Rent Repayment Order Magic Money Tree is pretty much dead!

by Phil Turtle, Landlord Licensing & Defence

9:11 AM, 10th August 2020
About 4 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

22:30 PM, 11th August 2020
About 4 months ago

Reply to the comment left by Ian Narbeth at 10/08/2020 - 10:08Well done indeed!

Fantastic result.

Mick Roberts

10:06 AM, 14th August 2020
About 3 months ago

Reply to the comment left by Monty Bodkin at 11/08/2020 - 17:58I've just put the below on somewhere else Monty, & relates to what u said about the Consequences. And same for Giles, if he supports tenants (which I do), even my tenants are saying they've gone too far:
Good affluent tenants will always manage, but whereas 10 years ago, 15 HB Benefit tenants would be queuing for a property, it's now 15 working Letting agent worthy credit checked tenants that are queuing up. Invariably leading to higher rents.
We got to remember, RENT PAYS FOR EVERYTHING.
Yes Landlord pays initial costs and sets houses up, but he then gets it back and ongoing costs by rent coming in.
U keep giving Landlord more costs, he either puts rent up or packs up.
And then with those packing up, supply and demand, they can put costs up even more.
Let's turn it round and exaggerate this. U let Landlord evict after 2 weeks of non payment, he gets his house back, minimum cost, he rents again.
Next Landlord thinks this isn't bad, I'm gonna buy some more, at least I don't have to wait 6+ months to go to court with no income in to evict.
More Landlords more houses. Rents fall. Tenants have a choice. Tenants especially vulnerable ones can't move anywhere at moment. U let Landlords get their property back sooner if no rent and damage, and more will buy.
Tenants ten years ago if they din't like something, they'd just move, it was easy for them. Landlord had to be half alright or he din't have a tenant.

I've just had this house this week:
https://photos.app.goo.gl/F4wPEF9Xyh3iV1FJ8

Ian Narbeth

10:27 AM, 14th August 2020
About 3 months ago

Reply to the comment left by Mick Roberts at 14/08/2020 - 10:06
..but Mr Roberts can you PROVE you didn't let it in that condition?
OK, SARCASM OFF.

Does anyone believe that a one month deposit is anywhere near adequate to cover the cost of putting that house back into a tenantable condition?

"Rent pays for everything". Succinctly put, Mick. Politicians and tenants and tenant advisers, take note.

Mick Roberts

10:44 AM, 14th August 2020
About 3 months ago

Reply to the comment left by Ian Narbeth at 14/08/2020 - 10:27
That's the thing Ian,

I can't prove, but she knows she had new kitchen 7 years ago.
And this is why now, all new ones I keep go with Letting Agent which invariably costs tenant more money.

We need to educate em Yes Rent pays for everything. More costs they put on us more rent. Rent gets too expensive, we sell.
It's like a tax all these charges, where u have no choice, but eventually they push us too far & we sell. Remaining Landlords put their prices up, well just cause they can.

Des Taylor Landlords Defence Ltd

10:47 AM, 14th August 2020
About 3 months ago

Reply to the comment left by David at 10/08/2020 - 11:46
Hello David,

Thanks for your response and comments and for reading it and taking note.

To address each of the things

a) Rent arrears, this is a victory, as the FTT does not and cannot in RRO cases, address the repayment of arrears, nor offset against the claim.

What it did which, it was empowered to do and that was adopt GAAP (Generally Accepted Accounting Practices) and apply the relevant Period payments not to the rent in the period directly relating to the Relevant Period Dec 18 to Jul 19 but as in GAAP, to apply those payments received to the arrears that had accumulated since the inception of the tenancy.
This is an important point. I t closes down a loop the no-win, no-fee lawyers had not accounted for.

b) The amount awarded is significant as it equates to 12% of what the tenant had hoped for.

c) The landlady was not prosecuted for not having a licence and will not be, she also had received some income from the refuging friend via council payments, so it offsets that, hence balances the books more or less without any other issues.

d) The Tribunal has clearly seen suitable to permit the direct transcription of the words Rogue Tenant and noted the details in the decision about the running of the business from the premises, even though the evidence was not admitted to the hearing, it leaves a public record for follow up on benefit fraud and HMRC investigations of the Rogue Tenant and her family.

e) Rent Repayment Orders have their place, and when the Housing and Planning Act 2016 came into force on 6th April 2017, no one had imagined before that, it would be a new game for lawyers of Tort, or that councils would employ people with the funding from the Ministry of Housing, Communities and Local Government to assist tenants in making Rent Repayment Order claims and to work in conjunction with Housing Enforcement Intelligence Officers within the council to make this a secondary penalisation of landlords both good and bad.

f) Licensing exists and landlords must be aware of licensing in their area the same way as drivers must be aware of licensing to drive different vehicles. Sadly, many are not aware and the consequences are the council can prosecute and the tenant can do so too, (using the RRO process).

g) The arrears amount has now been legally assessed and confirmed and of course the arrears are now a matter of fact and the landlady can go for summary judgment and send in the bailiff (after following the right process) and/or bankrupt the tenant.

