to apply to the Tribunal for a rent repayment order.

(iii) Whether the Tribunal should exercise its discretion to make a rent repayment order.

(iv) Determination of the amounts of any order. Offence under section 72(1) of the 2004 Act

[20]In accordance with sections 43(1) of the 2016 Act, the Tribunal was satisfied beyond reasonable doubt that the Respondent, as landlord (or even as agent) of the Property, being in control and managing it had committed an offence listed in section 40 of the 2016 Act, namely an offence under section 72(1) of the 2004 Act. This was demonstrated to the satisfaction of the Tribunal by the unchallenged description of occupation by the Applicant during her period as a tenant, and the absence of an HMO licence as demonstrated by the communication from Sandwell MBC. The “standard test” for a HMO under Section 254 of the 2004 Act was passed in that: the building at the Property consisted of one unit of living accommodation of two storeys; it was occupied by persons who did not form a single household; it was those persons only or main residence; their occupation of the living accommodation constituted the only use of that accommodation; two or more households shared basic amenities (the kitchen and the bathroom, in particular); and. rent was payable. The statutory tests for these various factors were made out on the facts. Entitlement of the Applicant to apply for a rent repayment order

[21]The Tribunal determined that the Applicant was entitled to apply for rent repayment orders pursuant to section 41(1) of the 2016 Act. In accordance with section 41(2), the Respondent was committing the relevant offence throughout the period when the subject property was let to the Applicants; and the offence was committed in the period of 12 months ending with the day on which the application was made (5th June 2019).

[22]Furthermore, the Applicant had demonstrated that she had paid rent, and sought repayment of that rent, fulfilling Section 40(2)(a) of the 2016 Act. Discretion to make a rent repayment order

[23]The Tribunal was satisfied that there was no ground on which it could be argued that it was not appropriate to make rent repayment orders in the circumstances of the present case. Amount of Rent Repayment Order

[24]In accordance with section 44 of the 2016 Act, first, the amount of an order must relate to rent paid in a period, not exceeding 12 months during which the landlord was committing an offence under section 72(1) of the 2004 Act. The Applicant’s claim satisfies that condition.

[25]Second, the amount that the landlord is required to pay in respect of a period must not exceed the rent paid in respect of that period. The Applicant paid the sum of £3,059.05 net in the period, which happens to encompass the whole term of her tenancy.

[26]Third, in determining the amount of any rent repayment order, the Tribunal must, in particular, take into account the conduct of the parties, the financial circumstances of the landlord and (not applicable in the present case) whether the landlord has been convicted of any of the offences listed in section 40 of the 2o16 Act.

[27]The discretion afforded to the Tribunal at the final stage of the determination of the amount of any rent repayment order was considered by the Upper Tribunal (Lands Chamber) in Parker v Waller

[2012] UKUT 301 (LC)

; and the observations of the President in that case have received express approval in subsequent decisions of the Upper Tribunal. Although those observations were made in the context of the rent repayment order regime contained in the 2004 Act, in the view of the Tribunal many of them remain relevant in the context of the 2016 Act regime.

[28]The following observations, contained in paragraph 26 of the decision in Parker v Waller, would appear to be relevant in the present case – (iii) There is no presumption that the RRO [Rent Repayment Order] should be for the total amount received by the landlord during the relevant period unless there are good reasons why it should not be. The Residential Property Tribunal (RPT) [now the First-tier Tribunal (Property Chamber)] must take an overall view of the circumstances in determining what amount would be reasonable. (iv) [The 2004 Act] requires the RPT to take into account the total amount of rent received during any period during which it appears to it that the offence was being committed. It needs to do that because the RRO can only be made in respect of rent received during that period. It is limited to the period of 12 months ending with the date of the occupier’s application. But the RPT ought also to have regard to the total length of time during which the offence was being committed, because this bears upon the seriousness of the offence. (v) The fact that the tenant will have had the benefit of occupying the premises during the relevant period is not, in my judgment a material consideration or, if it is material, one to which any significant weight should be attached. This is because it is of the essence of an occupier’s RRO that the rent should be repaid in respect of a period of his occupation. While the tenant might be viewed as the fortunate beneficiary of the sanction that is imposed on the landlord, it is only misconduct on his part that would in my view justify the reduction of a repayment amount that was otherwise reasonable. (vi) Payments made as part of the rent for utility services count as part of the periodical payments in respect of which an RRO may be made. But since the landlord will not himself have benefited from these, it would only be in the most serious case that they should be included in the RRO. (vii) [The Act] requires the RPT to take account of the conduct and financial circumstances of the landlord. The circumstances in which the offence was committed are always likely to be material. A deliberate flouting of the requirement to register will obviously merit a larger RRO than instances of inadvertence – although all HMO landlords ought to know the law. A landlord who is engaged professionally in letting is likely to be more harshly dealt with than the non-professional.

[29]The Tribunal has these matters in mind, but necessarily has to take a robust approach to the exercise of its discretion in this case. There is simply no information regarding the circumstances of the Respondent because he has failed or refused to participate in the hearing. It follows that there is nothing to mitigate his position. The Tribunal can have regard to the rent paid being inclusive of utility services, but again the failure of the Respondent means that the Tribunal must assess such sum for itself and doing the best it can from its own specialist experience. Considering the whole period of the claim as a little over 6 months, and apportioning estimated utility costs per room, the Tribunal would expect this expense to be in the order of £80 per month, the rent the Respondent received from the Applicant net of such outgoings would be £2,569.60.

[30]The Tribunal determines that the full amount of this sum should be repaid under the Rent Repayment Order. Whilst noting that there is no presumption that the total amount is payable, nor, for that matter, the total amount minus utility services, in this case there are clear indicators why the full amount should be payable. Firstly there is the conduct of the Respondent as landlord, in particular his failure to provide the Applicant with any Tenancy Agreement and associated documents, and his failure to provide details of his address as landlord (or the landlord’s address if he were an agent) combined with the use of non-geographic methods of communication. Secondly, there is nothing to mitigate the Respondent’s conduct, and he has chosen not to engage with the Tribunal at all. Hence, the barring order preventing his participation. The Tribunal was not even afforded access to the Property. This non-participation is within the rights of the Respondent, but cannot be allowed to work to his advantage. Thirdly, there is no criminal sanction because the Respondent has not been prosecuted. Fourthly, there is no other application for a Rent Repayment Order known for the period in question and the period for this claim is now expiring in any event. It follows that there is no reason for the Respondent in these circumstances not to disgorge the net sum that he has received from the Applicant during the period she was in occupation of an unlicensed HMO.

[31]There is no relevant misconduct on the part of the Applicant, who seems to have vacated promptly upon notice from the Respondent.

[32]The sum of £2,569.60 shall be paid by the Respondent to the Applicant within 28 days of this decision accordingly. Tribunal Judge Dr Anthony Verduyn Dated 28th October 2019