32 Sugar House 99 Leman Street London E1 8GH LON/00BG/HMG/2023/0006
FIRST-TIER TRIBUNAL
PROPERTY CHAMBER (RESIDENTIAL PROPERTY)
Case No LON/00BG/HMG/2023/0006
Between
Mr T AdamczewskiApplicantMrs A Balkan (previously Ilkates)Respondent
Before
Judge PittawayMs S Coughlin MCIEHIn person for the ApplicantMr Hart of Freemans solicitors Application for a Rent Repayment Order by tenants for the RespondentDate 22 October 2024Hearing 2024-10-16Property: 8GHType of application: Sections 40, 41, 42, 43 and 45 Housing and Planning Act 2016. Judge Pittaway
DECISION
[1]The Tribunal finds that the Respondent committed an offence under section 95(1) of the Housing Act 2004 without reasonable excuse.[2]The Tribunal makes a Rent Repayment Order in favour of the Applicant in the sum of £5,004.10.[3]The Tribunal orders the reimbursement of the application and hearing fees, a total of £320.[4]The reasons for the Tribunal’s decisions are given below. The Hearing[5]The form of remote video hearing was V:CVPREMOTE.[6]Mr Adamczewski represented himself at the Hearing. Mr Hart of Freemans solicitors represented Mrs Balkan.[7]Ms Balkan lives in Turkey and the Tribunal had been advised that she would not be giving evidence. In fact Mrs Balkan flew to England to join the hearing, at which she was accompanied by her daughter, Ms Naz Gurses. On being advised that her daughter was there to assist her the Tribunal enquired of Mr Hart as to whether this was due to difficulties with understanding and communicating in English. It was advised that she did not need an interpreter, only assistance with technical language.[8]The Tribunal had before it an applicant’s bundle, 374 pages. It contained a statement of case by the applicant but no separate witness statement. With the agreement of Mr Hart the Tribunal treated the statement of case as a witness statement to the extent it contained statements of fact. The Tribunal also had a respondent’s bundle of 245 pages. The witness statements of Mrs Balkan and Mr Fraser in the bundle were undated and referred to Exhibits but without numbering them. The Tribunal were advised of the dates each statement had been signed, 31 July 2023 and 2 August 2023 respectively. At the Tribunal’s request signed copies of the statements with the Appendices numbered were provided to the Tribunal immediately after the Hearing.[9]During the hearing the Tribunal received, by email, a skeleton argument sent earlier in the day by Mr Hart, who had copied it to the applicant. This referred to two recent Upper Tribunal decisions Newell V Abbott and Okrojek [2024] UKUT 181 (LC) (’Newell’); and Daff v Gyalui and Aiach-Kohen [2023] UKUT 134 (LC) (‘Daff’) Mr Adamczewski confirmed that he did not need time after the hearing to consider these cases. He would rely on the Tribunal’s assessment of them.[10]The Tribunal heard evidence from Mr Adamczewski, from Mr Fraser of Fraser & Co, the agents who let and managed the letting of the property for the respondent, and from Mrs Balkan. The Tribunal heard submissions from Mr Hart and Mr Adamczewski. The background[11]The tribunal received an application from the Applicant on 6 March 2023 under section 41 of the Housing and Planning Act 2016 (“the 2016 Act”) for a rent repayment order in the sum of £15,163.90 in respect of 32 Sugar House 99 Leman Street London E1 8GH (‘the Property’). The period in respect of which the application was made was 25 March 2021 to 7 March 2022. The amount of rent sought was calculated on a daily basis bases on a monthly rent of £1,330 per month.[12]The ground for making the application was that the respondent had failed to licence the Property, which required a licence under s95(1) Housing Act 2004 (the ‘2004 Act’). The Property[13]The Property is described in the application as a one bedroom flat on the fourth floor of the building.[14]No party requested an inspection and the tribunal did not consider that one was necessary.[15]Mrs Balkan is the registered proprietor of a long lease of the Property, having bought it (according to the official copy entries in the Applicant’s bundle) in 2009.[16]Mrs Balkan (in her previous name Altingul Ilkates) let the Property to Mr Adamczewski under an AST dated 24 March 2021 for an initial term of twelve months commencing on 25 March 2021. Mr Adamczewski remained in occupation until 24 January 2023 following service on him of a notice under section 21 Housing Act 1988 requiring him to give up possession on 12 February 2023. The Selective Licence[17]The relevant local housing authority is the London Borough of Tower Hamlets. Its Selective Licensing Scheme applies to all privately rented properties in the Council ward areas of Weavers, Whitechapel, Spitalfields and Banglatown, excluding those which require an Additional or Mandatory HMO. The Property is in the Whitechapel ward. The original Selective Licensing Scheme ran from ! October 2016 to 1 October 2021. It was renewed from 1 October 2021 to run to 1 October 2026. Issues[18]The respondent having agreed that an offence had been committed under section 95(1) of the Housing Act 2004 (the ‘2004 Act’) (controlling or managing an unlicensed house which is required to be licensed) the issues before the Tribunal to determine were;• During the period in which the offence was committed did the Respondent have a defence to the commission of the offence under section 95(4) of the 2004 Act?