A Rent Repayment Order (RRO) can be ordered against a landlord who has control or management of an unlicensed house in multiple occupation (HMO) pursuant to section 72 (1) of the Housing Act 2004. The RRO can require a landlord to repay some or all of the rent to a tenant for a maximum of 12 months’ rent in accordance with section 40 Housing and Planning Act 2016.
It was previously held in Rakusen v Jepson, [2023] UKSC 9; [2023] HLR 21, that a tenant can only obtain an RRO against an immediate landlord.
However, on the specific facts of the case of Cabo v Dezotti, (2024) EWCA Civ 1358, an RRO was made against the ultimate landlord even though the landlord had rented their house to a separate rent-to-rent company.
Ms Cabo was the freeholder of a house. Her husband was the sole director of a company called Top Holdings Ltd (“Top”). She entered into an agreement with Top whereby it would deal with the house on her behalf, including by letting rooms. The company subsequently granted licences to various occupiers and it held itself out as being the licensor under those agreements. Ms Dezotti was an occupier under one of those agreements. She contended that the property was an unlicensed HMO and applied for a RRO against Ms Cabo.
Ms. Dezotti was awarded £9,600.
Ms Cabo was unsuccessful in resisting the RRO at the First Tier Tribunal, the Upper Tribunal and then the Court of Appeal. Despite Ms. Cabo claiming that as Top was the immediate landlord no RRO could be made against her if Rakusen was properly applied, the courts disagreed based upon the facts.
The whole scenario was described as “artificial” and “something of a sham”. The true position was that Ms Cabo was the landlord and should be subject to the RRO. In letting the rooms, Top was plainly acting as agent for Ms Cabo and not as the true landlord.
Whilst not overruling Rakusen, it is clear that landlords must be wary not to use rent to rent arrangements which are artificial or sham like in order to avoid the rules relating to HMO’s.
Should you require any further information regarding landlord and tenant law, please do not hesitate to send your enquiry to Mr Bill Dhariwal (E: bill.dhariwal@lawcomm.co.uk) or Sam Nolan (E: sam.nolan@lawcomm.co.uk).
The content of this article does not constitute legal advice.
