HMO Licences and rent repayment orders

If you own a house in multiple occupation then it is important to get the paperwork in order. If you don’t then you risk a conviction and/or a rent repayment order. In this blog we look at HMO licences and rent repayment orders.

Online and London based landlord and tenant lawyers and HMO solicitors

For landlord advice on rent repayment orders and houses in multiple occupation licencing issues call the landlord team at OTS Solicitors on 0203 959 9123 or contact us online. Appointments are available by phone or video call.

What is a rent repayment order?

A rent repayment order makes a landlord repay rent to their tenant. A rent repayment order can not only make HMO ownership unprofitable it’s also bad for business and for a landlord’s reputation.

When can a rent repayment order be made?

A landlord can only be made subject to a rent repayment order to repay rent if the landlord is found to have committed a specified offence where the penalty can be imposition of a rent repayment order. There doesn’t have to be a conviction for the rent repayment order to be made.

Is a landlord at risk of a rent repayment order if the property is occupied under licence?

Whether you rent a property to a tenant or under licence to a licencee, an HMO landlord can still be ordered to pay a rent repayment order if you have committed an offence under specified legislation. HMO landlords therefore need to be equally careful whether they are leasing rooms to tenants or licencing rooms to licencees.

What offences can result in rent repayment orders?

A rent repayment order can only be made if a specific offence has been committed, namely:

• The use or threat of violence to secure entry to a property contrary to section 6 of the Criminal Law Act 1977
• Either harassment or illegal eviction that is contrary to section 1 of the Protection from Eviction Act 1977
• Failure to comply with a prohibition order or a banning order under the Housing Act 2004
• Control of or the management of an unlicenced property contrary to section 95 of the Housing Act 2004
• Control of or the management of a house in multiple occupation without the appropriate HMO licence contrary to section 72 of the Housing Act 2004.

Is a conviction required for a rent repayment order?

A conviction isn’t required for a rent repayment order to be made. To make a rent repayment order all that a tribunal has to be satisfied of is that an offence has been committed . The burden of proof is beyond reasonable doubt that one of the specified offences has been committed. Reasonable doubt is the criminal standard of proof.

How much rent can be ordered to be repaid under a rent repayment order?

A rent repayment order can require the repayment of rent to a maximum of 12 months’ rent. If you are an HMO owner that can be a substantial loss of income.

However, the tribunal has discretion to decide on the amount and in cases where a tenant or licencee applies for a rent repayment order the tribunal must take into account the occupier’s conduct and deduct any housing benefit paid.

In some cases, the tribunal will also consider the conduct and financial circumstances of the HMO owner and whether there has been a conviction. What the tribunal won't do is limit the amount of the rent repayment order to the amount of profit made by the owner of the house in multiple occupation so whilst utilities bills can be deducted other overheads, such as repairs and replacement of furnishings, can't be discounted when assessing the maximum rent repayment order.

Can an HMO owner rely on an existing HMO licence?

If you are a relatively new HMO owner you can't rely on the fact that the previous owner of the property had an HMO licence. That’s because an HMO licence isn’t transferrable between owners of an HMO property and can't be assigned to the new owner on sale or transfer of the house in multiple occupation.

Who can apply for a rent repayment order?

If you own a house in multiple occupation then your tenant, licence holder or occupier can apply for a rent repayment order. A local housing authority can also apply for a rent repayment order.

Deadline for applying for a rent repayment order

There is a deadline or time limit after which a rent repayment order can't be applied for. To secure a rent repayment order the occupier of an HMO must apply for the rent repayment order within twelve months of the date of the offence and can get a maximum of twelve months rent as a rent repayment order.

Who decides rent repayment orders?

An HMO occupier who wants to secure a rent repayment order has to apply to the First-tier Tribunal (Property Chamber) using the prescribed form. The First-tier Tribunal must be satisfied beyond reasonable doubt that the owner of the house in multiple occupation has committed the prescribed offence although a conviction isn’t necessary.

Can you appeal a rent repayment order?

It is possible, in some cases, to appeal against a rent repayment order. The appeal application is made to the Upper-tier Tribunal. It is best to get specialist legal advice from HMO solicitors before launching an appeal. Not paying the rent repayment order or appealing the order is not the best option as failure to pay a rent repayment order (that isn’t successfully appealed) will end up with the rent repayment order being enforced as if it were a judgement debt.

Online and London based landlord and tenant and HMO solicitors

For landlord advice on house in multiple occupation licencing and regulation issues and your best options if you are facing HMO licensing penalties or a rent repayment order call the landlord team at OTS Solicitors on 0203 959 9123 or contact us online. Appointments are available by phone or video call.