5 Conway Road, London N15 3SA LON/00AP/HMG/2024/0607

FIRST-TIER TRIBUNAL

PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case No LON/00AP/HMG/2024/0607

Between

(1) Brendan Hayes (2) Florence Katharine Eastoe (3) Jez Raphael Laurencin (4) Joe MorrisonApplicant

(1) Samuel Barnaby Yauner and (2) Kate Louise YaunerRespondent

Before

Tribunal Judge Prof R Percival

Mrs L Crane MCIEH

Ms Hoxha, Represent Law Ltd for the Applicant

In person Application for a rent repayment for the Respondent

Date 1 May 2025

Property: 5 Conway Road, London N15 3SA (1) Brendan Hayes (2) Florence Katharine Eastoe

Type of application: order by a tenant Tribunal Judge Prof R Percival

DECISION

[1]The Tribunal makes rent repayment orders against the First Respondent to each of the Applicants in the following sums, to be paid within 28 days: Mr Hayes: £1,837 Mr Laurencin: £1,837 Ms Eastoe: £1,462 Mr Morrison: £1,265

[2]The Tribunal orders under Tribunal Procedure (First-tier Tribunal)(Property Chamber) Rules 2013, rule 13(2) that the Respondent reimburse the Applicants together the application and hearing fees in respect of this application in the sum of £330. The application

[1]On 4 September 2024, the Tribunal received an application by the first Applicant under section 41 of the Housing and Planning Act 2016 (“the 2016 Act”) for Rent Repayment Orders (“RROs”) under Part 2, Chapter 4 of the Housing and Planning Act 2016. On 19 November 2024, the second, third and fourth Applicants were added to the application under Tribunal Procedure (First-tier Tribunal)(Property Chamber) Rules 2013 (“the 2013 Rules”), rule 10 (Judge Korn). Directions were given on 25 November 2024.

[2]In accordance with the directions, we were provided with an Applicant’s bundle of 372 pages, and a Respondent’s bundle of 211 pages. The hearing Introductory

[3]Ms Hoxha, Represent Law, represented the Applicants. All of the Applicants attended. Mr and Mrs Yauner appeared and represented themselves.

[4]The property is a four bedroom end of terrace house.

[5]The RRO application is in respect of the period from 31 January 2023 to 30 January 2024.

[6]Mr Hayes and Mr Laurencin occupied the property from 7 April 2018 – the beginning of a series of tenancies – until 31 January 2024. Ms Eastoe and Mr Morrison did so from 1 April 2023 until 30 January 2024. The alleged criminal offence

[7]The Applicants allege that the Respondent was guilty of the having control of, or managing, an unlicensed house in multiple occupation contrary to Housing Act 2004 (“the 2004 Act”), section 72(1). The offence is set out in Housing and Planning Act 2016, section 40(3), as one of the offences which, if committed, allows the Tribunal to make a rent repayment order under Part 2, chapter 4 of the 2016 Act.

[8]The Applicants case is that the property is situated within an additional licensing area as designated by the London Borough of Haringey (“the council”). The relevant scheme came into effect on 27 May 2019, and remained in force during the period of occupancy.

[9]The Respondents do not contest that the property was covered by the additional licensing scheme and that it was not licensed.

[10]The Respondents’ case was that they were non-professional landlords, having let their family home while temporarily relocating in order to secure a place at their preferred school for one of their children. They were unaware of the licensing requirements, and acted by inadvertence rather than wilfully evading regulatory requirements.

[11]The property had been let in 2018. Originally, the Respondents had engaged letting agents Rent Square, who found the original tenants, which included Mr Hayes and Mr Laurencin, and two others. The Respondents decided to manage the property themselves. The relevant additional licensing scheme was introduced after the letting agent provided them with standard form assured shorthold tenancies and gave them advice as to what was required of them in relation to the letting, such as providing gas safety certificates and an electrical installation condition report. The scheme was not brought to their attention and they were unaware of it.

