Rent Repayment Order Magic Money Tree is pretty much dead!

by Phil Turtle, Landlord Licensing & Defence

9:11 AM, 10th August 2020
About 2 months ago

Rent Repayment Order Magic Money Tree is pretty much dead!

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Rent Repayment Order Magic Money Tree is pretty much dead!

“Rent Arrears must be accounted for BEFORE rent is eligible to be reclaimed under a Rent Repayment Order (RRO).”

At a stroke, this Judgement of the First-Tier Tribunal (in a case defended by Des Taylor of Landlord Licensing and Defence) means that the no-win/no-fee become almost worthless for the lawyers, and far fewer Rent Repayment Orders (RRO) will be brought against landlords in the future. Click here to download the full judgement

The Hastings law firm of Holden & Co LLP representing the rogue tenant would have expected 30-50% of the £7,184 amount. Let’s say £2,200 to £3,600.

After Des Taylor’s defence of the landlord against this malicious claim, the Tribunal made just a token RRO award, and so the no-win/why-bother lawyers stand to make just £250 to £420.  In context, that’s 1-2 hours fee for 2-3 days’ work. Not exactly good business!

Thanks to Des Taylor’s ground-breaking win at the First-Tier Tribunal (Housing) the Rent Repayment Order Magic Money Tree so loved by Rogue Tenants is pretty much dead!

Des Taylor a director of Landlord Licensing & Defence, was able to persuade the Tribunal that the tenant making the no-win/no-fee Rent Repayment Order claim was a serial non-payer of rent, and had illegally taken in multiple lodgers whilst sometimes claiming universal credit.

Said Des Taylor, “It is ridiculous that a rogue tenant can attempt to claim over £7,000 in rent repayment order fees which the landlord will be directed to pay to the tenant in cash when the tenant owes the landlord £16,000 in unpaid rent.”

The victory for landlords came in two decisions by the Tribunal

Arrears First

Until this judgement, tenants and lawyers have been able to pick almost any period they like where the tenant paid the maximum amount as the “Relevant Period’ for the claim, and that’s exactly what this tenant did. There was only one period of 7 months when she’d actually paid any significant rent, so that of course was the period her lawyers picked and £7184 was the amount she was attempting to claim for rent repayment.

At the start of this maliciously chosen ‘Relevant Period’ however, the tenant was already £3,132.95 in arrears.

Stating that standard accounting practice must be applied to Rent Arrears, the Judge said in her findings: “The Tribunal is satisfied that it would be standard accounting practice for any landlady/landlord or council/housing association to apply any payments made during the Relevant Period firstly to any arrears that had accrued prior to the date of payment”

This decision that monies received must first go to arrears before counting as “Rent Paid’ for the purposes of a Rent Repayment order meant the Judge slashed the maximum RRO claimable from over £7,000 to just £4201.09.

But that was not all…

Rogue tenant behaviour

Although obviously a Judge cannot use words such as Rogue tenants, it was noteworthy and unusual that she reported in her findings “Mr Taylor submitted it was clear that the account showed the Applicant (tenant) was a person who constantly was in arrears (which had risen from £4,700 to over £13,000), that she was a ‘rogue tenant’ who failed to pay the rent, and then took advantage of the Respondent’s (landlord) ignorance of the licencing requirements.

“He (Taylor) submitted the Applicant had specifically chosen as the Relevant Period a time when rent was being paid, but she was in arrears at the start of that period, and for more than a year from July 2019 had paid no rent at all. He said the Respondent should not be doubly punished by being ordered to repay rent, when the Applicant had not been paying any rent for a substantial period.”

Summing up the Judge said “The Tribunal finds the Applicant’s failure to pay any rent since July 2019 to be a deliberate, persistent and very substantial breach of the terms of the tenancy agreement following the souring of relations between the parties in July 2019. This default has resulted in the rent arrears increasing very significantly.

“The Tribunal finds that as at the date of the hearing of this application, Mrs Awad owed the Respondent a total of £15,538.32 for the six-bedroom property she occupies with her family. She appears to have taken no proper steps to seek advice, to maximise her income or reduce her indebtedness and to have taken advantage of the Respondent’s inexperience. The Tribunal has given this very significant weight when considering the Applicant’s conduct.”

The Tribunal then decided that based on what Taylor had described as Rogue Tenant behaviour they would cut the already significantly reduced Rent Repayment claim by a further 75%.

The Judge said “This is to reflect the Applicant’s (tenant) continued persistent, deliberate and very significant breach of the terms of the tenancy as regards payment of rent and her obstructive behaviour in preventing the Respondent (landlord) from carrying out inspections.

