Rent Repayment Orders
Following some comments on a recent post of Tessa’s on Rent Repayment Orders, I thought it would be a good point to set out for Landlord Law Blog readers exactly how they work.
Other elements that prompt me to do this is the recent case of Mr Z who got caught out when he thought that his agents were applying for a licence, you can read about this here.
Furthermore, the fact that I am doing more and more of these each month, since the advent of the Housing and Planning Act 2016.
What is a Rent Repayment Order?
A Rent Repayment Order (RRO) is a means whereby either rent or housing benefit (HB) can be claimed back from a landlord by either the council or the tenants. If a property has been operating without a license where one is needed, then going back to the Housing Act 2004 the council could claim 12 month’s worth of HB from the landlord.
The tenant could also claim 12 month’s worth of rent but only if the council had prosecuted the landlord first.
Recent changes have come into force
In April the game changed and now a tenant can claim back 12 month’s worth of rent and the council 12 month’s worth of HB where the landlord has:-
- Used violence to secure entry.
- Unlawfully evicted or harassed the occupier.
- Failed to comply with an improvement notice.
- Controlled or managed an unlicensed property.
- Breached any banning order made.
Importantly now, the council does not have to have prosecute for these offences first but any Rent Repayment Order application must be made with a criminal standard of evidence, which in the case of 3,4 & 5 is dead easy to prove, because of the paper trail available.
Who do you apply to?
Rent Repayment Order applications are made to the First Tier Tribunal (FTT), not a court, so the process is much more user-friendly, not to mention faster, so you can see why for many advice and advocacy workers like myself, Rent Repayment Orders are an attractive alternative to a full criminal prosecution, given the inordinate length of time they take and the pathetic fines levied at the end by the criminal judiciary.
A Rent Repayment Order nets the tenant enough money to relocate, possibly avoiding homelessness intervention and provides a suitably punitive sanction on the perpetrator that a criminal prosecution often does not. From the council’s perspective, a Rent Repayment Order allows them to claim back 12 month’s HB which they can keep to use for other enforcement purposes or the promotion and compliance of landlord and tenant law among both landlords and agents.
If the local authority is applying for a Rent Repayment Order they have to first notify the landlord of their intention to do so, giving 28 days for the landlord to cobble together a defence, during which time the landlord has to respond and the council cannot move forward with the application.
However, where the tenant applies for a Rent Repayment Order there is no requirement to put the landlord on notice first, although both council and tenant have to make their application within 12 months of the offence.
There are two forms of Rent Repayment Order
There are two forms currently available, the Rent Repayment Order 2, which is for breaches before 6th April 2018 and the Rent Repayment Order 1, which is for breaches after that date, so as time marches on, the Rent Repayment Order 1 is going to become the standard form used and they are fairly basic, nowhere near as complex as an N5B form that a landlord has to use to apply for accelerated possession.
Section 49 of the Housing and Planning Act gives councils the powers to assist tenants to apply for Rent Repayment Orders (which is where my crew ‘Safer Renting’ come in) and section 48 places a duty on a local authority to consider making a Rent Repayment Order, so things aren’t just left in the wind, government actively encourages the use of them.
Once a Rent Repayment Order is granted
When a Rent Repayment Order is granted by the FTT then any monies awarded can be recovered under county court enforcement procedures, as if the debt was a county court one, so bailiff’s and attachment of earnings are available, as well as registering a charge to force sale of a property.
There are many advantages to Rent Repayment Order’s
I have written elsewhere about the lengthy and bureaucratic procedures involved in any form of rogue landlord enforcement and the lack of staffing and resources in local authorities these days due to austerity and public sector cuts but Rent Repayment Orders are rapidly becoming the secret weapon in the war against rogue landlords.
They are quick, cheap (£100 for the application and a further £100 if there has to be a hearing) the tenant gets something out if it and the rogue landlord gets punished.
If the council do them they get to keep the money for enforcement and don’t have to engage with heavily bureaucratic processes apart from the 28 day warning period.
