Superior landlords cannot be liable for Rent Repayment Orders

In this case, the landlord, Martin Rakusen, was the leaseholder of a flat in London. He granted a tenancy to the Kensington Property Investment Group (‘Kensington Property’). Kensington Property then let out the property without an HMO licence. The tenants applied for an RRO of £26,140 against Mr Rakusen, which the tenants secured at first instance. Mr Rakusen challenged that decision and argued such an application should only be made against the immediate landlord and not him (as superior landlord).

The Upper Tribunal dismissed Mr Rakusen’s appeal, so he appealed further to the Court of Appeal. The Court of Appeal finally found in Mr Rakusen’s favour and agreed an RRO could not be made against a superior landlord. It was then the tenants’ turn to challenge the court’s decision, and they appealed to the Supreme Court.

In its decision today, the Supreme Court held that an RRO cannot be made against a superior landlord but only against the immediate landlord of the tenancy that generates the relevant rent.

Comment

This is a Supreme Court decision so cannot be challenged further. It therefore clarifies that tenants (or licensees) cannot seek redress from superior landlords. Remember that directors cannot be personally liable to repay rent to tenants/licensees under RROs either (as confirmed last year in the case of Kaszowska v White [2022]) . In other words, tenants/licensees can only obtain an RRO against the immediate landlord. For most property guardian companies, the property guardian company itself will be the immediate landlord/licensor. Therefore, as ever the utmost caution is needed in ensuring the correct HMO licensing is obtained to avoid property guardians applying for an RRO. On the plus side, it is a selling point to building owners (likely to be the superior landlord), to know they will not be at risk of facing potential liability.

If you have any problems with a property guardian, please get in touch with our Property Disputes specialists.