Rakusen v Jepsen and others

Under section 40(2) of the Housing and Planning Act 2016, a rent repayment order may be made only against the immediate landlord under the tenancy which generated the relevant rent. It cannot be made against a superior landlord higher in the chain of tenancies.

The expressions “landlord under a tenancy” and “repay an amount of rent paid by a tenant” connect the order to the direct landlord-and-tenant relationship. The statutory context, legislative history, practical operation and policy of the scheme support that ordinary meaning. Extending liability to superior landlords, even to prevent avoidance through rent-to-rent arrangements, requires legislation rather than an expanded judicial construction.

The appellants occupied rooms in a flat under agreements with Kensington Property Investment Group Ltd, which itself rented the flat from the respondent. The flat was an unlicensed house in multiple occupation. The appellants applied for rent repayment orders against the respondent as a superior landlord.

The First-tier Tribunal refused to strike out the application against the respondent, following Goldsbrough v CA Property Management Ltd [2019] UKUT 311 (LC). The Upper Tribunal dismissed the respondent’s appeal: [2020] UKUT 0298 (LC). The Court of Appeal allowed his further appeal: [2021] EWCA Civ 1150, [2022] 1 WLR 324.

The issue before the Supreme Court was whether section 40(2) of the Housing and Planning Act 2016 permits a rent repayment order against a superior landlord, rather than only the immediate landlord under the tenancy which generated the relevant rent.

1. Appeal dismissed unanimously. Lord Briggs and Lord Burrows delivered the joint judgment, with which Lord Lloyd-Jones, Lord Kitchin and Lord Richards agreed. A rent repayment order under section 40(2) of the Housing and Planning Act 2016 cannot be made against a superior landlord.

2. The opening words of section 40(2), “the landlord under a tenancy”, identify the grantor under the particular tenancy. The rent mentioned later in section 40(2)(a) is the rent paid under that same tenancy. It is therefore the immediate landlord, which received that rent from the tenant, that may be required to repay it. A superior landlord is not the landlord under the tenancy generating the relevant rent and cannot naturally be said to repay rent which it never received from that tenant.

3. The same connection governs a universal-credit rent repayment order under section 40(2)(b). The word “pay”, rather than “repay”, reflects that universal credit may have been paid to the tenant and originates from central government, although the local housing authority receives the order. It does not sever the connection between the respondent landlord and the tenancy generating the rent.

4. The wider statutory context and purpose supported, or were at least consistent with, this construction. The predecessor scheme under the Housing Act 2004 applied only to immediate landlords. Neither the reforms nor the pre-legislative materials indicated an intention to extend orders to superior landlords. Other statutory provisions connected the recoverable amount to rent under the relevant tenancy and, where Parliament intended “landlord” to include a superior landlord, it said so expressly.

5. Restricting orders to immediate landlords may reduce their effectiveness where rent-to-rent arrangements employ an insubstantial intermediary. That policy concern could not displace the clear statutory language. Criminal penalties, civil financial penalties, banning orders and other sanctions remained available. Applying rent repayment orders throughout horizontal or vertical chains of tenancies would also create substantial difficulties in calculating and allocating liability.

6. The principle against doubtful penalisation provided additional, though unnecessary, support. Because a rent repayment order is a penalty, any genuine doubt about extending it to a superior landlord would be resolved against imposing that liability. The court left open whether the relevant tenancy must always be the bottom tenancy occupied by the applicant.

1. United Kingdom Supreme Court: The tenants’ appeal was dismissed unanimously. The court affirmed that a rent repayment order cannot be made against a superior landlord: [2023] UKSC 9.
2. Court of Appeal: The respondent landlord’s appeal was allowed. The court held that section 40(2) of the Housing and Planning Act 2016 confines rent repayment orders to immediate landlords: [2021] EWCA Civ 1150, [2022] 1 WLR 324.
3. Upper Tribunal: The respondent’s appeal was dismissed. The tribunal held that an order could be made against a superior landlord: [2020] UKUT 0298 (LC).
4. First-tier Tribunal: The application against Ms Field was struck out, but the application against the respondent was allowed to proceed because the tribunal considered itself bound by Goldsbrough v CA Property Management Ltd [2019] UKUT 311 (LC), [2020] HLR 18.