Landlords who rent out properties without a required licence are commonly ordered to repay rent they have received. However, as an important Upper Tribunal (UT) ruling made plain, it is crucial that financial penalties match the seriousness of the offence.
The case concerned a basement flat in an area where a selective licensing scheme applied, requiring licences to be obtained for properties that are let to one or two people, or one-family households. The landlord, who rented out the flat to two tenants, admitted that he had not obtained such a licence.
Following a hearing, the First-tier Tribunal noted that the flat was affected by damp and mould, that the tenants’ deposit had not been protected, that the landlord did not hold gas or fire safety certificates and that there were failings in fire safety equipment. In those circumstances, the landlord was ordered to repay £16,800 in rent to the tenants, that sum representing the entirety of the rent they had paid over a 12-month period, less the cost of utilities.
In upholding the landlord’s challenge to that outcome, the UT noted that, in some cases, landlords provide perfectly satisfactory accommodation but fail to obtain a licence out of ignorance. A clear distinction needed to be drawn between them and landlords who harass their tenants or who rent out dangerous properties which would not have qualified for a licence even had one been applied for.
Considering the gravity of the landlord’s conduct, the UT noted that the fire safety failings may have rendered the property ineligible for a licence. The failure to protect the deposit was also a significant breach of the duty he owed to his tenants. It was not, however, the most serious offence of its kind. The rent repayment order was reduced to £12,600, or 75 per cent of the rent paid by the tenants over the relevant period.