• If an offence has been committed the maximum amount of RRO that can be ordered under section 44(3) of the 2016 Act.• Whether the Respondent had been responsible for the cost of any utilities at the Property• The severity of the offence• Any relevant conduct of the landlord, the landlord’s financial circumstances, whether the landlord has any previous conviction of a relevant offence, and the conduct of the tenants to which the Tribunal should have regard in exercising its discretion as to the amount of the RRO. The Tribunal’s decision and reasons[19]The Tribunal reached its decision after considering the witnesses’ oral and written evidence, including documents referred to in that evidence, and taking into account its assessment of the evidence, having regard to the time at which the evidence was first raised or produced. The Tribunal has also had regard to the submissions made by the parties and legal authorities to which they referred.[20]As appropriate, and where relevant to the tribunal’s decision, these are referred to in the reasons for the tribunal’s decision.[21]This determination does not refer to every matter raised by the parties, or every document the Tribunal reviewed or took into account in reaching its decision. However, this doesn't imply that any points raised or documents not specifically mentioned were disregarded. If a point or document was referred to in the evidence or submissions that was relevant to a specific issue, it was considered by the Tribunal.[22]The relevant legal provisions are set out in the Appendix to this decision Defence under section 95(4) Housing Act 2004[23]A landlord may rely on a defence of reasonable excuse under section 95(4) of the 2004 Act.[24]Mr Hart submitted that Mrs Balkan’s ignorance of the need for a selective licence was a reasonable excuse. Mrs Balkan has resided permanently in Turkey since 2010 and had instructed an agent, Fraser & Co to let and manage the flat. Mr Hart submitted that Mrs Balkan would have licenced the Property had she been aware of the need to do so. Mrs Balkan suffered from lung cancer, which led to her having an operation in March 2020, and then having to recover in isolation because of COVID19. This impacted on her ability to research and become aware of the licensing requirements for the Property.[25]Mr Hart submitted that the application to licence the property had been made expeditiously once Mrs Balkan had been made aware of the need for it to be licenced.[26]The Tribunal heard evidence from Mr Fraser that he had joined his brother’s company Fraser & Co at the end of 2021 to advise on licensing. This had resulted in an email being sent to Mrs Balkan as to the need to apply for a selective licence on 26 October 2021. Mrs Balkan had instructed Fraser and Co to apply for a licence on her behalf by email on 3 November. The application was made on 8 March 2022. Mr Fraser was unable to assist the Tribunal as to why it took so long to make the application.[27]Mr Adamczewski submitted that Mrs Balkan had let the Property for some time without a licence, referring the Tribunal to the agreement between Mrs Balkan and Fraser & Co in the respondent’s bundle which showed that it had been appointed as her letting agent in 2018. Mr Adamczewski acknowledged Mrs Balkan’s illness, but submitted that the selective licensing scheme had been introduced in 2016, and Mrs Balkan was not hospitalised until 2020, so that there had been a period before her hospitalisation and COVID19 in which she could have established the need for a licence.[28]The Tribunal finds that Mrs Balkan had let the flat prior to the letting to Mr Adamczewski. Mrs Balkan gave confused evidence as to whether she had rented the flat before it was rented to Mr Adamczewski. The Tribunal has had regard to the fact that the letting agreement with Fraser & Co was entered into in 2018. It has also had regard to the e mail from Anisah Afzal of Fraser & Co in the respondent’s bundle of 9 February 2022 which refers to the flat having previously been let at £500 per week.