NRLA hails landmark ruling on rent-to-rent companies

A landmark ruling from the Supreme Court has been welcomed by the National Residential Landlords Association (NRLA) that delivers clarification about the responsibilities of so-called ‘rent-to-rent’ companies.

These companies take over the running of a property for a landlord.

And the landlords’ organisations says that the ruling in the case of Rakusen v Jepsen will have important implications for the private rented sector as a whole.

In the case, the landlord, Mr Rakusen, agreed to let a flat to a rent-to-rent company and while the property required a licence, the company did not apply for one.

Tenants of the flat sought a Rent Repayment Order

As a result of the failure to be licenced, the former tenants of the flat sought a Rent Repayment Order (RRO) against Mr Rakusen rather than the rent-to-rent company – even though he had not received rent directly from the tenants.

At an initial tribunal, it was ruled that the RRO could be applied for against Mr Rakusen.

The Court of Appeal however later overturned the decision and ruled in Mr Rakusen’s favour.

And now the Supreme Court has ruled that where rent-to-rent companies take over the running of a property, they cannot shirk responsibility and expect to leave the landlord to pay for their legal failings.

‘Who should be responsible for legal obligations in rent-to-rent cases’

The NRLA intervened in the case in support of responsible landlords and its chief executive, Ben Beadle, said: “This case has never been about whether legal obligations should be met, but about who should be responsible for them in rent-to-rent cases.

“We therefore welcome today’s ruling which accepted many of the arguments made by the NRLA and provides important clarity for landlords and tenants alike.

He continued: “The ruling makes clear that it is the responsibility of rent-to-rent companies acting as a landlord to ensure that relevant legal requirements are met, since it is they who receive tenants’ rent.

“It is simply not right that such companies can take money from people without any responsibility for the property they are running.”

‘First ruling where the rent-to-rent company is held accountable’

Neil Patterson, the managing director of Property118, said: “It is interesting that this the first ruling where the rent-to-rent company is held accountable rather than the landlord.

“But the question still remains, what happens if and when the rent-to-rent company cannot pay – does this fall back to the landlord?”