Rent Repayment Orders, financial penalties for HMO landlords and Defences of insanity


An appeal from the First Tier Tribunal (FTT) in the case of a AA v Rodriguez and others (2021) UKUT 269 (LC) recently came before the Upper Tribunal, the main issue being whether, because of poor mental health, the appellant landlord (the landlord) had a reasonable excuse for controlling an unlicensed house in multiple occupation (HMO) but also whether the landlord should be permitted to rely on evidence which was not before the FTT when the original decision was made.

The landlord rented five bedrooms in his long leasehold property and this was subject to Camden London Borough Council' s (the local authority) additional licensing scheme introduced under Part Two of the Housing Act 2004 which requires any HMO having three or more people comprising of two or more households to be licensed.

The local authority, having told the landlord that he had been operating an unlicensed HMO and that he should therefore apply for license, subsequently gave notice that they were imposing a financial penalty of £3,000. At around the same time, the tenants applied for a Rent Repayment Order (RRO) for the sum of £18,903 on the basis that the landlord has committed an offence, being a person in control of an unlicensed HMO.

The judge having considered both matters decided that the appeal against the financial penalty should be heard before the RRO matter. However, whilst there was a preliminary hearing in this respect at which some medical evidence was produced and at which directions were given concerning mental health issues, the matter went no further as shortly thereafter, the local authority decided to cancel the financial penalty.

At the FTT hearing that dealt with the RRO issue, the landlord landlord's defence was that he had been suffering from significant mental illness at all material times which provided him with a defence of insanity. In the alternative, it was argued that his mental illness provided a reasonable excuse for his failure to obtain a license. If the FTT was not persuaded by either of those defences, the landlord disputed the amount of the RRO sought.

The FTT found that whilst, on the balance of probabilities the landlord did suffer from mental illness, there is insufficient “cogent psychiatric evidence“ before it to conclude that this amounted to a defence of insanity. However, the FTT did find that the landlord had a reasonable excuse, being the statutory defence available to him under the Housing Act 2004, for operating the property without an HMO license for a certain period of time. The amount of the rent repayment order was reduced to £15,159.

The Upper Tribunal, in remitting the proceedings back to the FTT for further consideration of the landlord's defence of reasonable excuse held that as it had been the intention that the hearing of the appeal against the RRO and the financial penalty imposed by the local authority would be co-ordinated, it was not unreasonable for the landlord to believe that the FTT would take the same material into consideration at the RRO hearing as it had done in the preliminary hearing of the financial penalty appeal. However, this had not happened. Furthermore, the FTT‘s decision and approach had not been consistent: the RRO award had been reduced by reason of mental health issues but the reasonable excuse defence had failed.

The landlord clearly did have mental health issues and the inconsistent approach of two differently constituted tribunals as well as a clear discrepancy in the decision made justified the case being remitted back for further consideration.

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