21 Newton House, Abbey Road, London NW8 0AH: LON/00AG/HMF/2018/0028 LON/00AG/HMF/2018/0028

FIRST-TIER TRIBUNAL

PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case No LON/00AG/HMF/2018/0028

Between

Alice Markham, Alice Northcott The Estate of David AaronsApplicant

(Deceased) Chalk Farm Investments Limited Application for a Rent Repayment Order by Tenant – Sections 40, 41,Respondent

Before

Mr Peter Roberts Dip Arch RIBA

Mrs Jackie Hawkins

Date 26 March 2019

Property: London NW8 0AH Gregory Muller, Jack Revell,

Type of application: 43 & 44 of the Housing and Planning Act 2016 Judge Robert Latham

DECISION

(i) The Tribunal makes a rent repayment orders (‘RRO’) against the Estate of David Aarons (Deceased) in the sum of £4,159. The said sum is to be paid to the Applicant by 23 April 2019.

(ii) The Tribunal determines that the said Respondent shall also pay the Applicants £300 by 23 April 2019, in respect of the reimbursement of the tribunal fees paid by the Applicants. The Application

[1]On 1 October 2018, the Tribunal received an application under section 41 of the Housing and Planning Act 2016 (“the 2016 Act”) for RROs in respect of 21 Newton House, Abbey Road, London NW8 OAH. This is a four bedroom flat in a four storey block owned by the London Borough of Camden (“Camden”). Camden is also the local housing authority

[2]The application has been brought by the following tenants: Gregory Muller, Jack Revell, Alice Markham and Alice Northcott who occupied the flat as joint tenants pursuant to a tenancy agreement dated 1 October 2017 for a term of one year at a monthly rent of £2,101.66. The landlord is given as Chalk Farm Investments Limited. The tenants were obliged to pay the outgoings in respect of electricity, gas, water, and council tax, etc.

[3]On 1 November 2018, the Tribunal gave Directions. These set out the issues which the Tribunal would need to consider.

[4]The Tribunal was uncertain as to whether the correct Respondent was Mr Aarons or Chalk Farm Investments limited and joined the latter as a party. On 26 November, Mr Aarons filed a statement confirming that he is both the landlord and the long leaseholder of the flat. Chalk Farm Investments Limited is merely a management company owned and directed by Mr Aaron. He also filed a full response to the claim. He did not dispute the offence, but rather disputed the size of the RRO that is sought.

[5]On 8 January 2019, Mr Aarons died. The Executors are Mr Geoffrey Jayson and Mr Sean Williams. On 8 March, the Tribunal informed the Executors that the case would be determined on the papers in the week commencing 25 March. Our Determination

[6]The Tribunal is satisfied beyond reasonable doubt that the Respondent has committed an offence under section 72(1) of the 2004 Act. We are satisfied that:(i) On 8 December 2015, Camden introduced an additional licencing scheme for HMOs. Under this scheme all HMOs in the borough are required to be licenced.

(ii) The flat is an HMO falling within the definition falling within the “standard test” as defined by section 254(ii) of the 2004 Act. In particular: (a) it consists of four units of living accommodation not consisting of self-contained flats; (b) the living accommodation is occupied by persons who do not form a single household; (c) the living accommodation is occupied by the tenants as their only or main residence; (d) their occupation of the living accommodation constitutes the only use of that accommodation; (e) rents are payable in respect of the living accommodation; and (f) the households who occupy the living accommodation share the living room, kitchen, a bathroom and a toilet.

(iii) The Respondent has failed to licence the HMO as required by section 61(2) of the 2004 Act. This is an offence under section 72(1).

(iv) The offence was committed over the period of 1 October 2017 to 30 September 2018.

(v) The offence was committed in the period of 12 months ending on 1 October 2018, namely the date on which the application was made.

[7]The 2016 Act gives the Tribunal has a discretion as to whether to make a RRO, and if so, the amount of the order. Section 44 provides that the period of the RRO may not exceed a period of 12 months during which the landlord was committing the offence. The amount must not exceed the rent paid by the tenants during this period, less any award of universal credit paid to any of the tenants. All the Applicants confirmed that they were not in receipt of any state benefits and that they paid the rents from their earnings. The Applicants have paid rent totalling £25,200 during this period of 12 months.

[8]Section 44 of the 2016 Act, requires the Tribunal to take the following matters into account:(i) The conduct of the landlord: We consider this below.

(ii) The conduct of the tenants: There is no criticism of the conduct of the tenants.

(iii) The financial circumstances of the landlord: We consider this below.

(iv) Whether the landlord has at any time been convicted of an offence to which Chapter 4 of the 2016 Act applies, namely the offences specified in section 40: There is no relevant conviction.

[9]In determining the amount of any RRO, we have had regard to the guidance given by the Upper Tribunal in Parker v Waller

[2012] UKUT 301 (LC)

. This was a decision under the 2004 Act where the wording of section 74(6) is similar, but not identical, to the current provisions. The RRO provisions have a number of objectives:(i) to enable a penalty in the form of a civil sanction to be imposed in addition to the penalty payable for the criminal offence of operating an unlicensed HMO;

(ii) to help prevent a landlord from profiting from renting properties illegally; and

(iii) to resolve the problems arising from the withholding of rent by tenants. There is no presumption that the RRO should be for the total amount received by the landlord during the relevant period. The Tribunal should take an overall view of the circumstances in determining what amount would be reasonable. The circumstances in which the offence is committed is always likely to be material. A deliberate flouting of the requirement to register would merit a larger RRO than instances of inadvertence. A landlord who is engaged professionally in letting is likely to be dealt with more harshly than the non-professional landlord.

[10]It is common ground that the landlord received rent totalling £25,200 from these tenants. Mr Aarons paid out expenses totalling £8,563 in respect of:(i) interest on mortgage: £2,538;

(ii) Service Charges demanded by Camden: £1,615;

(iii) Maintenance costs: £2,520; and administration costs: £1,890. The net rent received is £16,637.

[11]Mr Aarons was a professional landlord in that he owns and lets a number of properties. He stated that he owned two HMO buildings in Camden, both of which were licensed. He was unaware that flats needed to be registered until Camden inspected the flat on 4 September 2018. He received a letter from Camden at the beginning of October notifying him that the flat need to be registered. He did not re-let the flat and promptly applied for it to be licensed. There are no aggravating features. The deposit was placed in a rent deposit scheme. There is no complaint of disrepair. The tenants renewed their tenancy after the initial period of one year.

[12]Taking all these factors into account, the tribunal makes a RRO in the sum of £4,159, namely 25% of the net rent received by Mr Aarons.

[13]The Tribunal furthers order that the Respondent should refund the tribunal fees of £300 paid by the Applicants pursuant to Rule 13(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013. Judge Robert Latham 26 March 2019