[29]Mr Hart referred the Upper Tribunal to the decision in Daff as being relevant because the appellant landlady in that case had had health issues. The Tribunal does not find that case to be relevant as to the effect of ill health as a reasonable excuse. In that case the First-tier Property Tribunal found that Ms Daff had no reasonable excuse for failing to obtain a licence and that part of its decision was not appealed.[30]Mr Adamczewski submitted that the application to licence the property was not made until Mrs Balkan, acting through her agent, had decided to serve on him a notice requiring possession under section 21 Housing Act 1988. Such a notice would not have been valid if the property did not have a licence. He referred the Tribunal to the chronology of events which showed that the s21 Notice was served within a month of the licence being granted.[31]The agreement with Fraser & Co makes it clear that the responsibility for applying for a licence is Mrs Balkan’s, not her agent’s. Once Mrs Balkan knew of the need for a licence there was a delay of over four months before it was submitted, and no cogent explanation for this delay has been provided to the Tribunal.[32]At paragraph 18 of Newell Judge Rodger approved that the First-tier Property Tribunal in that case had said that it was incumbent on landlords to familiarise themselves with relevant legal requirements. On the evidence before it the Tribunal finds that Mrs Balkan had not done so, even before her ill-health.[33]The Tribunal therefore finds that Mrs Balkan may not rely upon the defence of reasonable excuse, however the position in which she found herself is considered by the Tribunal as relevant to the factors considered by the Tribunal below in determining the amount of the RRO. Amount of the RRO[34]In its decision in Acheampong v Roman and others [2022] UKUT 239 (LC) (‘Acheampong’), the Upper Tribunal recommended a four-stage approach to determining the amount to be repaid, which may be summarised as follows(a) ascertain the whole of the rent for the relevant period;(b) subtract any element of that sum that represents payment by the landlord for utilities that only benefited the tenant;(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; and(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).[35]The Tribunal have adopted the approach recommended in Acheampong.[36]The Applicant is seeking repayment of the totality of the rent he paid during the period in which the offence was committed. There is no dispute as to the relevant period. It is accepted by Mr Adamczewski that an application for a licence had been made on 8 March 2022. The appellant has calculated the rent for this period to be £15,163.90 and this calculation has not been challenged by the respondent.[37]The AST in the applicant’s bundle confirms that it was Mr Adamczewski who paid for all the utilities at the property, including water. The Tribunal therefore finds that there are no deductions to be paid for utilities that only benefitted the tenant.[38]Mr Adamczewski referred the Tribunal to the statement in Acheampong that relative seriousness can be seen from the relevant maximum sentences on conviction for the various offences for which a RRO may be ordered. He submitted that this showed that failure to obtain a selective licence was less serious than those offences carry the possibility of imprisonment, but submitted that it was not of assistance otherwise. Mr Adamczewski also referred the Tribunal to a statement by Judge Cooke in Hancher v David & ORS [2022] UKUT 277 (LC) that an offence under s72(1) is not one of the more serious of the offences for which an RRO can be made, and submitted that this was likely also to apply to offences under s95(1).[39]The Tribunal finds that the offence of failing to obtain a selective licence is not of the most serious type of offence for which a RRO may be sought. As to the seriousness of the failure to obtain the selective licence in this case the Tribunal considers this below, in the context of section 44(4) of the 2016 Act.[40]Section 44(4) provides that in determining the amount of the RRO there are various factors which the Tribunal should take into account, namely the conduct of the landlord and the tenant, the financial circumstances of the landlord and whether the landlord has at any time been convicted of an offence to which that Chapter of the 2016 Act applies.[41]Insofar as section 44(4) of the 2016 Act is concerned Mr Hart submitted the respondent was not seeking any reduction in any order by reason of her financial circumstances. Mr Hart also submitted that that the respondent had no previous convictions of offences under the Chapter of the 2016 Act.