In a landmark ruling, which clarifies the respective responsibilities in a Rent-to-Rent arrangement, the Supreme Court has ruled that Rent Repayment Orders cannot be made against a ‘superior landlord’.
This means tenants cannot seek redress and compensation from superior landlords – property owners or leaseholders and the liability instead sits with their immediate landlord – normally the rent-to-renter – who they have signed the tenancy with. This is good news for those who find their property has been sublet unknowingly, or who knowingly but in good faith, let their property to a company who subsequently breaches relevant legislation.
The case concerned superior landlord Martin Rakusen, the leaseholder of a flat in London, who granted a tenancy to Kensington Property Investment Group (KPIG). KPIG subsequently created an HMO to let the property to three tenants – Mikkel Jepsen, Ronan Murphy and Stuart McArthur – but failed to obtain the necessary HMO licence. The tenants applied to a First Tier Property Tribunal for a rent repayment order of £26,140 against Rakusen rather than KPIG.
This was challenged, with the counter argument being that the RRO could only be made against the immediate landlord, but the Upper Tribunal dismissed his appeal. Eventually, the Court of Appeal subsequently found in his favour, agreeing that an RRO could not be made against a superior landlord.
The Supreme Court was unanimous in its decision that a RRO cannot be made against a superior landlord but only against the immediate landlord of the tenancy that generates the relevant rent – in this case KPIG.
Whilst clarifying the situation in law for superior landlords – who will now breathe a sigh of relief – it will undoubtedly shine a spot light on Rent-to-Rent operators, many of whom have often been able to operate – until now – with little or no consequence in law.
If you have any questions about tenants referencing, deposits, inventory, maintenance issues, etc, email contact@lifeboatlettings.com. We are here to help!
