Agents find themselves in the firing line for Rent Repayment Order

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The two tenant applicants, Jenny Dos Santos and Margarita Gandara brought the case against property agents L Hub London. The hearing was held by way of a remote video hearing, the only practical solution at the time, not being objected to by the parties.

The Applicants and Respondent (managing agents) each filed a Bundle of Documents of supporting evidence, references to which are made in this tribunal’s decision.

Applicant 1, Ms Dos Santos sought a Rent Repayment Order (“RRO”) in the sum of £7,260 against the Respondents pursuant to Part I of the Housing and Planning Act 2016. The Respondent being the Manager of the tenanted property at 22 Durham Road E16.

Applicant 2, Ms Gandara also sought a Rent Repayment Order (“RRO”) in the sum of £7,800 against the Respondents.

The applicants sought the rent repayments under Part 2 of the 2004 Act which relates to the designation of areas subject to additional licensing of houses in multiple occupation* (HMO).

Under section 56, a local housing authority (“LHA”) may designate an area of their district to be subject to Additional Licensing in relation to designated HMOs specified.

The London Borough of Newham, where the property was situated, introduced an Additional Licencing Scheme designating areas for Additional Licensing of all Houses in Multiple Occupation. The scheme came into force on 1 January 2018 and runs until 31 December 2022.

The tribunal was satisfied that the House required a licence under the Scheme as an HMO. It was common ground, the tribunal noted, that the rental property in question was not licensed.

Section 72 of the Act specifies that a number of offences in relation to the licencing of houses may be committed where a person having “control of or managing” an HMO which is required to be licensed, but is not so licensed.

A key point noted by the tribunal was that the section does not use the word “landlord” and section 263 defines the concepts of a person having “control” and/or “managing” premises. These definitions the tribunal concluded 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.”

So in the tribunal’s interpretation of the 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.

The tribunal relied on a previous Court of Appeal judgement in Rakusen v Jepson and Others (22 July 2021), which reversed an Upper Tribunal decision, concluding that section 40(2)(a) only enables an RRO to be made against an immediate landlord and not a superior landlord, a decision which the tribunal said was binding on the tribunal and that it was not open to the tribunal to make an order against the freeholder.

An exchange of emails between the Respondent (managing agent) and the freeholder in July 2016 was put forward referring to the need for a licence for the property, but no clear decision as to how this was to be handled was arrived at between them, and the Respondent continued to manage the property.

The Tribunal’s Decision

The Tribunal concluded that it was satisfied beyond reasonable doubt that the Respondents had committed an offence under section 72(1) of the 2004 Act of control of an unlicensed HMO.

The property required a licence under Newham’s Additional Licencing Scheme and at no time during both Applicants’ period of occupation, was it licenced or an application for a licence made.

The tribunal was further satisfied that the Respondents (managing agents) were “persons having control” of the property as they received the rack-rent of the premises from the Applicants.

The tribunal made a rent repayment order in favour of the Applicant 1 in the sum of £7260 and in favour Applicant sin the sum of £7800. The tribunal also ordered the Respondents to refund to the

Applicants the tribunal fees of £300.

The case highlights the importance of the need for both landlords and managing agents to check regularly with their local authority about any changes to local licencing rules.

*The Housing Act 2004 introduced licensing for houses in multiple occupation (HMOs). Licensing is mandatory for all HMOs which have three or more storeys and are occupied by five or more persons forming two or more households. Additional HMO licensing schemes enable councils to require licencing of HMOs which are not covered by mandatory licensing, i.e., an HMO where at least 3 tenants live, forming more than 1 household.

**In modern usage, the term rack-rent is usually a rent that represents the full open market annual value of a holding, often simply called the market rent. Less frequently, a rack-rent may also be “the maximum rent permitted by law”, or in an earlier interpretation, an extortionate rent.

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Breathing Space scheme applications hit 17,000 three months after launch

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First figures for the government’s recently-introduced Breathing Space scheme which gives tenants greater protection from creditors including their landlords have been revealed.

Some 17,297 people registered for the scheme between May 4^th this year when it launched and the end of July, latest figures from The Insolvency service show.

For individuals, the Breathing Space scheme gives people legal protections from their creditors for 60 days, with most interest and penalty charges frozen, and enforcement action halted.