On the downside, the FTT aren’t exactly consistent with their decisions yet, some discount the landlord’s mortgage payments before calculating the amount of award but even with that it’s a process that works and is becoming increasingly popular among advice and advocacy services.
And they can be easily avoided
As long as the landlord gets themselves properly licensed and avoids the pitfalls of harassment, illegal eviction or ignoring improvement notices then they won’t find themselves subject to an application.
The NLA, RLA and other landlord bodies repeatedly advise that the number of rogue landlords is small by comparison, which is absolutely correct, so most landlords don’t have to worry about Rent Repayment Orders – but for the minority of rogues and the tenants and advice workers out there who need to do Rent Repayment Orders, you now know how they work.
Be interested to understand why any landlord (eve clean clean and green ones, ) would want to get trucked up with councils.
Its not surprising that there is a shortage of properties to rent.
I get the idea of begging fair to tenants but there is also fair to landlords as well.
And. There are plenty of tenants out there who will go out of their way to exploit this
Rob as I was at pains to point out, if ,a landlord does not comply with licensing requirements, harasses or illegally evicts their tenants or uses force to gain entry then RROs will be nothing but a legal theory and of no consequence to normal landlords, who generally dont do that kind of thing.
RROs cannot be used for anything other than those offences.
I dont get your point there. Is the existence of a law that protects tenants from those listed activities being unfair to all landlords?
As I also explain, an RRO cannot be obtained without a criminal standard of evidence, which is a difficult thing for tenants to ‘Exploit”
Can the tenant get the £100/£200 costs refunded as part of a successful order Ben?
Yes, costs of application are recoverable if you apply for them at the hearing. Just picking up on the above blog: the costs are £100 for the application and £200 (not £100) when the application proceeds to the hearing. It’s not a given that costs are awarded for the tenant and we’ve seen that sometimes only part of these fees are awarded even though the case was won.
As Ben mentions, there is considerable variation in the judgments since the Act came into force in April 2017 (note: not 2018…). There is a useful summary of this variety at the London FtT at this blog: https://getrentback.org/blog/
As Roz from Ben’s team will agree, I’m sure, winning the award is part of the story: getting the money can sometimes be more involved…
On this point, tenant applicants should be very clear who the actual respondent should be in their RRO1 application form. Only yesterday we were in a hearing where the respondent was switched from an agency to the property owner shortly before the hearing in a classic Rent-to-Rent situation.
As Ben points out: law-abiding landlords have nothing to fear from RROs: they are specifically designed for the bad apples. They are a very powerful way for tenants to get the redress they deserve and, importantly, a powerful force in improving housing safety: all the cases we have seen regarding licence infringements have led to the l/lord licensing the property and nearly always this has meant upgrading the fire alarm, gas and/or electrical installations to the required standard.
Thanks. I have added your site to our list of tenant help services on our Tenant Law site here http://tenant-law.co.uk/advice-services-for-tenants/
Thanks Tessa!
Good question Reb. I’m up in front of the FTT in the coming weeks. I’ll let you know. Got one £17,000 doozy, lets wee how the tribunal takes it
No costs shifting other than wasted costs or for unreasonable behaviour.
Thanks KTC but can you clarify? Does that mean the £100/£200 fee can be claimed back?
Sorry, no, I meant it’s not recoverable.
The general rule is that parties pay their own cost unless legislations explicitly specify otherwise. The tribunal does however have power to make cost order against a party or their representatives that have behaved unreasonably in bringing, defending or conducting an application.
Great, thanks for clarifying
Ben – I had a further question on the “let only agent” thread. Perhaps you could ask it at your next FTT, seeing as many harassment and illegal eviction RROs will have arisen due to arrears. Also, we didn’t establish whether “landlord” actually means the owner at the end of the chain, or could one still waste time going after a short lease-holding middle-man?
