Feb

Dangers of rent-to-rent highlighted by landlord’s £11k rent repayment order

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A rent-to-rent landlord operating a flat in central London has been ordered to pay rent back to his tenants totalling just over £11,000 via a rent repayment order or RRO.

The case highlights the challenges faced by rent-to-rent agreements, as the case involved a freeholder, leaseholder, landlord and a managing agent.

The landlord – David Ravelo – who operates the four-bedroom maisonette close to Euston Station that housed the five tenants, must foot the bill after a First Tier Tribunal judged that he had operated the property as an HMO without a licence.

The local council, Camden, has operated a borough-wide additional licencing scheme since 2015.

HMO licence

Ravelo’s five tenants, who each paid £800 a month, claimed their rent back for between five and 12 months up until 1^st December 2020, when an HMO licence was finally secured for the flat.

Revelo admitted that the property did not have a licence before that date, but claimed he had a ‘reasonable excuse’, saying that his managing agent “unequivocally misinformed him as to the current licensing status of the property”.

This was rejected by the Tribunal, which said “he has experience of other properties requiring HMO licences and was fully aware not only of the requirements but also how to check that those requirements had been met”.

The court heard that Ravelo considered the property to be in an ‘excellent condition’ and that the tenants said they had a good relationship with their landlord who was a ‘lovely person’. But they said he was too slow when it came to repairs and maintenance issues, including a major infestation of ants and mound in one of the bedrooms.

Ravelo’s bill could have been much twice as much – some £20,000 – but the Tribunal awarded a 50% reduction on the RRO because the offence was in the ‘mid-range’ of seriousness. Deductions were also made for the utilities that Ravelo paid for as part of the tenancy agreements.

Read the judgement in full.