Rakusen v Jepsen & Ors (2023) UKSC 9
The issue for the Supreme Court was whether the wording of section 40 and 41 Housing and Planning Act 2016 meant that a rent repayment order could be made against only a tenant’s immediate landlord, or also against a superior landlord (where the occupying tenant’s landlord themselves had a tenancy of the property) where that landlord had also committed a relevant offence.
Section 40 provides
- Introduction and key definitions
(1) This Chapter confers power on the First-tier Tribunal to make a rent repayment order where a landlord has committed an offence to which this Chapter applies.
(2) A rent repayment order is an order requiring the landlord under a tenancy of housing in England to—
(a) repay an amount of rent paid by a tenant, or
(b) pay a local housing authority an amount in respect of a relevant award of universal credit paid (to any person) in respect of rent under the tenancy.”
The issue really turned on the meaning of ‘a landlord’. The Court of Appeal, overturning the Upper Tribunal (Lands Chamber) had found that as a matter of statutory interpretation, this was a reference to the landlord in the tenant’s tenancy, not any superior landlord. (Our note here).
Shortly, the Supreme Court agreed.
This straightforward interpretation links the landlord with the tenancy that generates the relevant rent. It renders it artificial and unnatural to construe the opening words of section 40(2) as referring to any landlord other than the landlord under the tenancy which generates the relevant rent, that is the rent to be repaid under section 40(2)(a) and the rent in respect of which the universal credit is paid under section 40(2)(b). It excludes a superior landlord because it is not the “landlord under” the tenancy which generates the rent.
The appeal was dismissed.
For transparency, I acted for an intervener, Safer Renting, whose concern was to set out the range of poor and illegal practices carried out in ‘rent to rent’ arrangements, or where a property owner sought to distance themselves from the handling of the property behind a company or companies, obfuscating who was responsible for management and who ultimately received the rent.
The Supreme Court decision does make rent repayment orders of little utility as a way to tackle rogue landlord, and the committing of relevant offences, in ‘rent to rent’ set-ups. This is despite such set-ups being more likely to commit such offences, either deliberately or through incompetence. A ‘rent to rent’ landlord facing rent repayment order applications will typically just disappear, or dissolve the company. Payment of RROs made against such set-ups is rare and impossible to enforce.
The Supreme Court acknowledges this, but considers it a matter for Parliament to address
we accept that the interpretation we take renders RROs less effective than they perhaps could be if they were to be made available against superior landlords. But in our view that development would undermine the clear definition of an RRO, as set out in section 40(2) of the 2016 Act, and would therefore require new legislation. In other words, if this is thought to be a problem any reform would be a matter for Parliament and cannot be achieved through a distorted interpretation of the relevant provisions in the 2016 Act.
Hopefully, this will happen, otherwise tenants of rent to rent setups, most likely to suffer problems at the hands of their landlords, will simply see the landlord escape without penalty (and frequently re-emerge in a very similar guise – see here for example).