At last, reprieve from the endless refrain in Rent Repayment Order (RRO) judgments at the FtT: “Following Parker v Waller, there is no assumption that 100% of the rent should be awarded.”
Well there is now.
Move over Parker, here comes Vadamalayan. And about bloody time.
We have been banging on about Parker being largely defunct for RROs brought under The Housing and Planning Act 2016 (HaPA) since Flat Justice was started: see our (long-unchanged) web page here for example, https://www.getrentback.org/RRO%20history.html. Every submission we have made at the FtT and Upper Tribunal (Lands Chamber) (UT) has argued for 100% payment of the rent and for the redundancy of Parker in this respect (see B. here for example: https://www.getrentback.org/Argument%2012%20months’%20prior%20&%20deductions.pdf ).
We hate to think about the number of cases where Applicants under HaPA 2016 have been denied their full award because of Parker’s inappropriate use at the FtT. This has been going on since April 2018 when HaPA came into force, so for 2 years now the law has been incorrectly applied by the First-tier Tribunals when it was blindingly obvious that Parker was “unsafe”. Shame.
Here’s a quick summary of what Vadamalayan means:
- There is now an assumption that Applicants for a RRO under HaPA should receive 100% of their rent back
- There is no requirement for awards to be “reasonable”, wording taken from s74(5) of HA 2004 which was superseded by HaPA 2016
- The process of calculating a landlord’s profit through consideration of landlord expenses to arrive at the award stops with Vadamalayan. As s44(2) of the HaPA said all along: “The amount must relate to the rent paid”. Not the profit made by the landlord (nor the profit made after taxes- our latest appeal). As Judge Cooke states succinctly: “this is a rent repayment order so we start with the rent.” (§12 of Vadamalayan).
- Fines imposed on landlords should not be deducted or allowed for in calculation of a RRO for Applicants. Again, common sense prevails. Rent repayment orders came about so that tenants could get their rent back from an illegal contract. It is their right. That a Local Authority (LA) may decide to impose a fine should not detract from that basic right.
In practical terms, what does this mean for current & future RRO Applicants? We reckon:
- Simpler evidence bundles: no need to pick over landlord expense claims
- No fear of deduction of LA fines from an award: many Applicants have been put off applying when a large fine has been imposed
- Shorter hearings
- Higher awards
- Greater chance of a negotiated settlement, so avoiding a hearing altogether
- Loads more RRO applications
For First-tier Tribunals, too, their work on a particular case is vastly reduced. How many hours we have spent in hearings, listening to landlords or their solicitors/barristers/mates-from-the-pub scrap over every penny of expenditure….
The only matters which can reduce an award, after this ruling, are as per s44(4):
- conduct of the landlord and the tenant
- the financial circumstances of the landlord
- any relevant prior conviction of the landlord
In addition, the Vadamalayan ruling allows that utility costs paid by a landlord and included in the rent may be deducted. This makes sense, even for die-hard 100% advocates like us! After all, it wouldn’t be right for Applicants with inclusive rents to also, effectively, get utility costs back on top of rent when this is not available to Applicants who paid their utilities separately. Of course such deductions should only be made when proper evidence is presented by the landlord: not just some numbers scrawled on the back of a fag packet. See Parker, §40, discussed below.
But the Parker baby, dirty though it was, should not be thrown out with the bathwater. Parker is still relevant for other aspects of RRO decisions in these respects:
§26(v): The fact that tenants may have had use of the property should not reduce the award. The “windfall” argument. This is brought up by about half the Respondents in our cases still and some Tribunals have been swayed despite Parker.
§39: The conduct considered by the FtT, under s44(4) of HaPA, must be relevant to the offence. Tribunals could avoid wasting so much time if this principle were applied consistently. How can a tenant’s dirty toilet, untidiness, 3-day-late rental payment, disinterest in gardening, uncleaned plates, noisy parties, couch-surfing friends (probably ‘cos they just got evicted), smelly cooking, wondering around in underpants, eating of flatmates food…prevent the landlord from applying for a licence, the alleged offence? Yet valuable hours are wasted in hearings, and will probably continue to be, on such irrelevancies. Tribunals need to cut this short and Parker gives them the perfect reason here.
