Landlords and tenants of licensable Homes in Multiple Occupation (HMOs) should take note after what is believed to the first case in the country of a Rent Repayment Order (RRO) being made by the Residential Property Tribunal.
Two groups of Leamington students have successfully claimed back a total £18,540 of rent which they paid to their landlord, Mr B S Bahi, whilst they occupied flats in Warwick Street, Leamington Spa from September 2006 to June 2007.
In order to apply for an RRO, the landlord must first have been convicted by the council for failing to licence his property as a house in multiple occupation. Mr Bahi was prosecuted at Leamington Spa Magistrates Court in June 2007 when he was fined a total of £3057.80, including costs, after the council took legal action.
Problems with flats
The students felt that they had endured a ‘poor experience’ whilst at the flats, citing various problems which were only rectified after considerable delays, or had not been rectified at all. The students were represented by Ken Harris, Advice and Welfare Officer for the Students Union at Warwick University.
The Tribunal considered the conduct and financial circumstances of the landlord, and largely accepted the students claim that the landlord had failed to remedy problems within a reasonable timescale or at all. However, of much more significance to the Tribunal was the failure of the landlord to apply for HMO licences. After deliberation, the Tribunal decided that refund, equivalent to 50% of the rental income, would be reasonable. This was equivalent to £18,540.
Warning to landlords
Councillor Michael Doody, Housing Portfolio Holder said: "This decision should act as a warning. The Council’s Private Sector Housing team is actively pursuing other HMO landlords who are still to submit a licence application. Any which proceed to prosecution will give tenants the opportunity to make a similar claim to the tribunal."
Warwick Universities’ Advice and Welfare Officer, Ken Harris, said: "Students contribute significantly to their local economies, and often help to create more vibrant communities through volunteering initiatives and fundraising for local charities. Nationwide legislation on HMO licensing, as well as the Tenancy Deposit Scheme, has meant that students are now getting the legal protection that they deserve."
Landlords need to be aware that whilst the fine imposed for failing to licence an HMO can be as much as £20,000, it can be considerably less where there is mitigation. However, the Rent Repayment Order, can, in effect, result in a much more serious penalty, and can be applied to allow repayment of rent throughout the period that an HMO remains unlicensed.