Alex VassalApplicantYasmin Vali Saleh (1) and Venessa Breuer (2)Respondent
Before
Anthony Harris LLM FRICS FCIArbRachael KershawMr A McClenahan of Justice for Tenants for the ApplicantRespondent 1 No appearance Ms Breuer in person Application for a Rent Repayment for the RespondentDate 27 April 2021Property: 11 Hickin Street, London, E14 3LWType of application: Order by Tenant Anthony Harris LLM FRICS FCIArb
DECISION
Covid-19 pandemic: description of hearing This has been a remote video hearing which has not been objected to by the parties. The form of remote hearing was V: CVPEREMOTE. A face-to-face hearing was not held because it was not practicable and all issues could be determined in a remote hearing. The Applicant has filed a Bundle of Documents which totals 102 pages and to which page references are made in this decision. No evidence was submitted by either Respondent apart from several bank statements from Respondent (2) which were submitted late. Decision of the Tribunal[1]The Tribunal makes a rent repayment order against the Respondents in the sum of £6750.00. This is to be paid by 25 May 2021.[2]The Tribunal determines that the Respondent shall also pay the Applicants £300 by 25 May 2021 in respect of the reimbursement of the tribunal fees paid by the Applicant. The Application[3]By an application, dated 28 April 2020, the Applicant seeks a Rent Repayment Order (“RRO”) against the Respondents pursuant to Part I of the Housing and Planning Act 2016 (“the 2016 Act”). Respondent(1) is the freeholder of 11 Hickin Street E14 3LW (“the House”) and Respondent(2) the Manager of the House.[4]On 20 October 2020, the Tribunal gave Directions. Pursuant to the Directions, the Applicant has filed a Bundle of Documents. By 6 January 2021, the Respondents were directed to file a Bundle of Documents upon which they relied in opposing the application. Neither Respondent has filed a bundle.[5]A hearing was set for 18 February 2021 which was postponed due to the illness of Respondent (2). The hearing was re-arranged for 26 April 2021. On 20 April 2021 a further request was made by the 2nd Respondent for a postponement until October 2021 on the grounds of pregnancy complications. This was refused by Judge Vance as the application was made only 2 clear days before a hearing which was listed on 22 March 2021, the application has already been adjourned once and no medical evidence accompanied the application.[6]The postponement request was renewed by email dated 22 April 2021 accompanied by a medical certificate. The tribunal determined that the hearing would not be postponed as it was made by one Respondent only, the application to the tribunal was made in April 2020 and neither Respondent had filed any evidence. Justice requires that the application be determined. The Hearing[7]Mr A McClenahan of Justice for Tenants appeared for the Applicant.[8]Mr Alex Vassall appeared at the hearing and gave evidence. We accept his evidence without hesitation.[9]Ms Saleh, the 1st Respondent, did not appear at the hearing. We are satisfied that she is aware of the application and has made an informed decision not to engage. Correspondence sent to her at her known addresses has not been returned as undelivered. The 2nd Respondent informed the tribunal that the 1st Respondent was aware of the proceedings.[10]The 2nd Respondent dialled into the hearing. In response to a question from the tribunal she stated she was helping the owner with the house. The Housing and Planning Act 2016 (“the 2016 Act”)[11]Section 40 provides (emphasis added): “(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.”[12]Section 40(3) lists seven offences “committed by a landlord in relation to housing in England let by that landlord”. These include the offence under section 72(1)) of the Housing Act 2004 (“the 2004 Act”) of control or management of an unlicenced HMO.[13]Section 41 deals with applications for RROs. The material parts provide: “(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.[14]Section 43 provides for the making of RROs (emphasis added): “(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).”[15]Section 44 is concerned with the amount payable under a RRO made in favour of tenants. By section 44(2) that amount “must relate to rent paid during the period mentioned” in a table which then follows. The table provides for repayment of rent paid by the tenant in respect of a maximum period of 12 months. Section 44(3) provides (emphasis added): “(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.[16]Section 44(4) provides (emphasis added): “(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.”