Hopefully that clarifies some things and the reason it is a victory is: the arrears could not be offset, but the payments could be applied to the arrears, closing the wide gap that had remained open.

The tribunal has done the landlady a lot of favours and the injustice of the Rogue Tenant’s retaliatory actions have backfired.

Thanks.

Des Taylor
Casework Director
Landlords Defence Limited
0208 088 0788
https://www.landlordsdefence.co.uk/book/

Des Taylor Landlords Defence Ltd

10:51 AM, 14th August 2020
About 3 months ago

Reply to the comment left by Mike at 10/08/2020 - 16:16
Hello Mike,

The Rogue Tenant will not be getting away with the money, she will paying it off from her future income and assets, the arrears amount has now been legally assessed and confirmed and of course, the arrears are now a matter of fact and the landlady can go for summary judgment and send in the bailiff (after following the right process) and/or bankrupt the tenant.

You can all see the name of the tenant and you can all remember her modus operandi.

Thanks.

Des Taylor
Casework Director
Landlords Defence Limited
0208 088 0788
https://www.landlordsdefence.co.uk/book/

Des Taylor Landlords Defence Ltd

10:51 AM, 14th August 2020
About 3 months ago

Hello Mike,

The Rogue Tenant will not be getting away with the money, she will paying it off from her future income and assets, the arrears amount has now been legally assessed and confirmed and of course, the arrears are now a matter of fact and the landlady can go for summary judgment and send in the bailiff (after following the right process) and/or bankrupt the tenant.

You can all see the name of the tenant and you can all remember her modus operandi.

Thanks.

Des Taylor
Casework Director
Landlords Defence Limited
0208 088 0788
https://www.landlordsdefence.co.uk/book/

Des Taylor Landlords Defence Ltd

10:59 AM, 14th August 2020
About 3 months ago

Reply to the comment left by Monty Bodkin at 10/08/2020 - 18:46
Hello Monty,

The landlord has been duly, fairly and fully punished both legally and morally. She understood that and was as the judge stated naïve. That was a key point and carried a lot of weight.

A victory for decent tenants: YES!

A victory for decent landlords: YES!

A victory for amateur landlord: YES!

A warning for all Landlords: YES!

Thanks for taking the time to read and comment.

Des Taylor
Casework Director
Landlords Defence Limited
0208 088 0788
https://www.landlordsdefence.co.uk/book/

Des Taylor Landlords Defence Ltd

11:16 AM, 14th August 2020
About 3 months ago

Reply to the comment left by Frederick Morrow-Ahmed at 10/08/2020 - 12:20
Hello Frederick,

Thanks for commenting and I see you have some views which are interesting.

Rent Repayment Orders have their place, like all punishments.

In anger, misinformation and misunderstanding, things can often look like conspiracies, collaboration against others and laws designed to benefit one, none or specific individuals or organisations. Often when we delve into consultations and the reasoning we find that things have often happened as there was little or no representation nor opposition at consultation and proposal stages by those that often now find the situation very opposing to them.

There is process and procedure to address this and our legal system, like all, is not perfect, nor will it ever be.

What is important is that when considering each viewpoint, there will always be more than one and compromise will always be needed, whether agreed between the parties or judged by authorities.

The key here is that the system has been played by tenants and another loop has been closed. It also means that lawyers in the area will most likely charge fees for their work, than percentages of settlements as winning large amounts is no longer as likely as it may have once seemed.

Des Taylor
Casework Director
Landlords Defence Limited
0208 088 0788
https://www.landlordsdefence.co.uk/book/

David

11:19 AM, 14th August 2020
About 3 months ago

Reply to the comment left by Mick Roberts at 14/08/2020 - 10:06
Hadn't noticed tenants queing in my affluent area of Surrey perhaps they still are in London , Manchester etc.
In my experience and area supply seems high and I haven't noticed many typical 1 and 2 bed properties come on to the market, probably because landlords are hanging on hoping prices will rise. Rental prices have fallen in my area or stagnated, with few exceptions and tenants are canny enough to bargain prices lower.
Unlike 10 years ago when tenants had to pay fees and there was an incentive to stay put to avoid further fees, now they can switch as they please.

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