49 Bertram Road, London NW4 3PR LON/00AC/HMF/2020/0022
FIRST-TIER TRIBUNAL
PROPERTY CHAMBER (RESIDENTIAL PROPERTY)
Case No LON/00AC/HMF/2020/0022
Between
Vivian Larbi Dorian Warner Safae Bouazza Laura SternApplicantJeremy PereiraRespondent
Before
Judge NicolMr C P Gowman MCIEH MCMI BScDate 27 August 2020Property: 49 Bertram Road, London NW4 3PR Vivian Larbi Dorian WarnerType of application: Sections 40, 41, 43, & 44 of the Housing and Planning Act 2016 Judge Nicol
DECISION
The Respondent shall pay to the Applicants a Rent Repayment Order in the total sum of £14,200. The relevant legislative provisions are set out in an Appendix to this decision.
REASONS
[1]The Applicants were tenants at the subject property at 49 Bertram Road, London NW4 3PR, a 2-storey, 6-bedroom house, the first three from October 2015 and Ms Stern from April 2018 – they all left in August 2019. The Respondent is the freeholder. The Applicants seek a rent repayment order against the Respondent in accordance with the Housing and Planning Act 2016 (“the 2016 Act”).[2]The hearing of this matter was delayed by the restrictions on the Tribunal’s work arising from the COVID-19 pandemic. Eventually, the matter was heard on 27th August 2020 by remote video conference. The Applicants all attended but the Respondent did not, despite having been notified of the hearing in two letters from the Tribunal. The Tribunal’s case officer, Ms Stewart, tried to telephone him and the hearing was delayed by 15 minutes to see if he would respond or attend. He had not done so by the time the hearing finished at 11am.[3]The documents available to the Tribunal consisted of:(a) The application form dated 10th February 2020(b) The Tribunal’s directions dated 21st February 2020(c) A 19-page bundle of documents from the Applicants(d) The Respondent’s Reply dated 20th March 2020(e) The Applicants’ Reply dated 19th April 2020(f) The Land Registry entry for the Respondent’s title to the subject property(g) An Assured Shorthold Tenancy Agreement dated 1st November 2016 between the Respondent and 3 of the Applicants plus two others, Miss Ihaab Souissi and Miss Marta Henriquez(h) Email correspondence between the Respondent and Ms Stern The offence[4]The Tribunal may make a rent repayment order when the landlord has committed one or more of a number of offences listed in section 40(3) of the Housing and Planning Act 2016. The Applicants alleged that the Respondent was guilty of having control of or managing an HMO (House in Multiple Occupation) which is required to be licensed but is not so licensed, contrary to section 72(1) of the Housing Act 2004.[5]Both parties set out in their written statements of case much about the condition of the property but that is irrelevant to whether it is an HMO which should be licensed but is not.[6]The property was an HMO while the Applicants lived there:(a) It consists of 6 units of living accommodation not consisting of a self-contained flat or flats;(b) The living accommodation was occupied by persons, namely the Applicants, who did not form a single household, despite signing up on a single written tenancy agreement;(c) The living accommodation was occupied by the Applicants as their only or main residence;(d) Their occupation of the living accommodation constituted the only use of that accommodation;(e) Rents were payable in respect of their occupation of the living accommodation; and(f) The Applicants shared one or more basic amenities, namely two bathrooms and a kitchen.[7]The property was also licensable as an HMO. From October 2015 to February 2019, despite some changes of personnel, the property was always occupied by 5 people, as per Art.4 of the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018. Therefore, for that period the property was subject to mandatory licensing, i.e. the licensing requirements mandated by statute and statutory instrument.[8]In February 2019 Miss Souissi left, leaving only the four Applicants. This means the property was no longer subject to mandatory licensing. However, the local authority, the London Borough of Barnet, adopted an additional licensing scheme with effect from 5th July 2016 which extended licensing to, amongst others, properties occupied by 4 people. Therefore, for the remaining 5 months of the Applicants’ occupation until August 2019, the property should have been licensed under Barnet’s additional licensing scheme.[9]The property was not licensed at any time. Barnet wrote to the Respondent on 12th April and 2nd November 2018 notifying him that the property was required to be licensed but they had yet to receive a licensing application. Ms Bouazza texted the Respondent, concerned that Barnet’s letters would result in the tenants being “kicked out”. The Respondent replied, “They will not throw you out, but fine me. I will fill out the form.” He did not do so.[10]In his Reply, the Respondent said, “The property did not have a HMO License, and this was made clear to [the Applicants] from the very beginning.” Needless to say, warning the tenants that a property is not licensed does not excuse a failure to get it licensed.