[12]The lettings came to an end when one of Mr Yaunder’s two businesses went into liquidation, affecting his income, and, at the same time, the landlord of the house that they had been renting sought to end their tenancy agreement to sell that property. As a result, they needed to take possession of 5 Conway Road to live there themselves.

[13]We consider it appropriate to consider the Respondents’ case in relation to their knowledge of the additional licensing scheme as a claim that they had a reasonable excuse under section 72(5) of the 2004 Act.

[14]In Marigold v Wells

[2023] UKUT 33 (LC)

[2023] HLR 27

, the Upper Tribunal commended the approach to reasonable excuse set out in Perrin v HMRC UKUT 15 (TCC), a decision of the Upper Tribunal in the Tax and Chancery Chamber, and, to the extent relevant, adopted it in relation to the Land Chamber. Using and approving Perrin in the context of property management and licensing, the Upper Tribunal in Marigold found that “to be reasonable, an excuse must be objectively reasonable and that it was not enough that it was based on a genuine or honestly held belief”.

[15]The Upper Tribunal went on at paragraph [48] to commend the following guidance in Perrin (at paragraph [81]) as to the proper approach to consideration of a reasonable excuse defence: When considering a "reasonable excuse" defence, therefore, in our view the FTT can usefully approach matters in the following way:(1) First, establish what facts the taxpayer asserts give rise to a reasonable excuse (this may include the belief, acts or omissions of the taxpayer or any other person, the taxpayer's own experience or relevant attributes, the situation of the taxpayer at any relevant time and any other relevant external facts).

(2) Second, decide which of those facts are proven.

[3]Third, decide whether, viewed objectively, those proven facts do indeed amount to an objectively reasonable excuse for the default and the time when that objectively reasonable excuse ceased. In doing so, it should take into account the experience and other relevant attributes of the taxpayer and the situation in which the taxpayer found himself at the relevant time or times. It might assist the FTT, in this context, to ask itself the question "was what the taxpayer did (or omitted to do or believed) objectively reasonable for this taxpayer in those circumstances?

[16]We reject Ms Hoxha’s written submission that “ignorance of the law is not a defence”, as a blanket statement. At paragraph [49] of Marigold v Wells, the Upper Tribunal quoted paragraph [82] of Perrin, which rejected the “the much-cited aphorism ‘ignorance of the law is no excuse’”, and went on “[s]ome requirements of the law are well-known, simple and straightforward but others are much less so. It will be a matter of judgment for the FTT in each case whether it was objectively reasonable fo the particular taxpayer, in the circumstances of the case, to have been ignorant of the requirement in question, and for how long.”

[17]Insofar as there are factual issues in this case, we accept that the Respondents’ ignorance as to licensing requirements was genuine rather than a pretence motivated by a desire to evade the requirements.

[18]However, we do not consider that continuing to act on the basis of a state of ignorance provides an objectively reasonable excuse. It became clear in the hearing that they had assumed that nothing had changed since they had been represented by Rent Square, and that they had assumed that if there had been regulatory requirements beyond those relating to the tenancy agreement, they would have been brought to their attention by the agents. Their statement in their witness statement that “as non-professional landlords, we did not seek external professional advice” is itself unreasonable. It is precisely where a landlord is not professional that they should take whatever steps were necessary to inform themselves of their legal responsibilities. It was not objective reasonable, first, to rely on a letting agent to inform them of all their relevant obligations in the first place (we very much doubt whether a contract with a letting agent would include an obligation to provide comprehensive legal advice); and secondly, to assume that nothing changed in legal or regulatory requirements for six years.