[17]Section 56 is the definition section. This provides that “tenancy” includes a licence. The Housing Act 2004 (“the 2004 Act”)[18]Part 2 of the 2004 Act relates to the designation of areas subject to additional licensing of houses in multiple occupation (HMO). By section 56, a local housing authority (“LHA”) may designate the area of their district or an area of the district is subject to Additional Licensing in relation to the designated HMOs specified.[19]Section 72 specifies a number of offences in relation to the licencing of houses. The material parts provide (emphasis added): “(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. (4) 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[20]It is to be noted that this section does not use the word “landlord”. Section 263 defines the concepts of a person having “control” and/or “managing” premises. These definitions are wide enough to include a number of different people in respect of a property. Where there is a chain of landlords, more than one may be liable. It may also extend to a managing agent.[21]Section 263 provides (emphasis added): “(1) In this Act “person having control”, in relation to premises, means (unless the context otherwise requires) the person who receives the rack-rent of the premises (whether on his own account or as agent or trustee of another person), or who would so receive it if the premises were let at a rack-rent. (2) In subsection (1) “rack-rent” means a rent which is not less than two-thirds of the full net annual value of the premises. (3) In this Act “person managing” means, in relation to premises, the person who, being an owner or lessee of the premises–(a) receives (whether directly or through an agent or trustee) rents or other payments from– (i) in the case of a house in multiple occupation, persons who are in occupation as tenants or licensees of parts of the premises; and(b) would so receive those rents or other payments but for having entered into an arrangement (whether in pursuance of a court order or otherwise) with another person who is not an owner or lessee of the premises by virtue of which that other person receives the rents or other payments; and includes, where those rents or other payments are received through another person as agent or trustee, that other person.”[22]Section 263 was recently considered by Martin Rodger QC, the Deputy President, in Rakusen v Jepson and Others [2020] UKUT 298 (LC) (“Rakusen”). The situation is complex given the range of people, apart from the immediate landlord, who may be deemed to be persons “having control" and/or “managing” premises.[23]The Upper Tribunal (“UT”) noted that Section 263(1) is divided into two limbs: if a house is let at a rack rent the person having control is the person who receives the rack-rent; if the house is not let at a rack rent (for example because the only letting is at a ground rent) the person having control is the person who would receive the rack-rent if the premises were subject to a letting at a rack rent. The formula used in the definition has a considerable history going back at least to 1847 (as Lord Bridge of Harwich explained in Pollway Nominees Ltd v Croydon LBC [1987] 1 AC 79). The purpose of the definition is to identify the person (or group of persons who collectively have the relevant interest) who may be made subject to a statutory obligation to undertake work or make a contribution to the cost of public works.[24]In London Corporation v Cusack-Smith [1955] AC 337, Lord Reid considered a chain of leases and subleases where several were at a rack rent and was of the opinion that more than one person could be in receipt of a rack rent at one time. Where a house is let under a single tenancy at its full value, who then sublets the house either as a whole or as individual rooms to different sub-tenants, again at full value, both the superior landlord and the intermediate landlord will be in receipt of the rack rent of the premises and will satisfy the definition in section 263(1) of a person having control.[25]The status of “person managing” is more restrictive. The key qualification is the receipt of rent from the persons who are in occupation (whether directly or through an agent or trustee). Where a superior landlord lets a house to an intermediate landlord who then sublets to tenants or licensees in occupation, ordinarily only the intermediate landlord receives rent from those tenants or licensees. The superior landlord will receive rent from the intermediate landlord, who is not an agent or trustee for the superior landlord, so the superior landlord will not be a “person managing” for the purpose of section 263(3).[26]In Rakusen, the UT noted (at [59]) that the policy of the London Borough of Camden is that licences will not be granted to landlords holding less than a five year term (that being the usual duration of a licence) and that Camden considers the most appropriate person to be a licence holder in such situations to be the superior landlord. Similarly, when deciding on whom to serve an improvement notice, a LHA is likely to consider the practicality of the recipient being able to carry out the necessary remedial works. If the intermediate landlord has no significant repairing obligations and no right to carry out major repairs to the building, the LHA may well consider that the appropriate recipient of an improvement notice is the superior landlord.