[11]Therefore, it is beyond any reasonable doubt that the Respondent committed a relevant offence, namely having control of or managing a property which should have been licensed but was not. The Respondent’s Reply contained nothing which could constitute a defence. Rent Repayment Order[12]Therefore, the Tribunal is satisfied that it has the power under section 43(1) of the Housing and Planning Act 2016 to make Rent Repayment Orders on this application. The RRO provisions were considered by the Upper Tribunal (Lands Chamber) in Parker v Waller [2012] UKUT 301 (LC). Amongst other matters, it was held that an RRO is a penal sum, not compensation.[13]The law has changed since Parker v Waller and was considered in Vadamalayan v Stewart [2020] UKUT 0183 (LC) where
Judge Cooke said:
[9]In Parker v Waller … the President (George Bartlett QC) had to consider the provisions of sections 73 and 74 of the 2004 Act, which gave the FTT jurisdiction to make rent repayment orders; but they have been repealed so far as England is concerned and now apply only in Wales.[10]Section 74(5) of the 2004 Act provided that a rent repayment order in favour of an occupier had to be “such amount as the tribunal considers reasonable in the circumstances”. … With regard to orders made in favour of an occupier, therefore, he said at paragraph 26(iii): “There is no presumption that the 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 RPT must take an overall view of the circumstances in determining what amount would be reasonable.”[11]But the statutory wording on which that paragraph is based is absent from the 2016 Act. There is no requirement that a payment in favour of the tenant should be reasonable. …[12]That means that there is nothing to detract from the obvious starting point, which is the rent itself for the relevant period of up to twelve months. Indeed, there is no other available starting point, which is unsurprising; this is a rent repayment order so we start with the rent.[13]In Parker v Waller the President set aside the decision of the FTT and re-made it. In doing so he considered a number of sums that the landlord wanted to be deducted from the rent in calculating the payment. The President said at paragraph 42: I consider that it would not be appropriate to impose upon [the landlord] an RRO amount that exceeded his profit in the relevant period.[14]It is not clear to me that the restriction of a rent repayment order to an account of profits was consistent with Parliament’s intention in enacting sections 74 and 75 of the 2004 Act. The removal of the landlord’s profits was – as the President acknowledged at his paragraph 26 – not the only purpose of a rent repayment order even under the provisions then in force. But under the current statutory provisions the restriction of a rent repayment order to the landlord’s profit is impossible to justify. The rent repayment order is no longer tempered by a requirement of reasonableness; and it is not possible to find in the current statute any support for limiting the rent repayment order to the landlord’s profits. That principle should no longer be applied.[15]That means that it is not appropriate to calculate a rent repayment order by deducting from the rent everything the landlord has spent on the property during the relevant period. That expenditure will have repaired or enhanced the landlord’s own property, and will have enabled him to charge a rent for it. Much of the expenditure will have been incurred in meeting the landlord’s obligations under the lease. The tenants will typically be entitled to have the structure of the property kept in repair and to have the property kept free of damp and pests. Often the tenancy will include a fridge, a cooker and so on. There is no reason why the landlord’s costs in meeting his obligations under the lease should be set off against the cost of meeting his obligation to comply with a rent repayment order.[16]In cases where the landlord pays for utilities, as he did in Parker v Waller, there is a case for deduction, because electricity for example is provided to the tenant by third parties and consumed at a rate the tenant chooses; in paying for utilities the landlord is not maintaining or enhancing his own property. So it would be unfair for a tenant paying a rent that included utilities to get more by way of rent repayment than a tenant whose rent did not include utilities. But aside from that, the practice of deducting all the landlord’s costs in calculating the amount of the rent repayment order should cease.[17]Section 249A of the 2016 Act enables the local housing authority to impose a financial penalty for a number of offences including the HMO licence offence, as an alternative to prosecution. A landlord may therefore suffer either a criminal or a civil penalty in addition to a rent repayment order. …[18]The President deducted the fine from the rent in determining the amount of the rent repayment order; under the current statute, in the absence of the provision about reasonableness, it is difficult to see a reason for deducting either a fine or a financial penalty, given Parliament’s obvious intention that the landlord should be liable both(1) to pay a fine or civil penalty, and(2) to make a repayment of rent.