Those with mental health problems are given protection for the duration of their crisis treatment, plus another 30 days afterwards – although the latest data shows only 199 people took this up.

Rent arrears

The Insolvency Service figures do not separate out whether the Breathing Space scheme applicants included rent arrears in their agreements, but Shelter has said in the past that it is likely to be one of the key reasons.

This is because during the pandemic many tenants are likely to have prioritised paying off other debt such as payday loans, council tax arrears, gas and electricity arrears and personal loans or overdrafts, rather than rent while the eviction ban was in place.

The figures have been included in the government’s latest insolvency statistics which, despite the economic downturn during the pandemic, reveal that personal debt relief orders and bankruptcies have been climbing in recent months but are still lower than before the pandemic.

The Insolvency Service says this is not because people have been struggling less during Covid, but rather – it claims – that the government’s increased benefits and other financial support packages have been working.

As LandlordZONE reported in May HM Treasury warned tenants that the Breathing Space scheme was ‘not a rent payment holiday‘.

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The council that flouted policies to fine more landlords

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London Borough of Redbridge Council “secretly and informally” flouted its own policy in order to fine over 100 landlords in just six months.

Testimony from a senior officer in a 2019 court case reveals the council’s policy to try to resolve issues with landlords “informally” before issuing a fine was ignored “for a few weeks” that year.

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Splitting energy bills for tenants working from home?

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I’m posting this on behalf of an elderly landlord, who’s a friend. He owns a few 3-4 bed houses and rents it out by rooms to young professionals. All these years he has been splitting the monthly energy bills equally amongst the housemates

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Investigation reveals how landlord’s £5,000 licensing fine was quashed

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A landlord in London had a £5,000 fine for renting an unlicenced property quashed by a judge after a council officer admitted the borough’s enforcement team temporarily ignored its own guidelines, it has been reported.

Michael Labinso, who was looking after a property in Ilford on behalf of his mother, was caught up in an aggressive enforcement campaign by Redbridge council in NE London during 2018/2019 that sought to prosecute landlords operating properties without a licence, issuing 100 fines in six months.

Prior to that the council had always initially engaged with landlords to persuade them to licence their properties, and only moved to prosecution and a fine if their attempts to coax them into action were rebuffed.

But it has now come to light following an investigation by the area‘s local paper that for at least a fortnight the council abandoned this approach and moved directly to fines under its selective licensing scheme.

Deviated

During a 2019 court case the judge highlighted that the council had ‘deviated from its own policy’ and, although it was entitled to do so, this was not ‘appropriate or reasonable’ because due process had not been followed.

Court documents show that Labinso’s offence was at the ‘mildest end of the scale’ and that no other issues in relation to the property were discovered by the council.

Therefore, the court concluded, a £5,000 fine was disproportionate, and it was overturned.

The council has been approached for confirmation about whether other fines levied by it against landlords were initiated in this manner.

Read more about licensing fines reversals.

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Should we use Allotments?

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England’s allotments could provide space for over 600,000 new homes, according to the latest research by GetAgent.co.uk. The research found that there are an estimated 4,554 allotments across the nation containing roughly 177,606 plots, each at an average size of 250 square metres.

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Student rental yields bouncing back as undergraduates have returned

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Student rental yields are rebounding strongly from the pandemic as undergraduates have both returned to campuses and begun to fight over properties for next year’s academic year, latest research shows.

This follows the announcement last week by Universities UK that its members will ‘continue prioritising the health and safety of students while preparing for a much fuller in-person experience this year, and look forward to welcoming students in the autumn’.

Lettings platform Goodlord analysed 5,000 student tenancies processed by its platform during the first half of the year and found that rents, which had been slashed or non-existent during the worst months of Covid last year.

Greater London, the North East, North West, South East, South West and the West Midlands all recorded their highest average rents for the year-to-date for tenancies commencing in July 2021.

75% increase

And for example, the North East recorded an average rental price of £1,114 for a student tenancy during July 2021, up from £636 for those which began in March 2020 – an increase of 75%.

In the North West, July saw a new annual high of £1,552 recorded, up from the region’s year to date low of £707 in March – a 120% rise.

