(1) Mr N Williams (2) Ms A M LarkinApplicantMr D BlackstockRespondent
Before
Graham Freckelton FRICS (Chairman)Robert Chumley-Roberts MCIEH, J.PNone for the ApplicantCartwright King Solicitors for the RespondentDate 2 April 2020Hearing 2020-03-04Type of application: Application under section 41(1) of the Housing and Planning Act 2016 for a rent repayment order
DECISION
[34]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 a property 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[35]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 1st August 2018 until 8th February 2019 the subject property was a house subject to selective licencing.(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[36]The Tribunal determined that the Applicants were entitled to apply for a rent repayment order pursuant to section 41(1) of the 2016 Act. In accordance with section 41(2), the Respondent was committing the relevant offence from 1st August 2018 to 8th February 2019. Discretion to make rent repayment orders[37]The Tribunal was satisfied that there was no ground on which it could be argued that it was not appropriate to make a rent repayment order in the circumstances of the present case. Amounts of Rent Repayment Orders[38]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. The Applicants claim for the period 1st August 2018 – 8th February 2019 as confirmed to them by Nottingham City Council. 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 whether the landlord has been convicted of any of the offences listed in section 40 of the 2o16 Act.[39]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.[40]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.[41]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 51.[42]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 no evidence of conduct on the part of the Tenants (Applicants) which would affect its decision.[43]However, the Tribunal is mindful to take into account the conduct of the Landlord (Respondent). In particular the Tribunal notes: 1) That he had no prior convictions or penalties for any similar offences. 2) That he had taken full responsibility for his actions and pleaded guilty at the first opportunity. 3) The Tribunal accepts that there is little likelihood of the Respondent re-offending.[44]The Tribunal reduces the Rent Repayment Order by 25% to reflect this.[45]The Tribunal is also conscious of the Financial Penalty paid by the Respondent. Based on the Respondent’s submission that this amounted to £10,800.00 which referred to twelve properties this equates to £900.00 per property. The Tribunal determines to allow 50% of this against any rent repayment order.[46]In accordance with section 44(4)(b) of the 2016 Act, the Tribunal considered the financial circumstances of the Respondent. Unfortunately, although the Respondent has provided details of his disposable income, he has not given any indication of any mortgage payments on the subject property. The Tribunal notes that his annual Accounts show finance costs of £62,897.00 which the Tribunal assumes covers all his properties.[47]However, having regard to his disposable income (accepted by the Court) the Tribunal has taken a general view on the Respondent’s financial position and reduces the rent repayment orders by 50% to reflect this. This gives a total deduction of 75%.[48]With regard to the length of time the Tribunal can consider making the Rent Repayment Order this commences on 1st August 2018 until 8th February 2019. The Tribunal notes that the Applicants have requested a rent repayment order to cover this period in the sum of £3,125.00.[49]However, the Tribunal calculates the maximum amount of any rent repayment order as follows: 6 months x £500.00 per month 3000.00 Daily rate £6000.00 per annum ÷ 365 = £16.44 per day 8 days x £16.44 per day = 131.52 Total Maximum amount of order £3,131.52[50]Having regard to the above the Tribunal therefore determines as follows: Maximum Amount 3131.52 Less: 50% of Financial Penalty 450.00 2681.52 Less: 75% Allowance for conduct and Financial Circumstances 2011.14 Amount of Rent Repayment Order £670.38 Payment should be made in full within 28 days of the date of this decision.[51]The Tribunal therefore confirms the total amount of the Rent Repayment Order in the sum of £670.38 (Six Hundred and Seventy Pounds Thirty-Eight Pence). APPLICATION UNDER RULE 13(2)[52]Although the Applicants, in their Application to the Tribunal did not submit an Application under Rule 13(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 requesting reimbursement of the Application Fee paid, this is a matter which the Tribunal can consider on its own initiative.[53]After careful consideration the Tribunal determined that it would be just and equitable that the Application Fee of £100.00 should be reimbursed to the Applicants in this case. Payment should be made in full within 28 days of the date of this decision. APPEAL[54]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: 2 April 2020 Graham Freckelton FRICS Chairman First-tier Tribunal (Property Chamber)