[19]The only basis for deduction is section 44 itself and there will certainly be cases where the landlord’s good conduct, or financial hardship, will justify an order less than the maximum. But the arithmetical approach of adding up the landlord’s expenses and deducting them from the rent, with a view to ensuring that he repay only his profit, is not appropriate and not in accordance with the law. I acknowledge that that will be seen by landlords as harsh, but my understanding is that Parliament intended a harsh and fiercely deterrent regime of penalties for the HMO licensing offence.[53]The provisions of the 2016 Act are rather more hard-edged than those of the 2004 Act. There is no longer a requirement of reasonableness and therefore, I suggest, less scope for the balancing of factors that was envisaged in Parker v Waller. The landlord has to repay the rent, subject to considerations of conduct and his financial circumstances. There may be a case, as I said at paragraph 15 above, for deducting the cost of utilities if the landlord pays for them out of the rent (which was not the case here). But there is no justification for deducting other expenditure. …[14]On the basis of the decision in Vadamalayan, when the Tribunal has the power to make an RRO, it should be calculated by starting with the total rent paid by the tenant within time period allowed under section 44(2) of the Housing and Planning Act 2016, from which the only deductions should be those permitted under section 44(3) and (4).[15]The Applicants limited their claim to the last 6 months of their tenancy from February to August 2019 under the mistaken impression that they could only go back 12 months from the date of their application (in fact, under section 44(2) of the 2016 Act, the maximum period in respect of which the RRO may be calculated is 12 months). As far as the Respondent was aware, this was the case he had to answer. In his absence, the Tribunal did not see how it would be fair to extend the period back further than February 2019.[16]The Applicants paid £2,700 rent for February 2019 and then £2,300 for each of the following months, making a total of £14,200.[17]Under section 44(4)(a) of the Housing and Planning Act 2016, the Tribunal must take into account the conduct of the landlord and of the tenants. In his Reply, the Respondent defended himself against allegations of poor management of the property but made only one complaint against any of the tenants. He said that Ms Warner stuck some mirror panels up and when one was removed some plaster came away. Ms Warner said she had discussed the panels with the Respondent and had his permission to put them up. In any event, there is nothing to justify reducing the amount of the RRO.[18]Under section 44(4)(b), the Tribunal must take into account the landlord’s financial circumstances. The Respondent provided no information on this subject. In these circumstances, the Tribunal is unable to make any deduction in relation to the Respondent’s financial circumstances.[19]The Tribunal sees no reason to reduce the amount of the RRO below the maximum amount and awards to the Applicants the full amount. Name: Judge Nicol Date: 27th August 2020 Appendix of relevant legislation Housing Act 2004 Section 55 Licensing of HMOs to which this Part applies(1) This Part provides for HMOs to be licensed by local housing authorities where– (a) they are HMOs to which this Part applies (see subsection (2)), and (b) they are required to be licensed under this Part (see section 61(1)).(2) This Part applies to the following HMOs in the case of each local housing authority– (a) any HMO in the authority's district which falls within any prescribed description of HMO, and (b) if an area is for the time being designated by the authority under section 56 as subject to additional licensing, any HMO in that area which falls within any description of HMO specified in the designation.(3) The appropriate national authority may by order prescribe descriptions of HMOs for the purposes of subsection (2)(a).(4) The power conferred by subsection (3) may be exercised in such a way that this Part applies to all HMOs in the district of a local housing authority.(5) Every local housing authority have the following general duties– (a) to make such arrangements as are necessary to secure the effective implementation in their district of the licensing regime provided for by this Part; (b) to ensure that all applications for licences and other issues falling to be determined by them under this Part are determined within a reasonable time; and (c) to satisfy themselves, as soon as is reasonably practicable, that there are no Part 1 functions that ought to be exercised by them in relation to the premises in respect of which such applications are made.