Supreme Court confirms rent repayment order can’t be made against a superior landlord 

The Supreme Court today ruled the tenants of an unlicensed house in multiple occupation (HMO) can’t take out a rent repayment order (RRO) against the leaseholder of the property because he wasn’t their immediate landlord. RROs are an important sanction against rogue landlords by allowing tenants, via the First-tier Tribunal, to seek repayment of rent from landlords who break housing regulations, such as renting out an HMO without a license. The are designed to encourage landlords to comply with the law or be put out of business. This case, Rakusen v Jepsen, concerns a flat on Finchley Road, N3, that the leaseholder, Martin Rakusen, let to a company called Kensington Property Investment Group Ltd after an introduction from estate agent Hamptons. He let the flat for three years from 2016. KPIG let rooms out in the flat without registering as an HMO. In September 2019, when the tenants discovered the flat was unlicensed, they sought an RRO against Rakusen for £26,000. Rakusen asked the FTT to strike out the claim, arguing it should be brought against KPIG. The tribunal refused. Rakusen appealed and in 2021 the Court of Appeal reversed the decision, saying RROs could only be taken out against direct landlords and Rakusen was a “superior landlord”. The case was appealed to the Supreme Court, and in a ruling handed down today, the court again backed the “superior landlord”. The case centres on the interpretation of section 40(2) of the Housing and Planning Act 2016, which states that an RRO can be made against “the landlord under a tenancy of housing in England”. The judgment, written by Lord Briggs and Lord Burrows, says a “straightforward interpretation” of this “links the landlord with the tenancy that generates the relevant rent”. “In our view, that straightforward exercise in interpretation of the words in section 40(2) indicates that the appeal should be dismissed; and that an RRO cannot be made against a… landlord higher up the chain of tenancies than the immediate landlord under the tenancy which generates the relevant rent,” the judges said. “Although not always true in the law, in this case the simple answer to the question posed is also the correct answer. An RRO cannot be made against a superior landlord. The appeal is therefore dismissed.” Rakusen (Respondent) v Jepsen and others (Appellants) Supreme Court (Lord Lloyd-Jones Lord Briggs Lord Kitchin Lord Burrows Lord Richards) 1 March 2023