It’s also not clear if you can put forward several breaches all at once, so if say the violence or harassment were not quite clear-cut on their own and the unlicensed status wasn’t proven beyond a doubt, would all three together carry more influence?
John any single breach is sufficient, although as you say there may be multiple breaches. There is no legal machinery in the process that allows the FTT for awarding more money for more than one breach and I wouldnt even bother to do one if there wasnt sufficent evidence, given the standard is so high and I wouldnt want to be accused, as KTC mentions above, of bringing an action unreasonably.
As for who to go after, we would go after the landlord at the head of the chain where it’s licensing but would more likely to go after the perpetrator of harassment or illegal eviction if they are the person’s receiving rent.
The problem these days among criminal landlords is the common and widespread practice of creating smoke screens and false trails. I am going to a property later today where the owner lives in Pakistan, who let to one local agent who let as a single family home, whilst another agent takes the rent, who is now harassing the 5 families he let to and yet another party holds the licence, whose conditions have been broken by the multi-let.
Now the authorities are on to to the property, all concerned parties are pointing the finger at everyone else, saying “Not me guvnor” and to make things worse, the agents taking the rent are based in Bulgaria.
If the council revoke the licence then the RRO could be done against the owner but he doesnt even live in the UK. If we do an RRO on the harassment we could go after the agents taking the money but they are in Bulgaria, just using a facebook page to rent out properties to Bulgarians seeking to come to London. We could also go against the local agent, especially in the light of that recent case on it being sufficient to take rent in advance and deposit for an agent to still be deemed to have management control but they will swear blind they knew nothing of the unauthorised sub-let and the FTT may well accept that.
Thats how the crims operate. Obfuscation and blind alleys. Also the FTT might award the money but if they dont pay up, the tenant or council still has to pursue the debt in the county court in the usual way, a nigh on impossible task for the Bulgarian agents and if the debt is big enough the local agents can and often do, simply fold up the limited company and pop up elsewhere.
This is the rogue landlord market in 2018 and the Guardian wonders why enforcement officers arent being more succesful
This is why I think the FTT should also have the option to discharge rent liability for tenants who have built up arrears in advance of the RRO, perhaps because they realised that recovery of money already paid might not be realistically achievable against crims..
You cant do an RRO on rent that hasnt been paid. The RRO application form has a specific section where the applicant has to provide evidence of the rent paid. Whilst RRO’s are a great punitive tool for perpetrators, they arent designed to take the piss haha
Seems comments here have overlapped each other. To be clear, costs ARE recoverable – but maybe not in full, and only part. I refer to the very helpful comment from GetRentBack above. FYI: KTC.
Re. who to go for, middle leaseholder or head landlord/owner: in the case we attended on Friday (16/11/2018) the agent had covered themselves with a contract in which it the licensing responsibility was clearly the owner’s. So it’s worth checking early on if any such clause exists in the Rent-to-Rent lease.
Another point worth mentioning that came up again in this case was the mortgage costs being used by the owner to set against any potential award. This can be a huge chunk of money that can potentially wipe out any potential award. It is often mis-reported that mortgage costs are allowable as a letting cost. However the main guidance case (under 2004 HA), Parker v Waller, did not allow mortgage costs as the property had been re-mortgaged since it’s original purchase. See discussion here: https://www.getrentback.org/guide%20case%20law.html
Come to think of it, the new tax regime for buy-to-lets doesn’t even allow all the mortgage interest payments to be deducted as a cost against rental income- 20% only I think.
We do not believe that ANY costs should be allowed to reduce the RRO award under the 2016 Act as the wording, and intention, of the Act does not require the tribunal to make an award “reasonable in the circumstances”.
Isn’t it April 2017 instead of April 2018 for the 2 types of forms?
ICYMI: we think there is a serious problem with the form RRO1 and the interpretation behind it and many of the decisions on RROs: please see our blog here: https://getrentback.org/blog/2018/12/22/mistake-in-form-rro1-and-all-decisions-using-this-interpretation/