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A Rent Repayment Order Can Make You Pay 1 Year's Rent to Your Tenants

Property Technology Blog

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Introduction

Many landlords are unaware of a significant change in legislation change on the Rent Repayment Order (RRO). It was originally introduced in 2006, under the Housing Act 2004, to enable local authorities and/or tenants to claim up to 12 months’ worth of rent from landlords who have committed a property licensing offence. Up until 2017, RROs were limited in use. The previous legislation on this was that tenants and local authorities could only apply for an RRO after the landlord had been convicted of operating a licensable property without the appropriate licence or temporary exemption notice. 

 

Recent changes made to Rent Repayment Orders

However, a number of significant changes to the RRO were made in April 2017 under the Housing and Planning Act 2016. Firstly, if tenants can prove beyond any reasonable doubt that their landlord has committed one of the offences listed below within the previous 12 months, tenants can submit an RRO application directly to the First-tier Tribunal. They no longer have to wait for the landlord to be convicted first. 

RRO applies to more offences

The Housing and Planning Act 2016 also extended the range of offences for which an RRO could be applied for:

  • Failure to obtain a licence for a licensable property under sections 72.1 (licensing of HMOs) and 95.1 (licensing of houses) of the Housing Act 2004
  • Failure to comply with an Improvement Notice under section 30 of the Housing Act 2004
  • Failure to comply with a Prohibition Order under section 32 of the Housing Act 2004
  • Using violence to secure entry to a property under section 6 of the Criminal Law Act 1977
  • Illegal eviction or harassment of the occupiers of a property under section 1 of the Protection from Eviction Act 1977
  • Breach of a banning order made under section 21 of the Housing and Planning Act 2016 

Restrictions to Rent Repayment Orders

These changes apply to qualified offences committed by a landlord post 6th April 2017. Under these new rules, tenants applying for an RRO must still have lived at the property within the previous 12 months, and the landlords’ offence must have taken place within that same time period.

If there is a managing agent for the property, it is still the tenant or local authority who would apply for the RRO, not the managing agent.  

Penalty

When it comes to calculating the rent repaid to the tenants or local authority, this is at the discretion of the tribunal; the landlord's financial situation, their conduct and any previous convictions or penalties related to the offence will be taken into account.  

Examples of RRO Applications

Leeds, May 2018

A housing officer visited a property in Leeds occupied by five unrelated students. The housing officer notified the tenants that their landlord was unlawfully renting out the property as he had not obtained the Mandatory HMO licence required for all properties that are rented to five or more unrelated tenants, sharing facilities. 

As a result of the changes brought in under the Housing and Planning Act 2016, the tenants themselves pursued legal action by applying for an RRO. 

Their application was successful and in April 2019, the First-tier Tribunal ordered the landlord to pay the rent back to the tenants. It amounted to £15,000.

Camden Council, November 2018 

The landlord of an unlicensed HMO in Camden, London, cost them around £60,000 in fines. There were serious damp and safety issues within the property.

Islington Council, December 2016

A Landlord received housing benefit was taken to the First-Tier Tribunal. The landlord was ordered to pay back the council £39,022.52 in housing benefit for the period the property was rented without a licence.

Haringey Council, April 2014

A landlord was ordered to pay £16000 for breaching the RRO by not having a licence.

Conclusion

Tenants are becoming wise to these new rules and there are companies now offering 'no win no fee' rent repayment service. If you are a landlord, it is vital to ensure that you apply for the correct licence, should your property require one, otherwise you leave yourself at risk of being ordered to repay up to 12 months rent back to your tenants. 

In addition to having to repay rent under the RRO, you could also face a number of additional sanctions including:

  • Financial penalties of up to £30,000
  • Criminal prosecution 
  • A lifetime ban from letting property in the future 
  • Being listed on the Rogue Landlord and Agent Database

RRO applications will become more common and landlords and agents representing them should stay on top of any potential grounds for RRO applications from tenants.

This was a guest post by HMO Services. Contact HMO Services for advice on RROs and the licensing of rental properties.

HMO Guide

Paul Conway

Written by: Paul Conway

Co-Founder and MD of HMO Services. Bringing skills and experience from an oil industry engineering background to the property market, Paul oversees the company’s smooth running while ensuring compliance doesn’t get in the way of great customer experience.

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