(6) For the purposes of subsection (5)(c)– (a) “Part 1 function” means any duty under section 5 to take any course of action to which that section applies or any power to take any course of action to which section 7 applies; and (b) the authority may take such steps as they consider appropriate (whether or not involving an inspection) to comply with their duty under subsection (5)(c) in relation to each of the premises in question, but they must in any event comply with it within the period of 5 years beginning with the date of the application for a licence. Section 56 Designation of areas subject to additional licensing (1) A local housing authority may designate either– (a) the area of their district, or (b) an area in their district, as subject to additional licensing in relation to a description of HMOs specified in the designation, if the requirements of this section are met. (2) The authority must consider that a significant proportion of the HMOs of that description in the area are being managed sufficiently ineffectively as to give rise, or to be likely to give rise, to one or more particular problems either for those occupying the HMOs or for members of the public. (3) Before making a designation the authority must– (a) take reasonable steps to consult persons who are likely to be affected by the designation; and (b) consider any representations made in accordance with the consultation and not withdrawn. (4) The power to make a designation under this section may be exercised in such a way that this Part applies to all HMOs in the area in question. (5) In forming an opinion as to the matter mentioned in subsection (2), the authority must have regard to any information regarding the extent to which any codes of practice approved under section 233 have been complied with by persons managing HMOs in the area in question. (6) Section 57 applies for the purposes of this section. Section 61 Requirement for HMOs to be licensed (1) Every HMO to which this Part applies must be licensed under this Part unless– (a) a temporary exemption notice is in force in relation to it under section 62, or (b) an interim or final management order is in force in relation to it under Chapter 1 of Part 4. (2) A licence under this Part is a licence authorising occupation of the house concerned by not more than a maximum number of households or persons specified in the licence. (3) Sections 63 to 67 deal with applications for licences, the granting or refusal of licences and the imposition of licence conditions. (4) The local housing authority must take all reasonable steps to secure that applications for licences are made to them in respect of HMOs in their area which are required to be licensed under this Part but are not. (5) The appropriate national authority may by regulations provide for– (a) any provision of this Part, or (b) section 263 (in its operation for the purposes of any such provision), to have effect in relation to a section 257 HMO with such modifications as are prescribed by the regulations. A “section 257 HMO” is an HMO which is a converted block of flats to which section 257 applies. (6) In this Part (unless the context otherwise requires)– (a) references to a licence are to a licence under this Part, (b) references to a licence holder are to be read accordingly, and (c) references to an HMO being (or not being) licensed under this Part are to its being (or not being) an HMO in respect of which a licence is in force under this Part. Section 72 Offences in relation to licensing of HMOs (1) A person commits an offence if he is a person having control of or managing an HMO which is required to be licensed under this Part (see section 61(1)) but is not so licensed. (2) A person commits an offence if– (a) he is a person having control of or managing an HMO which is licensed under this Part, (b) he knowingly permits another person to occupy the house, and (c) the other person's occupation results in the house being occupied by more households or persons than is authorised by the licence. (3) A person commits an offence if– (a) he is a licence holder or a person on whom restrictions or obligations under a licence are imposed in accordance with section 67(5), and (b) he fails to comply with any condition of the licence. (2) In proceedings against a person for an offence under subsection (1) it is a defence that, at the material time– (a) a notification had been duly given in respect of the house under section 62(1), or (b) an application for a licence had been duly made in respect of the house under section 63, and that notification or application was still effective (see subsection (8)). (3) In proceedings against a person for an offence under subsection (1), (2) or (3) it is a defence that he had a reasonable excuse– (a) for having control of or managing the house in the circumstances mentioned in subsection (1), or (b) for permitting the person to occupy the house, or (c) for failing to comply with the condition, as the case may be. (4) A person who commits an offence under subsection (1) or (2) is liable on summary conviction to a fine. (1) A person who commits an offence under subsection (3) is liable on summary conviction to a fine not exceeding level 5 on the standard scale. (7A) See also section 249A (financial penalties as alternative to prosecution for certain housing offences in England). (7B) If a local housing authority has imposed a financial penalty on a person under section 249A in respect of conduct amounting to an offence under this section the person may not be convicted of an offence under this section in respect of the conduct. (2) For the purposes of subsection (4) a notification or application is “effective” at a particular time if at that time it has not been withdrawn, and either– (a) the authority have not decided whether to serve a temporary exemption notice, or (as the case may be) grant a licence, in pursuance of the notification or application, or (b) if they have decided not to do so, one of the conditions set out in subsection (9) is met. (3) The conditions are– (a) that the period for appealing against the decision of the authority not to serve or grant such a notice or licence (or against any relevant decision of the appropriate tribunal) has not expired, or (b) that an appeal has been brought against the authority's decision (or against any relevant decision of such a tribunal) and the appeal has not been determined or withdrawn. (4) In subsection (9) “relevant decision” means a decision which is given on an appeal to the tribunal and confirms the authority's decision (with or without variation). Section 254 Meaning of “house in multiple occupation” (1) For the purposes of this Act a building or a part of a building is a “house in multiple occupation” if– (g) it meets the conditions in subsection (2) (“the standard test”); (h) it meets the conditions in subsection (3) (“the self-contained flat test”); (i) it meets the conditions in subsection (4) (“the converted building test”); (j) an HMO declaration is in force in respect of it under section 255; or (k) it is a converted block of flats to which section 257 applies. (2) A building or a part of a building meets the standard test if– (a) it consists of one or more units of living accommodation not consisting of a self-contained flat or flats; (b) the living accommodation is occupied by persons who do not form a single household (see section 258); (c) the living accommodation is occupied by those persons as their only or main residence or they are to be treated as so occupying it (see section 259); (d) their occupation of the living accommodation constitutes the only use of that accommodation; (e) rents are payable or other consideration is to be provided in respect of at least one of those persons' occupation of the living accommodation; and (f) two or more of the households who occupy the living accommodation share one or more basic amenities or the living accommodation is lacking in one or more basic amenities. (3) A part of a building meets the self-contained flat test if– (a) it consists of a self-contained flat; and (b) paragraphs (b) to (f) of subsection (2) apply (reading references to the living accommodation concerned as references to the flat). (4) A building or a part of a building meets the converted building test if– (a) it is a converted building; (b) it contains one or more units of living accommodation that do not consist of a self-contained flat or flats (whether or not it also contains any such flat or flats); (c) the living accommodation is occupied by persons who do not form a single household (see section 258); (d) the living accommodation is occupied by those persons as their only or main residence or they are to be treated as so occupying it (see section 259); (e) their occupation of the living accommodation constitutes the only use of that accommodation; and (f) rents are payable or other consideration is to be provided in respect of at least one of those persons' occupation of the living accommodation. (5) But for any purposes of this Act (other than those of Part 1) a building or part of a building within subsection (1) is not a house in multiple occupation if it is listed in Schedule 14. (6) The appropriate national authority may by regulations– (a) make such amendments of this section and sections 255 to 259 as the authority considers appropriate with a view to securing that any building or part of a building of a description specified in the regulations is or is not to be a house in multiple occupation for any specified purposes of this Act; (b) provide for such amendments to have effect also for the purposes of definitions in other enactments that operate by reference to this Act; (c) make such consequential amendments of any provision of this Act, or any other enactment, as the authority considers appropriate.(7) Regulations under subsection (6) may frame any description by reference to any matters or circumstances whatever.