LATEST: High Court intervenes dramatically in rent-to-rent sector over RROs
The High Court has intervened dramatically in the rent-to-rent sector after three judges ruled that a landlord who sublets their properties via this kind of scheme are not liable for Rent Repayment Orders (RROs).
The ruling overturns a previous decision by the Upper Tribunal in Rakusen v Jepson, which ruled that an RRO application could be made against any landlord of the relevant property for the relevant period of the relevant offence.
Leaseholder and landlord Martin Rakusen granted a tenancy of his flat in Finchley Road, London, to Kensington Property Investment Group Ltd (KPIG) in May 2016, introduced by agents Hamptons. KPIG then entered into separate written agreements with the four tenants.
In November 2018, Hamptons told Rakusen that KPIG wanted to apply for a licence but none was granted and Rakusen did not renew KPIG’s tenancy in May 2019. The tenants then applied for, and won, RROs totalling £26,140.
Significant difference
Giles Peaker (pictured) at Anthony Gold Solicitors says the judgement will make a significant difference to those seeking RROs against less than salubrious landlords.
He adds: “A crumb of comfort is that the Court of Appeal accepted the policy intent and the ‘on the ground’ situation with dodgy rent to rent/intermediate landlords may both merit the extension of RROs to superior landlords. But the Court of Appeal consider that is now a matter for parliament.”
Tim Frome (pictured), MD of Property Redress Scheme, says the decision limits a tenant’s options if they have a case for a RRO against an intermediary landlord, particularly if that intermediary landlord has subsequently gone out of business.
“At the Property Redress Scheme we have a number of members who undertake rent to rent tenancies and we regularly assist both the agents and their consumers to come to resolutions on complaints,” adds Frome. “We’ve also been in regular dialogue with the government on the growing rent to rent industry and they are looking carefully at whether it needs further regulation.”
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