Rent repayment orders (RROs) are on the rise, as tenants are realising that they can recoup up to 12 months’ rent (24 months under the Renters’ Rights Bill) if their landlord hasn’t followed private rented sector laws. Landlords are understandably increasingly worried about RROs. The most viewed story in 2023 on LandlordZONE, which is also powered by Total Property, was Landlord to pay tenants £12,500 because ‘innocence of law is no defence’. This is indicative of interest in this topic, but also highlights the wider issue of the risks that landlords who fail to follow the law expose themselves to.
Rent repayment orders are a tool the Government has introduced to enable tenants to trigger enforcement powers on landlords. They aim to deter landlords from breaking tenancy laws and are there to empower tenants to take effective action against unscrupulous landlords. Rent repayment orders are also made available to local authorities where the rent has been paid through Universal Credit or housing benefit.
Under the Renters’ Rights Bill, due to become law sometime in early 2025, the Government is strengthening rent repayment orders. The measures taken aim to increase further the deterrent effect of the orders, making them easier and more appealing for tenants and local authorities to pursue, and the Bill expands them to cover more of the sector.
A rent repayment order is a mechanism through which, currently, a landlord who has committed an offence can be ordered to repay an amount of rent to the tenant or local authority.
Where a tenant believes their landlord has committed a listed offence, they can apply to the First-tier Tribunal (FtT) for a rent repayment order. If the Tribunal is satisfied beyond reasonable doubt that the landlord has committed one of the listed offences, it can order the landlord to repay an amount of rent.
Local authorities can also pursue rent repayment orders where the rent has been paid by housing benefit or Universal Credit.
The Renters’ Rights Bill will extend rent repayment orders to the following offences:
These are set out in more detail in Section 40(3) of the Housing and Planning Act 2016.
RROs were first introduced in 2004 as an additional measure used by local authorities to penalise landlords for HMO licensing offences, but these powers were subsequently extended in 2016 so that tenants are able to make claims – see this guide to rent repayment orders.
RROs, when made out, require repayment of rent, housing benefit or the housing costs element of Universal Credit. This is in respect of a tenancy or licence by a landlord or letting / managing agent who has committed a particular offence – see below.
To obtain an RRO it is not necessary for the landlord or agent to have been convicted of an offence in the courts, but in order to grant an RRO, The Residential Property Tribunal (RPT) must be satisfied beyond reasonable doubt (the criminal standard of proof) that one of the qualifying offences has been committed. The decision to prosecute is a matter for separate consideration but a finding against by the RPT is likely to be persuasive.
The RRO proceeds are paid either to the tenant directly, or to the local housing authority if rent was originally paid through housing benefit, or through the housing element of Universal Credit. If the rent was paid partially by the tenant with the remainder paid through housing benefit/Universal Credit, then the rent will be repaid on an equivalent basis.
The Housing Act 2004 introduced RROs to cover situations where the landlord of a property had failed to obtain a licence for a property that was a House in Multiple Occupation (HMO) - one that was required to be licensed. Since the Housing and Planning Act 2016 the scope of the RRO had been widened to cover the additional offences listed above and as explained will be widened further on the passing of the Renters’ Rights Bill.
The failure of a landlord / agent to license a licensable property is a common reason for awards of RROs. HMO licences, other types of property licences and RROs apply to specific individuals or companies:
Not to transfer - landlords apply to their local authority for an HMO licence or other types of property licences. These licences cannot be transferred to another person or entity, they are specific to the landlord, so when a new owner / landlord acquires a property that requires and already has a licence, they cannot rely on the existing licence. They must apply to the local authority for their own licence. They commit an offence if they do not.
Superior landlord - an RRO can currently only be made against the tenant's immediate landlord and not the superior landlord, but as stated above, that will change on the passing of the Renters’ Rights Bill. The determination under a Supreme Court ruling in an appeal in the 2021 case of Rakusen v Jepsen will be reversed so that an RRO can be made against a superior landlord.
Limited company licensees - company landlord directors cannot be held personally liable to repay rent to tenants or licensees under RROs as confirmed in the 2022 case of Kaszowska v White, but again this ruling will be reversed on the passing of the Renters’ Rights Bill. Company directors will then be held liable.
Note: The licence holder (individual or company) must have an interest (ownership) in the property for the period of the licence. If the licence holder is a company, it must provide the address of the UK registered office and the names of the company secretary and directors.
These changes cited above bring particularly important decisions for landlords / property owners and agents who enter into sublet or rent to rent arrangements and for landlords who operate through limited companies.
Great care needs to be taken on how rent to rent arrangements are set up, as an owner of a property can be a tenant's immediate landlord if the person or company named on the agreement is acting solely as an agent. Always seek advice from a property specialist lawyer when setting up these tenancies.
In cases where there is some ambiguity as to who is the immediate landlord and who is the agent, an RRO can be made against either or both of them jointly. This ambiguity is often the case with rent to rent arrangements where the agreements are not properly structured.
