Xiaohan Xu & Ors v USAF Management 11 Limited & Ors

A rent repayment order is punitive and deterrent rather than compensatory, but the tenant’s experience remains relevant because it bears on the landlord’s conduct and the seriousness of the offence. A tribunal may therefore consider whether an unlicensed property was in poor condition or whether the licensing breach caused any practical effect. The tribunal must assess the statutory factors and the seriousness of the particular offence, but retains a broad discretion over quantum. An appellate tribunal should not interfere merely because it might have made a different award. An evaluative conclusion that no factor is decisive, followed by an award at the midpoint, is not an error of law where the tribunal has considered the relevant factors and has not treated the order as compensation.

The appellants were tenants of student accommodation in Liverpool. Their landlords had committed offences under Housing Act 2004 by operating properties subject to selective licensing without licences. The First-tier Tribunal made rent repayment orders but awarded 50% of the available amount. It considered the landlords’ explanation, their status as professional landlords, the condition and quality of the accommodation, the effect of the absence of licences on the tenants, and deterrence.

The appellants appealed with permission, contending that the FTT had treated the absence of harm to the tenants as an irrelevant or overriding consideration and had thereby made a compensatory award. The central issue was whether the FTT had erred in law when assessing the quantum of the orders.

1. Appeal dismissed. The FTT had made no error of law. Its identified factors were consistent with Acheampong v Roman [2022] UKUT 239 (LC) and the statutory direction in Housing and Planning Act 2016.
2. A rent repayment order is not compensation. Its purpose is principally deterrence and punishment. That does not make the effect of the landlord’s conduct on the tenants irrelevant. The condition of the property and the absence or presence of practical impact may inform the assessment of the landlord’s conduct and the seriousness of the particular offence. The FTT was entitled to consider that the accommodation was in good condition and that the licensing failure had little effect on occupation and enjoyment.
3. The licensing offences were properly treated as less serious than some other offences capable of founding a rent repayment order. The FTT also properly considered the landlords’ professional status, the explanation for the delay, the size of the operation and the absence of aggravating disrepair or interference with quiet enjoyment. No single factor had to be decisive.
4. The FTT had a discretion as to the amount. The Upper Tribunal would intervene only for an error of law or irrationality, not merely because it might have selected a different figure. The reference to there having been no damage done did not convert the award into compensation or show that the FTT had treated the absence of tenant impact as the overriding factor.
5. The argument based on the proposed Renters Rights Act 2025 did not establish an error in the FTT’s decision. The appeal therefore failed.

• Upper Tribunal (Lands Chamber) — On an appeal from the First-tier Tribunal (Property Chamber), the Upper Tribunal dismissed the appeal and upheld the FTT’s exercise of discretion on quantum. The FTT’s decision was delivered on 24 January 2025.