6 April 2018 did not just mark the start of another tax year, but was also the date when it became significantly easier for tenants to make applications for Rent Repayment Orders (RROs). Now, over 12 months on and following further legislation which came into force in October 2018 which expanded the definition of a House in Multiple Occupation (HMO), we have seen a recent increase in the number of tenants seeking RROs against landlords of residential accommodation.
What are RROs?
An RRO is an order by the First-Tier Tribunal (Property Chamber, Residential Property) requiring a landlord to re-pay some or all of the rent paid by a tenant in connection with the tenant’s occupation of a residential property. The order can result in a landlord having to pay a sum equal to 12 months’ rent back to a tenant or former tenant.
When can the Tribunal make RROs?
The Tribunal can make an RRO for a wide range of landlord defaults, including a failure by a landlord to comply with the residential licensing regime.
The residential licensing regime is complex but in simple terms, a property will require a licence (unless it falls within an exception) if:
1. It falls within the scope of ‘Mandatory Licensing’, which includes:
- living accommodation (not a self-contained flat or flats) which is occupied by five or more people forming more than one household, sharing or lacking basic amenities (basic amenities means a toilet, personal washing facilities or cooking facilities);
- a self-contained flat occupied by five or more people forming more than one household and sharing or lacking basic amenities;
- a converted building containing one or more units of living accommodation (that is not self-contained) occupied by five or more people forming more than one household;
- a building in respect of which an HMO declaration is in place; or
- certain converted blocks of flats.
2. It is within an area subject to ‘Additional Licensing’. Local Authorities have discretion to designate HMOs in all, or part of their area, which would otherwise fall outside of the nationwide mandatory licensing scheme, as subject to additional licensing.
3. It falls within an area subject to ‘Selective Licensing’. A selective licensing scheme can apply in relation to any privately rented housing within a designated area that is not an HMO.
If a landlord does not hold a valid licence where one is required, tenants or former tenants of properties may make applications for RROs.
What should landlords be doing?
Given the complexity of the licensing scheme, we suggest that landlords conduct a review of their portfolio to ensure that all properties requiring one hold a valid licence.