And so the final figure awarded against the Landlord was £849.18 and that not because she deserves it in any way, owing as she does over £16,000 in unpaid rent, but because the legislation says that Rent Repayment Orders are intended to penalise landlords for failing to license property and a few other crimes.

The Landmark Justice for Landlords Decision

Commenting on the judgement, Des Taylor explained, “This judgement has given us two fantastic decisions with which to fight malicious and speculative no-win/no-fee Rent Repayment Order claims.

1) A majority of ‘money grabbing’ claims are brought by tenants in arrears. We now know that with a correctly structures defence we can get the arrears taken off the claim. In many cases this makes the case no-chance-of-fee for the ambulance-chasing solicitors.

2) We also have the highest ever ‘discount’ applied because of the tenant being ‘rogue’.

Click here to download the full judgement (you should!)

Fair Justice

It has to be recorded that the Landlord was, of course, guilty of the crime of not having a licence or the tenant would not have been able to instigate the RRO claim.

Her ignorance of the requirement to licence was, of course, no defence, though through the approach Taylor took in defending her enabled the Judge to agree that this was due to inexperience, was not deliberate and that, responsibly, she had immediately applied for a licence upon realising she needed to have one. Instead of the over £7,000 RRO claim, her punishment, which we agree more fairly fits the crime, is just £849.18, in other words, our defence assisted her to get the fine reduced by 88%.

We now move forward to assist the landlord to successfully evict the tenant and recover the £16,000 arrears.

Final Score

Decent Landlords: 1 Rogue Tenants: Nil

Landlord Licensing and Defence: Helping Landlords get out of trouble when they get into it.

Councils and Tenants are ruthless and unforgiving and will destroy your business in one inspection.

LANDLORD LICENSING AND DEFENCE fights your corner like no other.

Civil Penalties and Rent Repayment Orders are severe and business breaking for most. We cut to the chase and get things sorted.

Anyone can get it wrong; we reduce the chances of it breaking you, psychologically, financially and physically.

Get in touch, with us when the Council or the Tribunal gets in touch with you.

Telephone 0208 088 0788 or http://www.landlordsdefence.co.uk/book  for an initial assessment


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Comments

Monty Bodkin

9:34 AM, 11th August 2020
About 2 months ago

Reply to the comment left by Mike at 10/08/2020 - 16:16
From the article;

"had illegally taken in multiple lodgers whilst sometimes claiming universal credit."

Mick Roberts

12:34 PM, 11th August 2020
About 2 months ago

Brilliant,

Keep it up.

But still slightly annoying that we can't have common sense legal process here that says Yes Rent repayment order, but clear your arrears up first before we look at anything coming back the other way.
But excuse me, good, I read on & now just £849.18 for not Licensing. Finally punishment to fit the crime, not £3000 these councils wish to dish out which then makes Landlord thing I've had enough, I'm selling. Costs other side of the council more money in homeless.

You said it Ian, Licensing should be to make house better for tenant, instead now it's a paper exercise to see what they can trip the Landlord up on.

Frederick Morrow-Ahmed

12:38 PM, 11th August 2020
About 2 months ago

Reply to the comment left by Giles Peaker at 10/08/2020 - 23:35
Hi Giles,

I was seeking to make a generic statement and regret that in doing so in a rush it was badly worded.

My contention is that imposing layer upon layer of facetious legislation does absolutely nothing for tenants - zilch, nada. All it does is impose unproductive bureaucracy. I let my first flat in Southampton in around 1973 for a period when my firm transferred me to Wales. I then let my next property in London a few years later when I went abroad to work. This was during the dark days of the Rent Act 1977 (which luckily had provisions for people in my situation to get their property back upon return) but even in those days the only paperwork required was a simple tenancy agreement of a few pages. I have seen this grow exponentially to a state where a book in many binders is required. Did it improve the situation for my tenants? Not an iota. They were being as well looked after when 4 pages were required as when a few tomes are. I have also seen their situation change from where they were desperate to find any property to rent (merci Rent Act 1977) to one where there is an abundance of property (thank you Mrs Thatcher for the Housing Act 1988). The greatest gift to tenants is the ability to vote with their feet, not asinine legislation. The only laws needed are prescriptive laws relating to safety (I come from an engineering background), otherwise caveat emptor. I may make an exception for deposit protection as there may have been landlords abusing this. But the greatest of all gifts to tenants, and I have already made myself unpopular on this website for airing this, is to be placed on an equal footing with landlords regarding mortgage interest relief so that they themselves can buy their own property. This was the case when MIRAS was available. It surely cannot be right that a whole generation of young people cannot get their feet on the housing ladder when, in comparison, a handful of landlords (whether incorporated or not) have “portfolios” of many houses. The difference lies in mortgage interest relief for the two (I await the backlash).

