This is part one of a three-part guide on Rent Repayment Orders outlining what you need to know as a landlord.
Rent Repayment Orders (RROs) were introduced in the Housing Act 2004 as an additional measure to penalise landlords managing or letting unlicensed properties. Certain residential properties are required to be licensed by law and it is a criminal offence to manage or control such a property without a licence.
Landlords or agents operating unlicensed properties can be prosecuted by the local authority and fined in the magistrates’ court. There are additional sanctions for landlords.
Even once the criminal proceedings have come to an end it is still possible for landlords to face further financial penalties in the form of Rent Repayment orders.
The Housing and Planning Bill, currently working its way through Parliament, will extend the law on RROs, broadening their application to cover a wider range of housing-related offences.
Residential Property Licensing
Since 2006 certain properties in the private rented sector have required a property licence. Mandatory licensing, which applies to large houses in multiple occupation (HMOs), is in force across England and Wales. Recent years have seen increasing numbers of local authorities introduce licensing schemes to cover other types of rented properties including non-HMO accommodation.
Failure to license a licensable property has a number of serious consequences.
Landlords prosecuted in the magistrates’ court face not only a criminal record but a potentially hefty fine. On March 12, 2015, the £20,000 cap on fines was removed so that fines are now unlimited for offences committed after this date.
For landlords, a criminal conviction and a fine may not be the end of the matter.
The Housing Act 2004 enables the local housing authority or the occupier of the property to apply to the First-Tier Tribunal for an order for the repayment of housing benefit or rent. Different criteria and procedures apply depending on whether the applicant is a local authority or an individual.
Applications for a RRO
Local authorities applying for a RRO need to demonstrate that at any time during the preceding 12 months the landlord has committed an offence of not having a licence and housing benefit has been paid to the landlord during that period.
The landlord does not need to have been charged or convicted of an offence but the local authority does need to prove, beyond reasonable doubt, that the landlord has committed an offence of failing to have a licence.
The local authority is required to serve a notice of intended proceedings giving the landlord at least 28 days to make representations before applying to the tribunal for an RRO.
The procedure is different for tenants who wish to apply for a RRO.
The most significant difference is that tenants are required to prove that their landlord has been convicted of an offence of failing to have a licence or that a rent repayment order has already been made in respect of housing benefit, i.e. the local authority has already made a successful application for a RRO.
Tenants are not required to serve notice on the landlord and can apply straight to the tribunal but they are dependent on the local authority taking action against the landlord first.
Without a criminal conviction or a rent repayment order, both processes initiated by the local authority, tenants are not able to apply for an RRO.
Tenants must be able to show that they paid rent during the period in which the landlord was committing the offence and they must make their application within 12 months from the date of the conviction or the local authority’s RRO for the return of housing benefit, whichever date is later.
Tenants are further restricted by the requirement that they can only reclaim rent paid in the 12 months prior to the date of their application to the tribunal.
This means that if the tenants move out and the local authority takes over 12 months to obtain a conviction or a RRO, then the tenants will not recover anything.