Upper Tribunal overturns First-tier Tribunal decision on Rent Repayment Order for unlicensed HMO: Key legal principles and redetermination discussed

Citation: [2023] UKUT 283 (LC)
Judgment on

Introduction

In the case of Louise Irvine v Dr Anthony Metcalfe & Ors ([2023] UKUT 283 (LC)), the Upper Tribunal (Lands Chamber) revisits and overturns a First-tier Tribunal (Property Chamber) decision concerning rent repayment orders (RROs) for an unlicensed House in Multiple Occupation (HMO). This article scrutinizes the key topics, legal principles applied, and the consequential redetermination of the rent repayment order.

Key Facts

The core of the dispute revolves around an HMO which was unlicensed during the occupancy of various respondents. The property in question was initially leased to a company, Uptown Properties Ltd, on the anticipation that it would not become licensable as an HMO. However, Uptown sublet individual rooms, resulting in an HMO situation. After Uptown’s liquidation, payments were directed from the tenants to Mrs. Irvine, making her the immediate landlord. This shift raised liability concerns under the Housing Act 2004 and initiated the subsequent RRO proceedings.

There are several legal principles at play in this case:

  1. Status of Tenant-Landlord Relationship: Defined by the tenancy agreement (Company Let Agreement), this determines the point from which the landlord could be said to be in control of an HMO, hence liable for ensuring licensure under Part 2, Housing Act 2004.

  2. Criminal Offence for Unlicensed HMO: Under Section 72(1), Housing Act 2004, controlling an unlicensed HMO is a criminal offense and under Section 40, Housing and Planning Act 2016, victims can apply to the FTT for an RRO against a landlord who has committed a relevant housing offense.

  3. Reasonable Excuse Defence: Under Section 72(5), Housing Act 2004, a person has a defense if they can prove they had a reasonable excuse for not licensing an HMO.

  4. Landlord’s Relationship with Intermediate Landlords: The case pivots around the interpretation of the ‘Goldsbrough’ decision and is significantly influenced by the Supreme Court ruling in ‘Rakusen v Jepsen’, which clarified that RROs cannot be claimed against a superior landlord, but only against an immediate landlord.

  5. Adequacy of Reasons in Tribunal Decisions: The necessity for a tribunal to adequately address all significant points and defenses raised by parties, given the serious nature of the findings which equate to a determination of criminal culpability.

Outcomes

The Upper Tribunal determined that the FTT had no jurisdiction to make an RRO for the period during which the Agreement with Uptown was enforced, meaning the RRO could only apply from when Mrs. Irvine became the direct landlord post-Uptown’s liquidation.

Moreover, the FTT was found to have inadequately dismissed Mrs. Irvine’s ‘reasonable excuse’ defense, which it was obliged to consider given the criminal implications of the offence. Consequently, the FTT’s decision was set aside and the RRO was redetermined.

Conclusion

This case highlights the significance of landlord-tenant relationships and the stringent requirements of housing law in protecting tenants in unlicensed HMOs. It underscores the legal requirement for licensing HMOs, the limited scope of RROs to immediate landlords, the ‘reasonable excuse’ defense scope, and the necessity of thorough consideration and reasoning in tribunal decisions. The redetermination also reflects on the gravity assigned to the landlord’s duty, both in understanding the legal framework governing HMOs and in providing housing that meets the standards required by law.

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