“July was one of the busiest months we’ve seen for the lettings market in quite some time – the Goodlord platform processed more tenancies than ever before. Rents are rising and voids are dipping, for both student properties and the wider market,” says Tom Mundy, its COO (pictured).

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Propertymark call for dedicated housing court in Commission consultation

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In a consultation by the Law Commission on areas of law that it intends to review, Propertymark has called for a dedicated housing court to guarantee fair, timely redress for tenants and landlords and safeguard investment in the private rented sector.

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LATEST: Landlords slam council over ‘keeping them in the dark’ about licensing plans

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A group fighting property licensing plans in one of London’s largest boroughs have claimed that its kept many of the landlords who operate rental properties within the borough in the dark about its plans.

Member of the group also slammed the plans as being ‘cobbled together’ and lacking detail or justification.

The landlords involved met online last night to discuss tactics and submit their response to the borough’s two licensing proposals, the consultations for which closed at midnight last night (16^th August).

This includes renewing its additional licensing scheme for HMOs but enlarging it to include bigger properties, and introducing a selective licensing scheme to cover 15 of its poorest wards in order to licence all rented properties, which will have to be signed off by the Secretary of State due to its size.

The meeting, headed up by Peter Littlewood (pictured) of landlord campaigning group iHowz, heard from Ealing landlords living both inside and outside the borough, many of whom complained that that the council had not made sufficient efforts to inform them about its new licensing plans. The meeting was also attended by Conservative Ealing councillor Nigel Sumner.

Many had not heard about the plans until the last moment via word of mouth or a random council newsletter sent two weeks ago, while others pointed out that landlords who had properties within Ealing but lived outside the borough were unlikely to have seen the councils outdoor poster and bus advertising campaign, particularly during Covid.

Inadequate communication

“Communication has been less than adequate,” said landlord Mita Shrestha. “The impression is that the council has been much keener to get tenants involved, rather than the landlords who will be paying the licensing fees involved.”

And landlord Rodney Townson claimed that the council’s proposal documents, particularly the HMO scheme extension, had been poorly put together.

“They look like they’ve been knocked together on a laptop and not very comprehensive, very broad brushstroke and lack any detail or specifics to back up their claims,” he said.

The group also pointed out that Ealing has yet to publish a review of how its previous HMO licensing scheme performed, other than to say it has been ‘very successful’.

The landlord group sent its comments to Ealing property regulation chief Alison Forde before the consultation deadline expired.

Not all licensing scheme proposals get the green light – as LandlordZONE reported last year, Luton recently began a consultation on its revised selective licensing plans after a two-year campaign by local landlords that uncovered errors within the scheme.

And iHowz has in the past played a role in persuading several councils to change course, including at Stockton-on-Tees, Southampton and Margate.

Landlords are being urged to contact their MP or local councillor about the licensing scheme, and Littlewood told those at the meeting that a Judicial Review was one option – also these cost £50,000 to launch.

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Tenants on benefits ‘being pushed into poverty’ by government cuts’ – claim

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Increasing numbers of tenants in receipt of benefits are being pushed into poverty, problem debt and homelessness, an alliance of landlords, tenants, letting agents and poverty charities has revealed.

It is calling for the government to publish a full assessment of its decision to freeze Local Housing Allowance and cut Universal Credit despite a 107% increase in the number of private rented households in receipt of benefits during the pandemic.

Of these, 55% have experienced a shortfall between the housing support they receive and the rent they pay.

The government has already admitted that the median shortfall is £100 a month, a considerable sum for those managing on stretched budgets.

Since April this year, Local Housing Allowance has been frozen in cash terms, and later this year, Universal Credit will be cut by £20 a week.

Reduced benefits

The figures will have a direct impact on landlords – tenants struggling on reduced benefits are more likely to be vulnerable to financial challenges and fall into rent arrears.

The alliance includes high-profile organisations including the Nationwide Building Society and its mortgage brokerage The Mortgage Works, Propertymark, Shelter, The Big Issue, Crisis as well as the National Residential Landlords Association.

A statement from the alliance says: “We believe that the UK Government should reverse its decisions to cut Universal Credit and to freeze Local Housing Allowance.

“To apply policies like these without doing any meaningful impact assessment is, we argue, lacking the necessary foresight and consideration of the impact they will have on people’s security of tenure and well-being and for many will threaten their chance of recovery.”

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