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Upper Tribunal (Lands Chamber) finds Superior Landlords can be liable for Rent Repayment Orders in test case ruling

Friday 13 November 2020

Edward Fitzpatrick of the Garden Court Chambers Housing Team was instructed by the tenants through Justice for Tenants pro bono.

Rakusen v Jepsen & Others [2020] UKUT 298,  decision of the Upper Tribunal (Lands Chamber). 

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This was a test case as to the application of Section 40 Housing and Planning Act 2016 with respect to the extension of situations where Rent Repayment Orders can take effect; now in respect of a range of offences and without the requirement of a conviction. 

A challenge was brought by the Leaseholder in the case who had leased the premises to a property management company under a 3 year lease and they in turn had granted licences/tenancies to the Claimants. It was argued that on the correct construction of Chapter 4 of the Housing and Planning Act and in particular on the actual wording of section 40 a Rent Repayment Order can only be made against the immediate Landlord to whom the tenant had paid rent and could not be brought against a Superior landlord who had leased the premises.  Reliance was placed on the wording under Section 40(2) which refers to “repay” to say that this could only apply to the landlord who had actually received the rental payments from the tenant.  It was also argued that the reference to the “the Landlord” could only be the immediate landlord under the tenancy.

In rejecting these arguments the Deputy President considered the statutory context of the provisions and the policy of the extension of Rent Repayment Orders, holding that the restriction advocated did not arise from the wording of the provisions and was not in accordance with the purpose of the provisions.  It was held that a Superior Landlord can be liable under section 40, subject of other defences they might have.

The decision is important in “Rent 2 Rent” cases where the immediate landlord being a property company with no repairing obligations are unlikely to be the subject improvement notices or prosecution for failing to licence as the target of the local authority would be the owner or Superior Landlord who could carry out necessary works. It is also the case that such companies tend to be a poor target for a claim as they generally are without assets and simply go into liquidation if a claim is brought.

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