RRO Applicants: the power is in your hands

It’s difficult to emphasise how important this appeal decision is for Rent Repayment Order (RRO) applications: https://www.bailii.org/cgi-bin/format.cgi?doc=/uk/cases/UKUT/LC/2019/311.html

Many Applicants are confused about who should be the Respondent (R), as tenancy agreements (if available) often don’t have the landlord details or the agreement names the agency as the landlord or, often, it is simply ambiguous who the landlord is.

This is especially the case for Rent-to-Rent (R2R) situations, where an agent has made an agreement with a property owner to pay them a guaranteed rent in return for the agency being able to assign tenancies directly in the property. Usually, the agency makes some kind of tenancy agreement with the owner so that they can have a claim to be the landlord. There are then two landlords: the owner and the agency.

Normally, we advise Applicants to target the property owner as the R: we know of several cases where agencies have liquidated their Ltd. company after a RRO award, so frustrating justice. Applicants who have paid £300 in fees, gone through months of evidence preparation, have run the gauntlet of the hearing and come out the other side with an award, are left with nothing. In the meantime, a new R2R company has been formed and the agency carries on with impunity.

Sometimes the R2R agency, however, may be the more legitimate R, depending on the circumstances. For example, they may have a genuine commercial lease with real responsibilities for the property.

Up to now, the Tribunal assessed the choice of R on application and could direct that a different R be assigned. Often this has been based on simply who is named as the “landlord” in any tenancy agreement. This is what happened in this case and it was this decision, at this stage of the process, which we challenged. This led to a preliminary hearing in May this year to decide who the R should be. The Decision of this preliminary hearing (to maintain the Tribunal’s choice) was the subject of our appeal.

The Housing and Planning Act 2016 (HaPA), under which RRO applications are now brought, does not define who can be prosecuted for a RRO any further than the word “landlord”.

The elegant and imaginative aspect of the UT decision in this appeal is that it accepts the use of the term landlord, does not define it but simply allows the A to decide who their real landlord is and who the R should be. Any arguments regarding whether the chosen R is the “appropriate person” are then left to be made at the hearing in First-tier Tribunal (FtT). Of course, the A needs to choose their R carefully to ensure that they can make the case that they are the most “appropriate person” according to the Housing Act 2004 (HA) s73(10).

This UT decision effectively deprives the FtT of the power to intervene in the choice of “landlord” by the A at the application stage and, in so doing, drives a coach and horses through the R2R scheme shams that attempt to protect the real landlord from RRO legislation.

For the FtT, the decision may well be welcome: it relieves them of the need to decide who is the “appropriate person” to be a R before any hearing and will remove the need for preliminary Case Management Conferences in many cases.

We will be writing soon to the FtT to ensure that procedural judges are made aware of this judgment and that As be allowed to decide who is the landlord for their application. We will also be updating our website with a guide for As to help them decide who is the Respondent landlord.