So, I am sorry that my earlier comment thoughtlessly incorrectly associated you with RRO. That was not the intent. Nor do I wish to make this personal in any way but to espouse a philosophy.

David

13:22 PM, 11th August 2020
About 2 months ago

easily done Monty to "screw up".I suggest this landlord was just an ordinary person, like so many, wanting to let a property for some income and retirement funds, not a business with a team of assistants and a legal team to guide her through the bureaucracy and parasites waiting to collect off her sweat. Rather sad the Courts dont have a little human sympathy and fairness. Its very obvious these local council schemes are a scam to collect money which they seem to waste. I have read they complain even with these schemes they dont have the resources to operate the scheme properly but how is that? In the meantime they delay granting licenses to landlords and simply discourage decent landlords from remaining in the sector.

Ian Narbeth

14:34 PM, 11th August 2020
About 2 months ago

Sometimes it seems its part of a plan to have every landlord in "breach" of some rule or other so that the politicians, local or national, can with impunity criticise all landlords and if they protest too much, fine them or put them to huge expense. Nobody else gets fined £1000 to £5000 because a simple form (like a Prescribed Information Form) has a trivial mistake in it. Most people's legal claims aren't thrown out of court because a year previously they failed to get the tenant's express consent to use the holding deposit towards the rent. I could go on. I challenge anyone to name a piece of legislation in the past 5 years that could be described as pro-landlord.

Monty Bodkin

15:24 PM, 11th August 2020
About 2 months ago

Reply to the comment left by Ian Narbeth at 11/08/2020 - 14:34
I challenge anyone to name a piece of legislation in the past 5 years that could be described as pro-landlord.

Section 21's no longer need to specify last day of a period of a tenancy.

New section 8 mandatory ground 7B.

(But I get your point!)

Ian Narbeth

17:20 PM, 11th August 2020
About 2 months ago

Reply to the comment left by Monty Bodkin at 11/08/2020 - 15:24
And that's the best the Govt has given us: the removal of a pointless trap and assistance in enforcing the draconian right to rent laws (up to five years in jail threat to landlords which is more than for assault).

Giles Peaker

17:55 PM, 11th August 2020
About 2 months ago

Reply to the comment left by Frederick Morrow-Ahmed at 11/08/2020 - 12:38
"I was seeking to make a generic statement and regret that in doing so in a rush it was badly worded."

You mean that you intended to infer that I am to blame for *all* legislation that you consider 'anti landlord'? I'm not sure that is an excuse...

Agree on mortgage interest relief. Not so much on the rest. If landlords want to see themselves as service providers, service providers are, in general, highly regulated.

I do think that housing law has become ridiculously complicated (eg, I'm going to have to redo my section 21 validity flowchart. Currently 10 pages, will likely now be 14 pages and a lot of question marks) and should be overhauled and simplified. But I can't see how an objection to a straightforwardly enforceable penalty for illegal eviction, or harassment, or breach of HMO regs can really be maintained. Failure to licence might attract more of my sympathy, but then, of course every single landlord who fails to licence does so accidentally out of misunderstanding or lack of knowledge (even when they most certainly don't).

I think the overall message from the government is relatively simple - the PRS must professionalise - albeit that the way that put that message into legislative practice is often flawed. As I often point out on my site 'Definitely Illegal'.

The only legislation I've had a part in was indeed 'prescriptive law relating to safety', by the way.

Monty Bodkin

17:58 PM, 11th August 2020
About 2 months ago

Reply to the comment left by Ian Narbeth at 11/08/2020 - 17:20Nevertheless, they are pro landlord pieces of legislation, as was asked.
Personally, I'm cautiously optimistic about Boris & co for landlords.
Osborne was openly hostile against plebeian landlords.
May half heartedly carried it on.
At least this lot have stopped putting the boot in (for now). Whether that is intentional as we are now starting to see the consequences of landlord bashing, only time will tell.

Giles Peaker

19:26 PM, 11th August 2020
About 2 months ago

On the original post, I have to point out that this is a precedent for nothing. It is an FTT decision that does not bind any other Tribunal. If it is appealed to the Upper Tribunal and the decision upheld, that would be binding, but until then, there is no certainty that other FTT decisions would go the same way. In short, anyone seeking to rely on this decision is taking a risk...

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