[42]As to the conduct of the landlord the Tribunal heard evidence from Mr Adamczewski as to failure by the landlord to keep the flat in repair, failure to provide an electrical safety report, failure to disclose her actual address, and attempted deductions from the deposit. Mr Adamczewski also referred to the timing of the application for a licence being dictated by the wish to obtain possession of the flat from him when he did not agree to an increase in the rent, rather than being prompted by the realisation that a licence was required.[43]On the evidence before it Tribunal finds that there was no explanation for Fraser & Co not having applied for the licence in November 2021 as soon as it was asked to by Mrs Balkan.[44]As to the conduct of the tenant the Tribunal heard some limited evidence that the tenant may have caused some damage to the flat beyond normal wear and tear.[45]In considering the conduct of both parties the Tribunal has had regard to Judge Rodger’s comment at paragraph 61 of Newell, that section 44(4) should not be taken, ‘as an invitation to landlords and tenants to identify every possible example of less than perfect behaviour to add to the tribunal scales in the hope of increasing or reducing the penalty.’ Judge Rodger continued, ‘The focus should be on conduct with serious or potentially serious consequences in keeping with the objectives of the legislation’, which he identified as being to punish and deter criminal behaviour. In that case Judge Rodger approached the level of penalty without giving weight to the allegations of poor conduct on either side.[46]The Tribunal finds that it is appropriate in this case to adopt a similar approach. It notes that the repair of the leaking roof complained of by the tenant may not have been the responsibility of a leaseholder of the flat.[47]Mr Hart submitted that should the Tribunal not find that Mrs Balkan had a reasonable excuse to committing the offence the Tribunal should nonetheless exercise its discretion in making the RRO, asking the Tribunal to have regard to her living abroad, being ignorant of the licensing requirements, the speed with which she applied for a licence once she knew it was required and her ill-health as mitigating factors. Mr Hart submitted that the Tribunal should have regard to the fact that the Council had had no issue with the state of the flat. He also submitted that the tenant had remained at the property until January 2023.[48]Mr Hart referred the Tribunal to the decisions in Hallett v Parker [2022] UKUT 165 (LC) (’Hallett’) and Daff and submitted that an appropriate RRO would be between the award made in Daff of 9% and that in Hallett of 25% of the rent paid during the relevant period.[49]In support of his claim for repayment of the whole rent Mr Adamczewski referred the Tribunal to the decisions in Vadamalayan v Stewart [2020] UKUT 0183 (LC) and Chan v Bilkhu & Anor [2020] UKUT 0289 (LC) where Judge Cooke indicated that licensing offences can attract 100% awards.[50]In reaching its decision in this case the Tribunal has had regard to the approach adopted by Martin Rodger KC, the Deputy Chamber President of the Upper Tribunal in Newell. In that case he undertook a review of orders made by the Upper Tribunal to promote consistent decision making, while acknowledging that each case is different and in each case the decision maker must exercise their own discretion.[51]The Tribunal does not find it appropriate to make an award of 100%, as submitted by Mr Adamczewski. At paragraph 57 of Newell Judge Rodger concluded that his review of recent decisions in appeals involving licensing offences illustrated that the level of rent repayment orders varies widely depending on the circumstances of the case. Awards of up to 85% or 90% of the rent paid (net of services) are not unknown but are not the norm. Factors which have tended to result in higher penalties include that the offence was committed deliberately, or by a commercial landlord or an individual with a larger property portfolio, or where tenants have been exposed to poor or dangerous conditions which have been prolonged by the failure to licence.[52]The Tribunal finds that the factors referred to by Judge Rodger for higher penalties do not apply in this case. It finds that the offence was not deliberate, Mrs Balkan had one rented property, and there was no evidence before the Tribunal of the tenant being exposed to poor or dangerous conditions prolonged by the failure to licence.[53]Judge Rodger continued at paragraph 57 of Newell to set out that factors tending to justify lower penalties include inadvertence on the part of a smaller landlord, the property being in good condition such that a licence would have been granted without additional work being required, and mitigating factors which go some way to explaining the offence, without excusing it, such as the failure of a letting agent to warn of the need for a licence, or personal incapacity due to poor health.