[19]Accordingly, we find that they did commit the criminal offence. The amount of the RRO

[20]In considering the amount of an RRO, the Tribunal will take the approach set out in Acheampong v Roman and Others

[2022] UKUT 239 (LC)

at paragraph 20: “The following approach will ensure consistency with the authorities:(a) Ascertain the whole of the rent for the relevant period;

(b) Subtract any element of that sum that represents payment for utilities that only benefited the tenant, for example gas, electricity and internet access. …

(c) Consider how serious this offence was, both compared to other types of offence in respect of which a rent repayment order may be made … and compared to other examples of the same type of offence. What proportion of the rent (after deduction as above) is a fair reflection of the seriousness of this offence? That figure is then the starting point (in the sense that that term is used in criminal sentencing); it is the default penalty in the absence of any other factors but it may be higher or lower in light of the final step:

(d) Consider whether any deduction from, or addition to, that figure should be made in the light of the other factors set out in section 44(4).”

[21]We add that at stage (d), it is also appropriate to consider any other of the circumstances of the case that the Tribunal considers relevant.

[22]In respect of the relationship between stages (c) and (d), in Acheampong Judge Cooke went on to say at paragraph [21] “I would add that step (c) above is part of what is required under section 44(4)(a) [conduct of the parties]. It is an assessment of the conduct of the landlord specifically in the context of the offence itself; how badly has this landlord behaved in committing the offence? I have set it out as a separate step because it is the matter that has most frequently been overlooked.”

[23]As to stage (a), by sections 44(2) and (3) of the 2016 Act, the maximum possible RRO is the rent paid during a period of 12 months, minus any universal credit (or Housing Benefit – section 51) paid during that period.

[24]It was not contested that rent had been paid in the following sums: Mr Hayes and Mr Laurencin: £7,350 Ms Eastoe: £5,850 Mr Morrison: £5,062.50 None of the Applicants claimed any relevant benefit during the period.

[25]The Applicants paid for utilities, so there is nothing to be subtracted at stage (d)

[26]In assessing the seriousness starting point under stage (c), there are two axes of seriousness. The first is the seriousness of the offence, compared to the other offences specified in section 41 of the 2004 Act. The offence under section 72(1) is significantly less serious than those in rows 1, 2 and 7 in the table in section 40 of the 2016 Act, and we take that into account (see Ficcara v James

[2021] UKUT 38 (LC)

, paragraphs [32] and [50]: Hallet v Parker

[2022] UKUT 239 (LC)

, paragraph [30]; Daff v Gyalui

[2023] UKUT 134 (LC)

, paragraphs [48] to [49] and the discussion in Newell v Abbott and Okrojeck

[2024] UKUT 181 (LC)

, paragraphs [34] to [39]).

[27]We turn to the seriousness of the offence committed by the Respondents compared to other offences against section 72(1). We consider at the same time stage (d), the conduct of the parties and the Respondent’s financial circumstances.

[28]The Applicants made no complaints about the state or condition of the property or the services provided by the Respondents as landlords.

[29]More generally, neither party made any complaint about the conduct of the other party.

[30]The Respondents submitted that they had been good landlords. Repairs were dealt with quickly and efficiently, often by Mr Yaunder personally. The rent had stayed at the same level through out the lettings, resulting in a rent well below the market level at the end of the period. The Respondents had agreed an application by the Applicants to reduce the rent during the covid-19 lockdowns, and did so for a period of four months. The Respondents provided examples of praise from the Applicants for the property and the Respondents’ conduct as landlord in their bundle.

[31]While we reject Mr Yaunder’s submission that they were not acting “for reward” (they received rent by way of reward for the letting), we accept his evidence that their outgoings on the mortgage of the property plus their rent for the house in which they lived were well in excess of the rent paid by the Applicants.

[32]Insofar as the nature of the landlord is relevant to quantum (and we note the approach to the professional/non-professional binary distinction dealt with by the Deputy President in Daff v Gyalui

[2023] UKUT 134 (LC)

, at paragraph [52]), the Respondents were very clearly in the small scale, amateur category.

