Flats 3 and 4 64 Addison Street Nottingham NG1 4HA BIR/00FY/HMK/2019/0079

FIRST-TIER TRIBUNAL

PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case No BIR/00FY/HMK/2019/0079

Between

(1) Mr G M Romero (2) Ms E L Drinkeld (3) Ms E M Robinson (4) Ms A L Ewins (5) Ms A Robertson (6) Ms L B MundayApplicant

Mr D BlackstockRespondent

Before

Graham Freckelton FRICS (Chairman)

Robert Chumley-Roberts MCIEH, J.P

None for the Applicant

Cartwright King Solicitors for the Respondent

Date 2 April 2020

Hearing 2020-02-21

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 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

[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. Throughout the period from the commencement of the tenancies to 3rd July 2019 the subject property was a house in multiple occupation subject initially to selective licensing 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

[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 from 1st August 2018 to 3rd July 2019 (in respect of Flat4) and 1st August 2018 to 2nd July 2019 (in respect of Flat3). 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 in Flat 4 claim for the period 1st August 2018 – 3rd July 2019 and the period 1st August 2018 to 2nd July 2019 (in respect of Mr Romero) as confirmed to them by Nottingham City Council. However, Mr Romero’s tenancy did not commence until 1st September 2018. 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.

[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 as set out in paragraph 60.

[49]With regard to Mr Romero the Tribunal calculates that the maximum amount of any Rent Repayment Order cannot exceed 10 months and 2 days (1st September 2018 – 2nd July 2019). The Tribunal calculates this as follows: 10 months x £423.00 = 4230.00 2 days @ £13.90 per day = 27.80 Total £4,257.80

[50]The rent paid by the Applicants included gas and electricity charges, water and sewerage charges, internet and television licence. The cost of these items cannot be quantified by the Respondent but it is the opinion of the Tribunal that an allowance should be made to reflect them as the Tribunal finds that the benefit of those items accrued to the Applicants (and not to the Respondent) and that the costs should not be included in the rent repayment orders.

[51]Using its knowledge and experience the Tribunal assesses those costs at £438.00 per month as follows: Water and Sewerage 40.00 Gas and electricity 345.00 Internet 40.00 Television 13.00 Total £438.00 This equates to £73.00 per Applicant, per month.

[52]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.

[53]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.

[54]The Tribunal reduces all the Rent Repayment Orders by 25% to reflect this.

[55]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. In turn, this equates to £150.00 per tenant and the Tribunal determines to allow 50% of this against any rent repayment order.

[56]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.

[57]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%.

[58]With regard to the length of time the Tribunal can consider making the Rent Repayment Order this commences on 1st August 2018 until 3rd July 2019 (for the former occupiers of Flat 4). The Tribunal notes that these Applicants have requested rent repayment orders up to 30th June 2019 and sees no reason to amend this to take account of three days. However, in the case of Mr Romero the Tribunal has had to calculate the maximum amount of any rent repayment order as detailed in paragraph 49 above. At the same time the Tribunal accepts, as a starting point, the amounts sought by the remaining Applicants rather than the calculation provided by the Respondent. With regard to the deduction for utilities the Tribunal limits these to either ten or eleven months (as applicable) and does not propose to make allowances for either two or three days (as applicable) as the amounts are minimal.

[59]Having regard to the above the Tribunal therefore determines as follows: Mr Romero Maximum Entitlement 4257.80 Less: Utility Costs £73.00 x 10 months 730.00 Allowance for Financial Penalty 75.00 Deductions 805.00 Maximum Order 3452.80 Less75% to reflect conduct and financial circumstances 2589.60 Rent Repayment Order £863.20 Ms Drinkeld Amount Claimed 4653.00 Less: Utility Costs £73.00 x 11 months 803.00 Allowance for Financial Penalty 75.00 Deductions 878.00 Maximum Order 3775.00 Less75% to reflect conduct and financial circumstances 2831.25 Rent Repayment Order £943.75 Ms Robinson Amount Claimed 3384.00 Less: Utility Costs £73.00 x 11 months 803.00 Allowance for Financial Penalty 75.00 Deductions 878.00 Maximum Order 2506.00 Less75% to reflect conduct and financial circumstances 1879.50 Rent Repayment Order £626.50 Ms Ewins Amount Claimed 2961.00 Less: Utility Costs £73.00 x 11 months 803.00 Allowance for Financial Penalty 75.00 Deductions 878.00 Maximum Order 2083.00 Less75% to reflect conduct and financial circumstances 1562.25 Rent Repayment Order £520.75 Ms Robertson Amount Claimed 3767.00 Less: Utility Costs £73.00 x 11 months 803.00 Allowance for Financial Penalty 75.00 Deductions 878.00 Maximum Order 2889.00 Less75% to reflect conduct and financial circumstances 2166.75 Rent Repayment Order £722.25 Ms Munday Amount Claimed 4400.00 Less: Utility Costs £73.00 x 11 months 803.00 Allowance for Financial Penalty 75.00 Deductions 878.00 Maximum Order 3522.00 Less75% to reflect conduct and financial circumstances 2641.50 Rent Repayment Order £880.50 Payment should be made in full within 28 days of the date of this decision.

[60]The Tribunal therefore confirms the total amount of the Rent Repayment Order in the sum of £4,556.95 (Four Thousand Five Hundred and Fifty Six Pounds, Ninety Five Pence). APPLICATION UNDER RULE 13(2)

[61]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.

[62]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

[63]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: 2nd April 2020 Graham Freckelton FRICS Chairman First-tier Tribunal (Property Chamber)