36 Lyttleton Street Derby DE22 3FE BIR/00FK/HMK/2019/0073

FIRST-TIER TRIBUNAL

PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case No BIR/00FK/HMK/2019/0073

Between

(1) Blaise Ntare Umugabo (2) Derek Okelo (3) Dhananjoy Chanda (4) Jonathan Mayombu (5) Rabbi MambonzoApplicant

Mr Jason HammondRespondent

Before

Graham Freckelton FRICS (Chairman)

Robert Chumley-Roberts MCIEH, J.P

Justice for Tenants for the Applicant

None for the Respondent

Date 25 February 2020

Type of application: Application under section 41(1) of the Housing and Planning Act 2016 for rent repayment orders

DECISION

[41]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 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

[42]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. In his submission the Respondent readily accepted that he had committed the offence.(i) Throughout the period from 8th October 2018 to 25th June 2019 the subject property was a house in multiple occupation subject to mandatory licensing.

(ii) The subject property was not licensed.

(iii) The Respondent was the person having control and/or managing the subject property. Entitlement of the Applicants to apply for rent repayment orders

[43]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 commencing 12 months from the date the Application was received by the Tribunal (1st October 2018 being the date mandatory licensing became law) ending with the day on which the application was made for a Licence (25th June 2019). Discretion to make rent repayment orders

[44]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

[45]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. All the Applicants claim rent repayment of varying amounts depending on the length of their tenancies as detailed in paragraph 10. However, the Tribunal determines that the actual period of any claim is limited to the period 1st October 2018 (being the date mandatory licensing became law) and 25th June 2019 (being the date the Respondent applied to Derby City Council for an HMO Licence) 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.

[46]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.

[47]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 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.

[48]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. The Tribunal determines that the amounts claimed from the various Applicants as set out in paragraph 10 are incorrect as they refer to the period commencing 1st October 2018 and expiring at the various dates the Applicants vacated the property. The date the offence was committed by the Respondent ceased on 25th June 2019, being the date, the Application for a Licence was accepted by Derby City Council. The Tribunal calculates this period as being 268 days.

[49]The rent paid by the Applicants did not include any service charges as these were charged separately at £20.00 per week each.

[50]The Tribunal calculates the maximum amount of repayment in respect of each Applicant for the period commencing 1st October 2018 to 25th June 2019 as follows: Blaise Ntare Umugabo £390.00 pcm x 12 = £4680.00 pa ÷ 365 = £12.82 per day. Maximum entitlement – 268 days x £12.82 per day = £3,435.76 Derek Okelo £411.66 pcm x 12 = £4939.92 ÷ 365 = £13.53 per day. Maximum entitlement – 268 days x £13.53 per day = £3,626.04 Dhananjoy Chanda £411.66 pcm x 12 = £4939.92 ÷ 365 = £13.53 per day. Maximum entitlement – 268 days x £13.53per day = £3,626.04 Jonathan Mayombu £390.00 pcm x 12 = £4680.00 pa ÷ 365 = £12.82 per day. Maximum entitlement – 268 days x £12.82 per day = £3,435.76 Rabbi Mambonzo £411.66 pcm x 12 = £4939.92 ÷ 365 = £13.53 per day. Maximum entitlement – 268 days x £13.53 per day = £3,626.04

[51]On the same principle, as applied by the Upper Tribunal in Fallon v Wilson

[2014] UKUT 0300 (LC)

, the Tribunal determines that there should be deductions to reflect both the arrears of rental for each tenant, the mortgage payment and the Financial Penalty levied on the Respondent by Derby City Council.

[52]In calculating the deductions, the Tribunal noted the submission of the Respondent regarding the arrears due by each Applicant. These have not been challenged and are accepted by the Tribunal. The amount of the arrears of rent owed is therefore deducted from the Rent Repayment Orders claimed.

[53]With regard to the mortgage payment the Tribunal finds that this is a legitimate expense. The annual payment of £4,829.76 equates to £13.23 per day which equates to £2.65 (rounded up) per tenant (Applicant) per day as detailed below: Mortgage payment: £4,829.76 ÷ 365 = £13.23 per day ÷ 5 = £2.65 per day.

[54]The Respondent submits that it is unfair for him to be expected to refund rental by way of a Rent Repayment Order when he has already been levied with a Financial Penalty. This is incorrect and not accepted by the Tribunal. However, the Tribunal does accept that the amount of any Financial Penalty should be reflected in any Rent Repayment Order made.

