Woodstock Legal Services have been closely following the Supreme Court appeal in the case of Rakusen v Jepsen. The appeal raises an important issue: whether a rent repayment order under Housing and Planning Act 2016 can only be made against a tenant’s immediate landlord or against any superior landlord. This is particularly significant in relation to rent-to-rent arrangements.
Supreme Court Debate
The supreme court is debating whether the superior landlord or any landlord in the chain should be responsible for a rent payment order.
In May 2016, Martin Rakusen agreed to rent his flat to a rent-to-rent company. By November 2018, the flat had unknowingly become a house in multiple occupation (HMO. But the licence wasn’t applied for, even though it is required under Part 2 of the Housing Act 2004.
The former tenant wanted to put a Rent Repayment Order against him as the superior landlord, instead of the rent-to-rent company.
In September 2019 the Appellants applied to the First-tier Tribunal for a Rent Repayment Order of £26,140 against Mr Rakusen pursuant to Section 41 of the Housing and Planning Act 2016. This being on the basis that Martin had committed the offence of managing an HMO that isn’t properly licensed.
Rakusen Denies the Offence
Martin denies that he committed an offence. He then went to invite the first-tier tribunal to strike out the Appellants’ application. The application was made on the basis that a Rent Repayment Order can only be made against the immediate landlord of the individual making the application. The strikeout was refused. Under the holding that Mr Rakusen was “a” landlord of the flat, albeit not “the” landlord of the Appellants. Mr Rakusen appealed to The Upper Tribunal with the permission of the tribunal judge.
The Upper Tribunal dismissed Martin’s appeal, holding that a Rent Repayment Order can be made against a superior landlord of an applicant. The Upper Tribunal judge granted permission to appeal to the Court of Appeal.
The Court of Appeal allowed Martin’s appeal, holding that a Rent Repayment Order could not be made against a superior landlord. The Appellants now appeal to the Supreme Court.
What NRLA Chief Executive Ben Beadle said of the Rakusen v Jepsen Debate
Both the tenant and landlord become the victim when it comes to dodgy rent-to-rent operators going wrong.
“We want to see absolute clarity,” he says. “You’ve got arrangements where the landlord has made an agreement with a provider. Who collects the rent and executes the repairs. And then situations which the landlord might not be aware of. In this case, they get clobbered through no fault of their own.”
If the Supreme Court was to change the position adopted by the Court of Appeal, then authorised rent-to-rent arrangements will likely become less common. Leading to a lower availability of budget accommodation to rent on a room-by-room basis, says the NRLA.
Our Advice
Woodstock Legal Services regularly deal with landlords that enter rent-to-rent schemes, which can be problematic. We often see these rent-to-rent scheme companies wrap themselves up, leaving you the landlord with occupants you need to deal with.
Our advice is to carry out due diligence on the companies before entering a rent-to-rent scheme. It is important to carry out background research for your own protection. Look the company up on the companies house as it provides company information necessary for protection. It is also good to research the company’s financial stability.
We always recommend that the director(s) sign personal guarantees, so that you have someone personably liable. Should they make off with the rent or fold and leave you with the costs or any damages to the property.
Contact Woodstock Legal Services: contact@woodstocklegalservices.co.uk