[54]The Tribunal finds in this case that the property was in a state of repair such that the licence was granted without additional work, and that there were mitigating factors that explained the offence, such as the failure of the agent to advise Mrs Balkan of the need for a licence until October 2021, that Mrs Balkan was resident abroad and that she was suffering from ill-health.[55]The Tribunal finds that Daff was decided on different facts, as the landlord’s financial circumstances were relevant to the amount of the order, and there is no evidence before this Tribunal as to Mrs Balkan’s financial circumstances.[56]The Tribunal considers the decision in Hallett to be helpful, but notes that in that case the landlord only failed to obtain a licence for seven months. Here the failure continued for a number of years.[57]At paragraph 62 of Newell Judge Rodger awarded a RRO of 60% of the rent received to reflect that the offence was committed by the landlord of a single property, that the offence was the result of inadvertence rather than being deliberate, that the accommodation was generally of a good standard which attracted long-term residents, stating that the award would have been 50% if the offence had been committed for a shorter period.[58]In addition to the factors outlined by Judge Rodger in Newell that resulted in an award of 60% of the rent the Tribunal in this case also needs to reflect the failure by the agent to advise Mrs Balkan of the need to licence the flat, that she lived abroad and was therefore less likely to be aware of the licensing conditions and that she was suffering from ill-health. There were letters in the bundle to substantiate her hospitalisation in 2020 and Mrs Balkan gave evidence that she had first become ill in 2017.[59]Having regard to the total rent for the relevant period, the seriousness of the offence and having regard to the mitigating factors set out to it on behalf of the respondent the Tribunal makes a Rent Repayment Order against the respondent in the sum of £5,004.10, being 33% of the rent paid for the relevant period.[60]The Tribunal would remind the parties that it does not have the power to order the payment of the RRO. It can only determine the amount of the RRO. Fees[61]The Applicant sought repayment of his application and hearing fees under Rule 13(2) of The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013.[62]The Tribunal finds it appropriate, in light of its decision to make an RRO, to order the reimbursement of the application and hearing fees, a total of £320. Name: Judge Pittaway Date: 22 October 2024 Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. 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. 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. 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. 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. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber). Appendix of Relevant Legislation Housing Act 2004 95 Offences in relation to licensing of houses under this Part(1) A person commits an offence if he is a person having control of or managing a house which is required to be licensed under this Part (see section 85(1)) but is not so licensed.(2) 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 90(6), and (b) he fails to comply with any condition of the licence.(3) 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 86(1), or (b) an application for a licence had been duly made in respect of the house under section 87, and that notification or application was still effective (see subsection (7)).(4) In proceedings against a person for an offence under subsection (1) or (2) 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 failing to comply with the condition, as the case may be. (7) For the purposes of subsection (3) a notification or application is “effective” at a particular time if at that time it has not been withdrawn, and either—[1](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[2](b) if they have decided not to do so, one of the conditions set out in subsection (8) is met. (8) The conditions are—[3](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[4](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. (9) In subsection (8) “relevant decision” means a decision which is given on an appeal to the tribunal and confirms the authority’s decision (with or without variation). 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. (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. 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); 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.