[55]In this case the amount of the Financial Penalty is £6000.00. This equates to £26.32 per day for the period commencing on 1st October 2018 and expiring on 25th June 2019 (being the date the HMO Licence was submitted to Derby City Council) totalling 268 days. This therefore equates to £4.48 per tenant per day as detailed below: Financial Penalty: £6,000.00 ÷ 268 = £22.39 ÷ 5 = £4.48 per day.

[56]The Tribunal allows one third of this against the Rent Repayment Orders equating to £1.49 per day.

[57]Based on the above the Tribunal Determines that the amount of the Claims and relevant deductions for each Applicant are as follows: Blaise Ntare Umugabo Maximum entitlement 3435.75 Less: Arrears 795.00 Mortgage – 268 days @£2.65 per day 710.20 Financial Penalty – 268 days @ £1.49 per day 399.32 Total Deduction 1904.52 Maximum Amount of Rent Repayment Order £1,531.24 Derek Okelo Maximum entitlement 3626.04 Less: Arrears 216.41 Mortgage – 268 days @£2.65 per day 710.20 Financial Penalty – 268 days @ £1.49 per day 399.32 Total Deduction 1325.93 Maximum Amount of Rent Repayment Order £2,300.11 Dhananjoy Chanda Maximum entitlement 3626.04 Less: Arrears 795.00 Mortgage – 268 days @£2.65 per day 710.20 Financial Penalty – 268 days @ £1.49 per day 600.30 Total Deduction 1904.52 Maximum Amount of Rent Repayment Order £1,721.52 Jonathan Mayombu Maximum entitlement 3346.02 Less: Arrears 1189.62 Mortgage – 268 days @£2.65 per day 710.20 Financial Penalty – 268 days @ £1.49 per day 600.30 Total Deduction 2299.14 Maximum Amount of Rent Repayment Order £1,136.62 Rabbi Mambonzo Maximum entitlement 3626.04 Less: Arrears 77.32 Mortgage – 268 days @£2.65 per day 710.20 Financial Penalty – 268 days @ £1.49 per day 399.32 Total Deduction 1186.84 Maximum Amount of Rent Repayment Order £2,439.20

[58]In accordance with section 44(4)(a) of the 2016 Act, the Tribunal considered the conduct of the landlord and tenant. Both parties complain about the other but the Tribunal finds that there is no evidence of conduct on either side which would affect its decision.

[59]Therefore, the Tribunal is satisfied that there is nothing in the conduct of the parties to justify any adjustment to the amount of the rent repayment orders.

[60]In accordance with section 44(4)(b) of the 2016 Act, the Tribunal considered the financial circumstances of the landlord. Mr Hammond did not provide details of his income and expenditure but the Tribunal was informed that he owns other residential letting properties in Swansea. However, the Tribunal accepts that at present he is in some difficulty in respect of paying the Financial Penalty imposed by Derby City Council. In addition to this, having regard to the expenditure of the Respondent on the property during the period of the tenancy the Tribunal considers that a further allowance is appropriate. The Tribunal determines that it is just and equitable that this be assessed at 20%.

[61]The Tribunal therefore determines that the Rent Repayment due to each of the Applicants is as follows: 1) Blaise Ntare Umugabo £1,531.24 less 20% = £1,224.99 2) Derek Okelo £2,300.11 less 20% = £1,840.08 3) Dhananjoy Chanda £1,721.52 less 20% = £1,377.21 4) Jonathan Mayombu £1,136.62 less 20% = £909.29 5) Rabbi Mambonzo £2,439.20 less 20% = £1,951.36 Payment should be made in full within 28 days of the date of this decision.

[62]The Tribunal therefore confirms the total amount of the Rent Repayment Order in the sum of £7,302.93 (Seven Thousand Three Hundred and Two Pounds, Ninety Three Pence). APPLICATION UNDER RULE 13(2)

[63]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 £300.00, being the Application and Hearing Fee paid.

[64]However, the Tribunal notes that although an Application Fee of £100.00 was paid a Hearing Fee was not paid in this case.

[65]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 28 days of the date of this decision. APPEAL

[66]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: 25th February 2020 Graham Freckelton FRICS Chairman First-tier Tribunal (Property Chamber)