Margaret Florence Cabo v Karen Tamie Dezotti

For the purposes of the Housing Act 2004, a person having control of an HMO must actually receive the rack-rent. Indirect receipt through an agent is insufficient, and an owner who does not collect the rent is not a person having control. An owner may nevertheless be a person managing an HMO where, by arrangement with a non-owner or non-lessee, the owner would otherwise receive rents or other payments. A person without a proprietary interest can grant a tenancy. Where an agent contracts in its own name for an undisclosed principal, the principal may be the landlord and may be liable for a rent repayment order.

Margaret Cabo appealed against a decision of the First-tier Tribunal (Property Chamber), which ordered her to repay £9,600 to Karen Dezotti under the rent repayment provisions of the Housing and Planning Act 2016. Cabo owned the freehold of an HMO but had appointed Top Holdings Ltd, a company controlled by her husband, to manage and let the property. The occupation agreement named Top Holdings as licensor, and rent was collected by persons connected with the company.

The FTT found that Cabo was a person having control and, alternatively, a person managing under section 263 of the Housing Act 2004. It also found that she was Dezotti’s landlord. The appeal concerned whether Cabo was a person in control, whether she was a person managing, and whether a company without a proprietary interest could grant a tenancy and be a landlord.

1. Person having control. Section 263(1) of the Housing Act 2004 refers to actual receipt of the rack-rent. The qualifying words, permitting receipt on one’s own account or as agent or trustee, show that the rent must come into the hands of the person said to have control. A person need not retain the rent beneficially, but indirect receipt through an agent or trustee is insufficient. Cabo was therefore not a person having control. The FTT had made no finding that she received the rack-rent, and its finding on this issue could not stand.
2. Person managing. Section 263(3)(b) applied. On the assumed terms of the Management Agreement, Cabo would have received rents or other payments but for arranging with Top Holdings, which was neither owner nor lessee, that it should receive them. The agreement created the necessary causal connection and the rents were received by Top Holdings by virtue of that arrangement. Cabo was therefore a person managing, notwithstanding that she did not herself receive rent, and was obliged to obtain an HMO licence. Her failure to do so constituted the offence under section 72(1) of the Housing Act 2004.
3. Landlord and rent repayment order. Following Rakusen v Jepsen and others [2021] EWCA Civ 1150, an order could be made only against the immediate landlord. A person without a proprietary interest can nevertheless grant a tenancy, as established in Bruton v London & Quadrant [2000] 1 AC 406. But an agent contracting in its own name for an undisclosed principal may bind that principal. The evidence established that Top Holdings acted as Cabo’s agent in letting the property. Cabo was therefore Dezotti’s landlord and could be the subject of a rent repayment order.
4. The appeal was dismissed. The rent repayment order of £9,600 remained in force.

• First-tier Tribunal (Property Chamber): On 18 March 2021, ordered Cabo to repay £9,600 to Dezotti under the Housing and Planning Act 2016.
• Upper Tribunal (Lands Chamber): Dismissed Cabo’s appeal. It set aside the FTT’s finding that she was a person having control, but upheld the alternative finding that she was a person managing and upheld the conclusion that she was Dezotti’s landlord.