You can read more on rent to rent in the ‘Ultimate landlord guide to rent to rent’. from mydeposits, also powered by Total Property.
Rent repayment orders are not obtained through the court's system but through a Residential Property Tribunal. The Housing and Planning Act 2016 introduced changes to widen the scope of the original rules - again to be widened further under the Renters’ Rights Bill - which gave individual tenants the right to apply directly to the Tribunal for an RRO for the various offences listed above.
Local authorities also were given greater powers following the 2016 Act. They have the power to impose unlimited fines or bring criminal charges for the above offences. They are able to keep the proceeds of these fines to fund greater enforcement efforts in their local areas.
Tenants can apply for an RRO on the payment of a fee (recoverable if successful) to recover rent (capped at 12 months’ rent to be extended under the Renters’ Rights Bill to 24 months) they have paid to the landlord or agent, providing they were occupying the property at the time the offence was committed and this was within the last 12 months, to be extended to 24 months under the Renters’ Rights Bill .
Legal costs in the first-tier and upper tribunal will be awarded at the discretion of the tribunal and the tribunal does not normally award legal costs against the tenant applicant/s, unless the claim is frivolous and unfounded or an applicant behaves unreasonably.
A local authority can apply for an RRO to recover housing benefit or the housing costs element of Universal Credit, providing the offence relates to housing in the authority's area, and a notice of intended proceedings has been served.
This notice will set out the reasons for making the claim and the amount of money being claimed. The landlord or agent respondent will be invited to make representations within a specified period of not less than 28 days, relating to a period of a maximum 12 (24 months under the Renters’ Rights Bill ) months of the landlord or agent committing an offence.
The amount being sought cannot exceed the amount of housing benefit or Universal Credit paid (directly or indirectly) to the landlord or agent over the relevant period. The local authority will be in a position to apply to the tribunal for an RRO after the expiry of its notice of intended proceedings and the process of its conceding any representations.
Where the claim is made by one joint tenant and the other tenant/s have settled with the landlord, the tribunal will start with the claimant's share of the rent when determining the RRO amount. Otherwise, awards will be made proportionately between multiple tenants.
The amount of the RRO award made by the tribunal will usually take into account other payments made by the landlord, such as utilities charges, which will be deducted from the award.
Also, the amount of the award will take into account the seriousness of the offence and a comparison to other awards made. The tribunal will also take into account the conduct of the landlord, whether they have been convicted of an offence or had a financial penalty applied, and their overall financial circumstances.
In the case of Leibel v Baird case [2021], by trying to hoodwink the tribunal and defend the indefensible landlord, Mr Baird's conduct exacerbated matters and brought down the wrath of the tribunal on his head. The case shows not only the importance of being honest in these matters, but of following the rule of the law in the first place, and of keeping and producing accurate documentary evidence.
According to government statistics, the quality of privately rented housing in England has improved markedly over the past decade. There were 82% of private renters reporting they are satisfied with their accommodation at the time of the last government housing survey.
However, the private rented sector in England accommodates around 19% of all households (around 4.5 million homes) with tenants staying in those homes for an average of around four years. Of the estimated 2.7 million private landlords, undoubtedly some of them fall into the rogue landlord category.
The previous Government said it wants to support good landlords who provide decent well-maintained homes, and avoid imposing further regulation on them, but it also wanted to root-out the rogue landlords by applying meaningful penalties for bad behaviour. There’s no reason to believe the present government should be any different in these objectives.
There are a relatively small number of rogue or criminal landlords who knowingly rent out unsafe and substandard accommodation, who the Government had said it was determined to crack down on. One way to do that without having local authorities take landlords through long drawn-out court cases, is to have an effective financial penalty system of landlord fines and using rent repayment orders.
However, since the scope of the RROs was widened in 2016 and there has been increasing awareness of them, claims against landlords have been on the rise.
Heavy civil penalties and up to 12 months’ rent repayment orders (24 months under the Renters’ Rights Bill ) made out in favour of individual tenants, company landlords or local authorities are an effective deterrent to those landlords who deliberately or carelessly commit civil and criminal offences. Landlords should be mindful of this and make sure they are compliant with the necessary rules when letting a property. The Leibel v Baird case is an ominous warning against trying to game the system.
“Remember, innocence of law is no defence - landlords might make the simplest mistake but the fact they didn’t know the law simply isn’t enough. If you’re renting out your property, the first thing you need to know is whether you need a licence. You can’t serve a Section 21 without one. [Section 21 will be abolished under the Renters’ Rights Bill but the rule will also apply to Section 8]. There are different types of licences and there can be several even within the same local authority, but the general rule of thumb is that if you have a property to rent in a town or a city in the UK, there will be a licensing scheme of some sort - HMO, selective or discretionary.”
- Paul Shamplina, Founder of Landlord Action and Chief Commercial Officer of Total Landlord
To find out more about licensing for landlords, read our guide, ‘What is licensing and do I need a landlord licence to let my property?’ And to find out more about being an HMO landlord read our ‘Ultimate guide to letting an HMO property’.
