Simpson House 3 Limited v Dr Jordan Osserman & Ors

When assessing a rent repayment order under section 44 of the Housing and Planning Act 2016, the First-tier Tribunal must consider the conduct of both landlord and tenant, together with the landlord’s financial circumstances and any relevant conviction. It must address material conduct allegations capable of affecting the amount and give adequate reasons if it leaves a disputed issue unresolved. The amount is not assessed from an automatic 100% starting point. The assessment must relate to rent paid and reflect the statutory factors and the purposes of HMO licensing. Reliance on managing agents does not remove a substantial commercial landlord’s regulatory responsibilities, although it may remain relevant to the amount awarded.

The Landlord had let a flat occupied by the three Tenants as an unlicensed HMO. The FTT rejected the Landlord’s reasonable-excuse defence and ordered repayment of 65% of the rent paid during the relevant period.

The Landlord obtained permission to appeal on reasonable excuse and quantum but later withdrew its appeal. The Tenants pursued a cross-appeal, arguing that the FTT had failed to consider several material allegations of poor conduct, including fire-safety issues, surveillance, retaliatory termination notices and misleading statements about the consequences of remaining in the property.

The central issues were whether the FTT had erred in its assessment of the amount of the rent repayment order and, if so, whether the Upper Tribunal should set aside and remake the decision or remit it to the FTT.

1. The cross-appeal was allowed. The FTT had failed to deal with material conduct allegations relied on by the Tenants. A tribunal need not address every evidential point, but it must address points of substance capable of affecting the outcome. If it considers that resolving a factual dispute would make no substantial difference, it should explain why.
2. The FTT had also misdirected itself on the statutory framework. For an English HMO, the relevant power arose under Chapter 4 of Part 2 of the Housing and Planning Act 2016. Section 44 required the amount to relate to rent paid and required particular regard to the conduct of landlord and tenant, the landlord’s financial circumstances and any relevant conviction. The FTT had wrongly relied on section 74 of the Housing Act 2004, and had wrongly treated the whole rent as an automatic starting point. Williams v Parmar [2021] UKUT 0244 (LC) had explained that the 100% starting-point approach was based on a misreading of Vadamalayan v Stewart [2020] UKUT 0183 (LC).
3. Under section 12 of the Tribunals, Courts and Enforcement Act 2007, the Upper Tribunal had power, but no obligation, to set aside an erroneous FTT decision. If it set the decision aside, it had to remit the case or remake the decision. It could not preserve the FTT’s flawed 65% assessment and simply add a further amount. A remaking had to proceed from scratch, using uncontested findings and material capable of supporting findings of fact; contested evidence available only in writing could not be resolved by the Upper Tribunal.
4. On the uncontested material, the Upper Tribunal gave substantial weight to the Landlord’s response to the Tenants’ complaints, including terminating the tenancy and misrepresenting the consequences of non-compliance with a section 21 notice. It gave no weight to the smoke detector defect because the absence of notice afforded a reasonable excuse for an isolated defect, and it could not determine the disputed surveillance or fire-notice allegations. The Landlord was ordered to repay £7,500 to each Tenant, approximately 80% of the rent paid. The hearing fee was payable by the Landlord. A costs application could be pursued under rule 10(3)(b) of the Tribunal’s Rules.

• First-tier Tribunal (Property Chamber): ordered repayment of 65% of the rent paid during the relevant period. The Landlord’s appeal was later withdrawn.
• Upper Tribunal (Lands Chamber): allowed the Tenants’ cross-appeal, set aside the flawed assessment and remade the rent repayment order at £7,500 for each Tenant.