[27]In Rakusen, the Deputy President considered the purpose of the 2016 Act before summarising his conclusion: “64. Finally, I bear in mind that the policy of the whole of Part 2 of the 2016 Act is clearly to deter the commission of housing offences and to discourage the activities of “rogue landlords” in the residential sector by the imposition of stringent penalties. Despite its irregular status, an unlicensed HMO may be a perfectly satisfactory place to live, and the main object of the provisions is deterrence rather than compensation. The scope of the additional jurisdictions conferred on the FTT is defined by reference to the commission of specific offences, with the only qualification identified being that the person committing the offence must be a landlord. I can think of no policy reason why the objective of deterring such offences should extend only to immediate landlords and not to superior landlords. If such a limitation had been intended it could have been made clear, as it was in section 73(1), 2004 Act. The facts of this case are not unusual and the phenomenon of intermediate landlords taking relatively short leases of houses with few repairing responsibilities with a view to subletting them to occupational tenants is sufficiently commonplace to have acquired the recognised label “rent-to-rent”. The effectiveness of rent repayment orders would be considerably reduced if the “rogue landlords” whom the orders are intended to deter could protect themselves against the risk of rent repayment by letting to an intermediate while themselves retaining responsibility for licencing and for the condition of the accommodation.[65]The conclusion I have reached, therefore, is that the FTT does have jurisdiction to make a rent repayment order against any landlord who has committed an offence to which Chapter 4 applies, including a superior landlord. There is no additional requirement that the landlord be the immediate landlord of the tenant in whose favour the order is sought. That appears to me to be the natural meaning of the statute and is consistent with its legislative purpose. The only jurisdictional filter is that the landlord in question must have committed one of the relevant offences, and before an order may be made the FTT must be satisfied to the criminal standard of proof that that is the case. Although a narrower interpretation is possible it would involve reading the language as prescribing an additional condition which is not clearly stated, and which would detract from the simplicity and effectiveness of the statutory regime.” The Evidence[28]On 31 October 2018, the London Borough of Tower Hamlets introduced an Additional Licencing Scheme designating areas for Additional Licensing of Houses and Flats in Multiple Occupation which included the ward in which the House is situated. We are satisfied that the House required a licence under the Scheme as an HMO and that it was not so licensed.[29]On 16 April 2020, Yasmin Saleh was registered at the Land Registry as the freeholder of the House (p.31-34). The House is an end of terrace property with accommodation arranged over 3 floors with the top floor being in the roof void. The accommodation consists of ground floor entrance hall one room, kitchen. The 1st floor has 2 rooms and a bathroom and the top floor has one room and a bathroom.[30]The Applicant signed a tenancy agreement for a term of 6 months from 1 September 2019 until 29 February 2020. The landlord was named as Vanessa Breuer, the 2nd Respondent. The rent was to be £750 per month with a deposit of £750. The tenancy was extended in February 2021 to run on a month by month basis. The Applicant vacated in May 2020.[31]The Applicant gave evidence that room one on the ground floor was occupied by Adrian Hula who was already living there when the Applicant moved in and was still in occupation when he moved out.[32]Room 2 on the 1st floor was the other room on that floor apart from the room occupied by the Applicant. When he moved in it was occupied by Alicia Aknin who moved out at the end of February or beginning of March 2020 and was replaced by a lady called Sixtine at the beginning of March. She returned to France as the Covid lockdown started but retained tenancy of the room which contained some of her possessions but she did not resume occupation before the Applicant moved out.[33]The top floor, room 4 was occupied by Jack Lloyd throughout the Applicants tenancy.