§40 The evidence for expenses must be presented in the bundle. Parker was not allowed to have his financial circumstances considered when these were not properly evidenced and open to challenge by the Applicants. This is clearly good law, yet we find examples of the contrary happening in many cases: we are currently appealing a case in which no evidence was presented of any expenses by the R, yet 30% was taken off the award just on the suggestion by the landlord at the hearing.
The conduct consideration, from 44(4)(a) of HaPA, has sometimes been used as an argument that the award should not be assumed to be 100% of the rent. The argument would be something like: “if the rent to be repaid is assumed to be 100%, how can worse landlord conduct be punished more?”. The answer is blindingly obvious and the rhetorical question reveals more the legacy of RROs under HA as opposed to HaPA. HaPA has many more offences than licensing where conduct becomes much more relevant, offences such as illegal eviction, harassment and breach of an Improvement Notice (IN). S44(4), of course, covers all offences under the new Act: conduct clearly plays a greater role in these offences. For licensing offences, there can be little argument regarding conduct, and Tribunals could save so much more time in limiting these considerations when only this offence is alleged.
The Mohamed and Lahrie ruling just last month dealt with another rotten old chestnut of an excuse: ” I didn’t know I needed a licence!”. Mohamed ruled that not licensing a property is a “strict liability offence”: i.e. that’s not an excuse (and it never was anyway). Together with Vadamalayan and, dare we say, the other important UT RRO rulings, Goldsbrough (Flat Justice), Taylor (Flat Justice), Sharma (Flat Justice) & Opara (Flat Justice), the escape routes for landlords in RRO cases are disappearing fast.
What’s left to do? Plenty, unfortunately:
- Multiple offences should have multiple awards. Another legacy problem in that FtTs are used to only making one award for licensing so that when new offences are alleged in addition under HaPA, only one award results with a maximum of 12 months rent. We argue that each offence is limited by 12 months’ rent so that an award for say illegal eviction, harassment and licensing should result in three awards whose total may well be more than 12 months’ rent. The punishment needs to fit the crimes and not just one crime.
- Incorrect licensing: properties licensed as single family dwellings under a Selective scheme which are then let as HMOs should not be treated leniently. This is often a deliberate ploy by landlords, especially in boroughs where HMO licensing is severely restricted, e.g. Brent.
- Guardianship scams with complicit LAs. We are seeing more cases where guardianship companies are using council-owned disused property to house tenants in poor to desperately dangerous conditions. All under the pretence, by the company and the LA, that because the property is “owned” by the council it is exempt from licensing and associated safety standards. These are all accidents waiting to happen and must stop now.
- Legislation: Students. Two thirds of respondents to the draft RRO bill thought student accommodation should not be exempted from the legislation. But it was anyway. This should change as we are not talking simply accommodation that is run by Universities directly but increasingly private companies.
- Legislation: Flats. Why are “purpose-built” flats exempted from the mandatory HMO legislation under the 2018 Prescribed Description Order? They are not less dangerous by being in a block of other similar flats, arguably more so. This looks very much like expediency to avoid too many RRO cases from high-rise blocks.
So the fight goes on but the Vadamalayan ruling is a huge encouragement that we are headed in the right direction and that RROs are fast becoming the go-to method for private tenant redress and a powerful check on criminal landlords their often dangerous properties.
“In addition, the Vadamalayan ruling allows that utility costs paid by a landlord and included in the rent may be deducted. This makes sense, even for die-hard 100% advocates like us! After all, it wouldn’t be right for Applicants with inclusive rents to also, effectively, get utility costs back on top of rent when this is not available to Applicants who paid their utilities separately.”
Intrigued by your logic on the above (and declare you consequently not ‘die-hard 100% advocates’) – Applicants should get their rent back. If their rent included utilities…they should still get their rent back. It is a Rent Repayment Order not a ‘Rent minus Utilities Repayment Order’.
The ‘unfairness’ the Judge highlights (which you sympathise with in your words above) is remediated at the expense of tenants and to the benefit of landlords (who have committed an offence). This is not OK nor, in my small opinion, in keeping with the law.
A alternate remediation of this ‘unfairness’ is to ADD the utilities costs of uninclusive rent tenants to their rent. That would be the alternate way to be ‘fair’! However, I suspect that is beyond the scope of the law in this instance (it not being a ‘Rent plus Utilities Repayment Order’ either). Although I posit: were ‘Rent plus Utilities’ to be applied, it is debatably as much a variation to the Act as ‘Rent minus Utilities’.