In Vadamalayan v Stewart & Ors [2020] UKUT 183 (LC), a landlord appealed about the level of the rent repayment order made against him. He challenged the First Tier Tribunal (FTT)’s calculation of the sum due. The approach under the Housing and Planning Act 2016 is now very different to the approach under the Housing Act 2004.
The Upper Tribunal Lands Chamber considered the starting point for a rent repayment order being made in favour of a tenant, as the law in England was changed markedly by the Housing and Planning Act 2016 so that the cases of Parker and Fallon are no longer of relevance as they considered the old law (which still applies in Wales).
This is important because sections 44 and 45 of the Housing and Planning Act 2016 are very different to section 74 of the Housing Act 2004 which involves reasonableness. On that basis, the Upper Tribunal had said in Parker that it would not be appropriate for a rent repayment order to exceed the landlord’s profit.
In this case, the Upper Tribunal considered that this was no longer the approach Parliament intended.
The starting point had to be the maximum, that being the rent for the relevant period.
The landlord claimed that his expenditures on the property during the relevant time should be deducted but the Upper Tribunal held that these are expenses which repair or enhance his own asset and are done to comply with a landlord’s duties. That compliance is not something which can be offset against a rent repayment order.
Similarly, a fine imposed by the Housing and Planning Act 2016 was a proper penalty which Parliament determined could be imposed as well as a rent repayment order and absent some direction from Parliament to offset a fine, this did not affect the assessing of a rent repayment order.
The judge was, in this case, also critical of the attempt by the landlord to deduct mortgage payments. These were held to be a matter for the landlord and not something which the tenant should be funding by way of deduction from a rent repayment order.
It is worth noting that where a landlord charges rent for utilities then, since these are expenses which are passed directly on to the tenant for resources the tenant directly consumed, these costs could be properly deducted.
Therefore, the Upper Tribunal reinforced that the only matters to consider when assessing are only the statutory factors:
- Conduct of the parties,
- Financial position of the landlord, and
- Whether the landlord has been convicted of a relevant offence.
In this case the appellant landlord was quite disappointed as the judge had determined that the schedule of deductions he sought to have applied to the starting figure would no longer be taken into account.
The judge considered the landlord’s financial position, but no further evidence had been provided and so had insufficient information to be persuaded to deduct anything from the starting point.
However, the landlord will have breathed a sigh of relief as there was no cross-appeal to increase the sum ordered the judge ordered the rent repayment order in the same sum as the FTT had done.
This is a major change and seems likely to result in larger rent repayment orders and reduced opportunities for landlords to offset costs against rent repayment orders.