[34]This evidence was not disputed. Licensing Scheme[35]The Additional Licensing Scheme applies to all properties which are occupied by 3 or more persons, comprising 2 or more households. The tribunal is satisfied beyond reasonable doubt that the House comes within the scheme and was required to be licensed.[36]Correspondence with the local authority was submitted by the Applicant confirming that the property was not licensed. This again was not disputed.[37]The tribunal is satisfied, beyond reasonable doubt, that the House was an HMO, it was required to be licensed and was not licensed. The period of the offence[38]Under section 41(2)(a) of the Housing and Planning Act 2016 a tenant may apply for a rent repayment order if 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 was made.[39]The tribunal is satisfied that the offence was committed during the period of the tenant’s occupation commencing on 1 September 2019 which was within the period of 12 months ending on the day the application was made which was 28 April 2020. The relevant landlord[40]The definition of a landlord is discussed above under section 263 of the Housing Act and amplified by the decision of the Upper Tribunal in Rakusen v Jepson and Others [2020] UKUT 298 (LC). The tribunal is satisfied beyond reasonable doubt that the 1st Respondent is the freeholder of the property and therefore capable of being the landlord for the purposes of section 263.[41]In respect of the 2nd Respondent the tribunal notes that she is named as the landlord on the tenancy agreement and also a participant in an unsigned agreement relating to a cleaning arrangement. Ms Breuer also stated that she was “helping the landlord”. We also note from the evidence of the Applicant’s bank statements that rent payments were made to the 2nd Respondent. We are therefore satisfied beyond reasonable doubt that the 2nd Respondent also falls within the definition of a landlord. Repayment Order[42]The tribunal is satisfied that the conditions for the making of a Rent Repayment Order have been made out. Under section 44 of the 2016 Act the amount the landlord may be required to repay must not exceed the rent paid in that period. The tribunal must also take into account the conduct of the landlord and tenant and the financial circumstances of the landlord and whether the landlord has been convicted of an offence.[43]The tribunal has no evidence of a conviction.[44]The amount of rent paid in the relevant period is £6750.[45]No evidence has been submitted on behalf of the 1st Respondent relating to financial circumstances.[46]On behalf of the 2nd Respondent 5 bank statements were submitted which were said to show hardship. On behalf of the Applicant these were said to be a very limited selection from one bank account and not sufficient evidence to show financial difficulty. The tribunal agrees with the Applicant.[47]Additionally, the tribunal takes into account the correspondence between the 2nd Respondent and Tower Hamlets which sought to mislead the Council as to the status of the tenants.[48]The tribunal is satisfied there is no conduct on the part of the landlord or the financial circumstances of either Respondent justify a reduction in the level of rent to be repaid.[49]The tribunal finds no evidence of any conduct on behalf of the tenant which is relevant to this assessment. Our Determination[50]The Tribunal is satisfied beyond reasonable doubt that the Respondents have committed an offence under section 72(1) of the 2004 Act of control of an unlicenced HMO. The House was a property that required a licence under Tower Hamlet’s Additional Licencing Scheme. At no time during Mr Vassal’s period of occupation, was it so licenced.[51]We are further satisfied that both respondents were “persons having control” of the House as they received the rack-rent of the premises the Applicant.[52]The tribunal makes a rent repayment order in favour of the Applicant in the sum of £6750.00 by 25 May 2021.[53]We are also satisfied that the Respondents should refund to the Applicant the tribunal fees of £300 which he has paid in connection with this application by 25 May 2021. A Harris LLM FRICS FCIArb Valuer Chair 27 April 2021 RIGHTS OF APPEAL[1]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 Regional office which has been dealing with the case.[2]The application for permission to appeal must arrive at the Regional office within 28 days after the Tribunal sends written reasons for the decision to the person making the application.[3]If the application is not made within the 28-day time limit, such 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 such reason(s) and decide whether to allow the application for permission to appeal to proceed despite not being within the time limit.[4]The application for permission to appeal must identify the decision of the Tribunal to which it relates (i.e., 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.