(8) In this section– “basic amenities” means– (a) a toilet, (b) personal washing facilities, or (c) cooking facilities; “converted building” means a building or part of a building consisting of living accommodation in which one or more units of such accommodation have been created since the building or part was constructed; “enactment” includes an enactment comprised in subordinate legislation (within the meaning of the Interpretation Act 1978 (c. 30); “self-contained flat” means a separate set of premises (whether or not on the same floor)– (a) which forms part of a building; (b) either the whole or a material part of which lies above or below some other part of the building; and (c) in which all three basic amenities are available for the exclusive use of its occupants. Housing and Planning Act 2016 Chapter 4 RENT REPAYMENT ORDERS Section 40 Introduction and key definitions (1) This Chapter confers power on the First-tier Tribunal to make a rent repayment order where a landlord has committed an offence to which this Chapter applies. (2) A rent repayment order is an order requiring the landlord under a tenancy of housing in England to— (a) repay an amount of rent paid by a tenant, or (b) pay a local housing authority an amount in respect of a relevant award of universal credit paid (to any person) in respect of rent under the tenancy. (3) A reference to “an offence to which this Chapter applies” is to an offence, of a description specified in the table, that is committed by a landlord in relation to housing in England let by that landlord. Act section general description of offence 1 Criminal Law Act 1977 section 6(1) violence for securing entry 2 Protection from Eviction Act 1977 section 1(2), (3) or (3A) eviction or harassment of occupiers 3 Housing Act 2004 section 30(1) failure to comply with improvement notice 4 section 32(1) failure to comply with prohibition order etc 5 section 72(1) control or management of unlicensed HMO 6 section 95(1) control or management of unlicensed house 7 This Act section 21 breach of banning order (4) For the purposes of subsection (3), an offence under section 30(1) or 32(1) of the Housing Act 2004 is committed in relation to housing in England let by a landlord only if the improvement notice or prohibition order mentioned in that section was given in respect of a hazard on the premises let by the landlord (as opposed, for example, to common parts). Section 41 Application for rent repayment order (1) A tenant or a local housing authority may apply to the First-tier Tribunal for a rent repayment order against a person who has committed an offence to which this Chapter applies. (2) A tenant may apply for a rent repayment order only if — (a) the offence relates to housing that, at the time of the offence, was let to the tenant, and (b) the offence was committed in the period of 12 months ending with the day on which the application is made. (3) A local housing authority may apply for a rent repayment order only if— (a) the offence relates to housing in the authority's area, and (b) the authority has complied with section 42. (4) In deciding whether to apply for a rent repayment order a local housing authority must have regard to any guidance given by the Secretary of State. Section 43 Making of rent repayment order (1) The First-tier Tribunal may make a rent repayment order if satisfied, beyond reasonable doubt, that a landlord has committed an offence to which this Chapter applies (whether or not the landlord has been convicted). (2) A rent repayment order under this section may be made only on an application under section 41. (3) The amount of a rent repayment order under this section is to be determined in accordance with— (a) section 44 (where the application is made by a tenant); (b) section 45 (where the application is made by a local housing authority); (c) section 46 (in certain cases where the landlord has been convicted etc). Section 44 Amount of order: tenants (1) Where the First-tier Tribunal decides to make a rent repayment order under section 43 in favour of a tenant, the amount is to be determined in accordance with this section. (2) The amount must relate to rent paid during the period mentioned in the table. If the order is made on the ground that the landlord has committed the amount must relate to rent paid by the tenant in respect of an offence mentioned in row 1 or 2 of the table in section 40(3) the period of 12 months ending with the date of the offence an offence mentioned in row 3, 4, 5, 6 or 7 of the table in section 40(3) a period, not exceeding 12 months, during which the landlord was committing the offence (3) The amount that the landlord may be required to repay in respect of a period must not exceed— (a) the rent paid in respect of that period, less (b) any relevant award of universal credit paid (to any person) in respect of rent under the tenancy during that period. (4) In determining the amount the tribunal must, in particular, take into account— (a) the conduct of the landlord and the tenant, (b) the financial circumstances of the landlord, and (c) whether the landlord has at any time been convicted of an offence to which this Chapter applies.