Who pays a rent repayment order? Supreme Court date set for decision

Agents who manage properties on behalf of landlords face waiting until the end of this year to find out if it is they, or the landlord, who must pay a rent repayment order )RRO) when a licence has not been applied for, where required.

RROs of up to 12 months’ rent can be granted by a Tribual to tenants if a landlord or agent fails to licence a property properly, which in London and other high-rent cities can reach £30,000 or more.

Now, the Supreme Court has granted permission to appeal in a case to decide whether an RRO can be made against a superior landlord, usually the property owner, and not just the immediate landlord, i.e., the agent.

The appeal follows a very long-running legal spat between landlord Martin Rakusen and his tenants which has now reached the UK’s highest court, most likely this year or early next year.

Immeidate or superior?

Last summer the Court of Appeal ruled that RROs only apply to the immediate landlord, overturning a previous decision by the Upper Tribunal, which ruled that an RRO application could be made against any landlord of the relevant property for the ‘relevant period of the relevant offence’.

Rakusen granted a tenancy for his flat in to Kensington Property Investment Group Ltd (KPIG) in May 2016 following an introduction by Hamptons, but three years later he did not renew the agreement after KPIG failed to get a licence for the property.

The tenants realised the error and applied for and won RROs totalling £26,140.  Their legal team has now won a final decision on the matter in the Supreme Court. It will be ‘landmark’ because it will finally rule on whether both landlord and agent are liable to pay an RRO where a licence has not been secured for a property, or just the agent.

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