[33]The Respondents say in their statement of case that “a full RRO award would place an undue financial burden on” them. They did not, however, provide any documentary evidence to support this assertion. In oral evidence, they told us that their monthly mortgage payments were £1,660 per month. Using approximate figures from memory, the outstanding mortgage on the house was £320,000, and the property was probably worth about £750,000. Mr Yaunder’s annual income was £75,000. Mrs Yaunder’s was £48,000.

[34]The only aggravating feature urged by Ms Hoxha was that the offence had been committed for a considerable time – over four and a half years.

[35]Our conclusion is that the Respondents were very far from being “rogue landlords”. We accept that the letting itself was wholly satisfactory for all concerned, and that the Respondents conducted themselves well in all respects, save for not licensing the property.

[36]We accept the facts provided by the Respondents as to their financial circumstances (albeit without documentary support), but do not consider that, as stated, they significantly move the dial in terms of the quantum of the RRO we should order. Of course, any significant additional expense will be problematic for them, but their earnings are reasonable and they have substantial equity in the property.

[37]In assessing the quantum of the RROs at stages (c) and (d), we have taken account of the guidance provided by the Upper Tribunal, including particularly where the Upper Tribunal has substituted percentage reductions in making a redetermination. The key cases are set out in (with respect) a most helpful manner in the course of the re-determination in Newell v Abbott and Okrojeck

[2024] UKUT 181 (LC)

from paragraph [47] to [57]. We do not repeat that material here, but have been guided by it.

[38]This is clearly a case at the bottom end of the range of seriousness set out in Newell. We do not think it is as low as Daff v Gyalui

[2023] UKUT 134 (LC)

, where Ms Daff’s personal mitigation and financial circumstances played a substantial part in the Deputy President’s redetermination. Nonetheless, had it not been for the aggravating feature of the length of time that the offence was committed, we would have assessed it at lower than Hallett v Palmer

[2022] UKUT 165 (LC)

(25%). As it is, we consider we must give some recognition to the length of the offending. In Newell itself, the Deputy President added 10% to what would have been a 50% RRO on a similar basis. Taking an approximately proportionate approach to what would have been a 20% award, we make a final determination at 25%. Reimbursement of Tribunal fees

[39]The Applicant applied for the reimbursement of the application and hearing fees paid by the Applicants under Rule 13(2) of the Rules. In the light of our findings, we allow that application. Rights of appeal

[40]If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber) then a written application for permission must be made to the First-tier Tribunal at the London regional office.

[41]The application for permission to appeal must arrive at the office within 28 days after the Tribunal sends written reasons for the decision to the person making the application.

[42]If the application is not made within the 28 day time limit, the application must include a request for an extension of time and the reason for not complying with the 28 day time limit; the Tribunal will then look at these reason(s) and decide whether to allow the application for permission to appeal to proceed despite not being within the time limit.

[43]The application for permission to appeal must identify the decision of the Tribunal to which it relates, give the date, the property and the case number; state the grounds of appeal; and state the result the party making the application is seeking. Name: Tribunal Judge Professor Richard Percival Date: 1 May 2025 Appendix of Relevant Legislation Housing Act 2004 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. Housing and Planning Act 2016 40 Introduction and key definitions (1) This Chapter confers power on the First-tier Tribunal to make a rent repayment order where a landlord and 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 to 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). 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. 42 Notice of intended proceedings (1) Before applying for a rent repayment order a local housing authority must give the landlord a notice of intended proceedings. (2) A notice of intended proceedings must— (a) inform the landlord that the authority is proposing to apply for a rent repayment order and explain why, (b) state the amount that the authority seeks to recover, and (c) invite the landlord to make representations within a period specified in the notice of not less than 28 days (“the notice period”). (3) The authority must consider any representations made during the notice period. (4) The authority must wait until the notice period has ended before applying for a rent repayment order.

[5]A notice of intended proceedings may not be given after the end of the period of 12 months beginning with the day on which the landlord committed the offence to which it relates. 43 Making of a 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 had 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 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). 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 this 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 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, (c) whether the landlord has at any time been convicted of an offence to which this Chapter applies.