What one landlord’s appeal against a Rent Repayment order means for unlicensed HMOs

By Samuel Winterbourne, Legal Assistant, Woodstock Legal Services

In late 2020 we saw the Upper Tribunal correct the First-Tier Tribunal’s decision that Palm View Estates had a reasonable excuse defence for managing an unlicensed House in Multiple Occupation (HMO) in the case of Thurrock Council v Palm View Estates. And though many things have changed since 2020, the UT having to clarify matters regarding reasonable excuse for an unlicensed HMO is not one of them.

The Case

The Case of Chow v Skipper [2022] regarded an urban flat that had been let to multiple tenants and was situated in a designated area where a House in Multiple Occupation requires a license. The license for this property had expired and almost a year has passed before it had been renewed. The First-Tier Tribunal ordered the couple to repay £11,012 to the tenants. This sum represented the rent which the tenants had paid during the unlicensed period, in its entirety.

A subsequent challenge was heard by the Upper Tribunal in which the landlords’ argued that they had paid an HMO licence fee in error for a different property which had not needed one. The Upper Tribunal allowed for fresh evidence to be admitted, including a letter from the local housing authority refunding the incorrect license fee which post-dated the First-Tier Tribunal’s decision.

The Upper Tribunal held that there was reasonable excuse for the property to not be licensed and thus, a Rent Repayment Order should not have been made. Resultantly, the decision surrounding the amount awarded did not arise.

What Can We Learn?

Landlords who let an HMO within the designated areas but without a license can be exposed to the prospect of having to repay rent to their tenants for the unlicenced period. It’s also important to remember that failure to renew a licence is also punishable by a civil penalty up to £30,000 and the local authority or any tenants being able to apply for a rent repayment order, up to 12 months.

The courts are prepared to accept a reasonable excuse, but why take the chance?

Always renew your license well in advance of expiry

Always double check the application to ensure all the property and landlord details are correct.

Always keep receipts to prove what has been paid.

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