(1) Ms M A V Castillo (2) Ms K JesienApplicantMr D MunirRespondent
Before
Graham Freckelton FRICS (Chairman)Robert Chumley-Roberts MCIEH, J.PNone for the ApplicantNone for the RespondentDate 19 February 2020Hearing 2020-02-13Type of application: Application under section 41(1) of the Housing and Planning Act 2016 for rent repayment orders
DECISION
[23]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 Parts 2 and 3 of the 2004 Act but was not so licensed.(ii) Whether the Applicants were entitled to apply to the Tribunal for rent repayment orders.(iii) Whether the Tribunal should exercise its discretion to make rent repayment orders.(iv) Determination of the amounts of any orders. Offence under section 72(1) of the 2004 Act[24]In accordance with sections 43(1) of the 2016 Act, the Tribunal was satisfied beyond reasonable doubt that the Respondent, as landlord of the subject property, had committed an offence listed in section 40 of the 2016 Act, namely an offence under section 72(1) of the 2004 Act. Throughout the period from the commencement of the tenancies to 10th May 2019 the subject property was a house in multiple occupation subject initially to selective licencing and subsequently to additional licensing as an HMO.(i) The subject property was not licensed.(ii) The Respondent was the person having control and/or managing the subject property. Entitlement of the Applicants to apply for rent repayment orders[25]The Tribunal determined that the Applicants were 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 to the Tribunal (14th October 2019). Discretion to make rent repayment orders[26]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. Amounts of Rent Repayment Orders[27]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 Applicants’ claims satisfy that condition. 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. Both Applicants claim for the period from the commencement of their tenancies until 9th May 2019. However, the submissions include a letter from Nottingham City Council confirming that the licence application was actually made on 10th May 2019. The Tribunal therefore substitutes this date for the date on the Application. 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.[28]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.[29]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 Rent Repayment Order (RRO) 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.[30]Distilling the substance of those observations and applying them to the facts of the present case, the Tribunal determines that various deductions should be made from the maximum amounts as set out in paragraph 37.[31]The rent paid by the Applicants included gas and electricity charges, water and sewerage charges, internet and television licence. The cost of these items is noted at £9.00 per week and is included in the rent. The Tribunal finds that the benefit of those items accrued to the tenants (and not to the Respondent) and that the costs should not be included in the rent repayment orders. However, as the Respondent has not taken any part in these proceedings the Tribunal cannot ascertain any additional expenses that might have been incurred so has no alternative but to disregard them.[32]In accordance with section 44(4)(a) of the 2016 Act, the Tribunal considered the conduct of the landlord and tenant. The Tribunal finds that there is evidence of conduct on the part of the Respondent landlord which would affect its decision. In particular the Respondent has not, despite being given every opportunity to do so taken any part in these proceedings and as previously noted did not arrange for the Tribunal to inspect the property which the Tribunal finds disrespectful.[33]In accordance with section 44(4)(b) of the 2016 Act, the Tribunal could have considered the financial circumstances of the landlord. Unfortunately, as previously noted the Respondent has taken no part in these proceedings and the Tribunal is therefore unable to consider this matter any further.[34]With regard to the length of time the Tribunal can consider making the Rent Repayment Order this commences on the dates the tenancies commenced and expires on 10th May 2019 (being the date the application for a licence was made to the local authority (S41(2)(b) of the Act)).[35]For Ms Castillo this amounts to 231 days and for Ms Jesien 214 days.[36]The daily rate in respect of the rent is calculated as follows: Ms Castillo - £470.00 x 12 = £5640.00 per annum ÷ 365 = £15.45 per day. Ms Jesien - £447.15 x 12 = £5365.80 per annum ÷ 365 = £14.70 per day.[37]With regard to the amount of services included in the rent the Tribunal calculates these as follows: Ms Castillo – 231 days ÷ 7 = 33 weeks x £9.00 per week = £297.00. Ms Jesien – 214 days ÷ 7 = 30.57 weeks x £9.00 per week = £275.13.[38]The Tribunal therefore confirms the total amount of the Rent Repayment Orders as follows: Ms Castillo Allowable rent: 231 days x £15.45 3568.95 Less: Amount attributable to services: 297.00 Total Rent Repayment Order £3,271.95 Ms Jesien Allowable rent: 214 days x ££14.70 3145.80 Less: Amount attributable to services 275.13 Total Rent Repayment Order £2,870.67[39]The Tribunal therefore confirms the total amount of both the Rent Repayment Orders of £6,142.62.[40]The Tribunal therefore determines that the Rent Repayment due to each of the Applicants is as follows: Ms Castillo - £3,271.95 Ms Jesien - £2,870.67 Payment should be made in full within 28 days of the date of this decision. APPLICATION UNDER RULE 13(2)[41]In their written submissions the Applicants submitted to the Tribunal an Application under Rule 13(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 requesting reimbursement of £100.00 each, being the Application Fee paid.[42]After careful consideration the Tribunal determined that it would be just and equitable that the Application Fee of £100.00 should be reimbursed to each of the Applicants in this case. Payment should be made in full within 14 days of the date of this decision. APPEAL[43]Any appeal against this decision must be made to the Upper Tribunal (Lands Chamber). Prior to making such an appeal an aggrieved party must apply in writing to the First-tier Tribunal for permission to appeal within 28 days of the date specified below stating the grounds on which that party intends to rely in the appeal. Date: 18th February 2020 Graham Freckelton FRICS Chairman First-tier Tribunal (Property Chamber)