Rent Repayment Orders and Financial Penalties for Landlords from 6 April 2017

From 6 April 2017, new legal provisions come into force affecting residential landlords. These provisions are contained in the Housing and Planning Act 2016. Further sections of the Act affecting landlords are expected to take effect from October 2017.

At Simply-Docs we are monitoring the changes and providing updates, guidance and new documents where appropriate. Our new Compliance Checklist for Residential Landlords is designed to help landlords comply with their housing law obligations.

Rent Repayment Orders

A rent repayment order (RRO) requires a landlord to repay rent to a tenant or repay universal credit (housing benefit) to a local housing authority.

Currently a RRO may be made against a landlord for failing to license a HMO or a property affected by a selective licensing scheme. The scope of RROs is to be significantly expanded.

From 6 April, a RRO may be made when a landlord is found guilty of certain offences relating to a property let by that landlord. The landlord’s guilt is ascertained by the First-tier Tribunal and there is no need for the landlord to have been prosecuted first. The relevant offences are listed in the Housing and Planning Act 2016. In brief, they are:

• Using violence to secure entry (Criminal Law Act 1977)
• Eviction or harassment of occupiers (Protection from Eviction Act 1977)
• Failure to comply with an improvement notice or prohibition order (Housing Act 2004)
• Control or management of an unlicensed property under the HMO or selective licensing regimes (Housing Act 2004).

Applications for rent repayment orders may be made by tenants or local housing authorities. Government guidance on the application of these new provisions is awaited and will be available on the gov.uk website.

From October 2017, breach of a banning order (see below) will be added to the list of grounds on which a RRO can be obtained.

Financial Penalties as an Alternative to Prosecution

Also from 6 April 2017, local authorities have new powers to impose financial penalties for offences committed under the Housing Act 2004, as an alternative to prosecution.

The offences are:

• Failure to comply with an improvement notice
• Licensing offences relating to HMOs and selective licensing regimes
• Failure to comply with an overcrowding notice
• Failure to comply with the HMO Management Regulations.

The maximum penalty is £30,000 per offence.

Before imposing a financial penalty, the local authority must serve a notice of intent on the landlord specifying the amount of the proposed penalty and the reasons for imposing it. The landlord has the right to make representations which the local authority must consider.

If the local authority decides to proceed with the financial penalty, it will serve a final notice imposing the penalty and requiring payment within 28 days. There is a right of appeal to the First-tier Tribunal.

Guidance is awaited on the operation of these provisions.

From October 2017, breach of a banning order (see below) will be added to the list of offences for which a financial penalty can be imposed.

Banning Orders

Banning orders are expected to be introduced in October 2017. They can be made against landlords, letting agents and property managers and will ban that person from letting property or engaging in letting agency or property management work for a period of at least 12 months.

Local authorities will be able to apply for a banning order against landlords and agents who have been convicted of certain offences (to be specified in regulations). Breach of a banning order can lead to imprisonment, a fine or imposition of a financial penalty by the local authority.

Advice for Landlords

The expansion of RROs and the introduction of financial penalties should prompt landlords to review their portfolio and identify any possible breaches of housing legislation. Local authorities may view financial penalties as a more effective means of enforcing housing law and may invest additional resource into this method of enforcement. And tenants may be motivated to investigate possible breaches themselves to see if they have grounds to apply for a RRO.