Avoid being caught out by the new sanctions targeting rogue landlordsJune 29, 2017
On 6 April 2017 the Housing and Planning Act 2016 (“the HPA”) gave Councils new powers to deal with rogue landlords. These include Rent Repayment Orders (RROs) and Civil Penalty Notices (CPNs). The government has defined a ‘rogue landlord’ as ‘a landlord who knowingly flouts their obligations by renting out unsafe and substandard accommodation to tenants’. The stated objective is to curb the number of landlords repeatedly getting away with these types of offences. In our experience, this is certainly not most landlords, but it is worth being informed about the law that applies to you.
What are Rent Repayment Orders (RROs)?
Local authorities and tenants can now apply to the First-tier Tribunal to make a rent repayment order, requiring a landlord to repay a specified amount of rent to the rent payer when a landlord has committed a relevant offence. The landlord need not have actually been convicted of the offence for a rent repayment order to be imposed.
What are examples of relevant offences?
- Using violence to secure entry
- Unlawful eviction or harassment of occupiers (Landlords - make sure you know the correct eviction process, call us today or see our Top Ten Traps so you don’t get caught out)
- Breaching banning orders (which are due to be introduced in October 2017 - watch this space for more information!)
- Failure to comply with an improvement notice served by a local authority
- Operating a House in Multiple Occupation (“HMO”) or property without a licence
How much will I have to pay if a Rent Repayment Order is made against me?
The maximum amount of rent that can be awarded is capped at 12 months’ rent. However, if the landlord HAS been convicted of the offence, the First-tier Tribunal MUST award the maximum 12-month repayment. Otherwise, according to Sections 44 and 45 of the HPA, the First-tier Tribunal has discretion over the sum awarded and will look at factors such as:
- the conduct of the landlord and the tenant; and
- the financial circumstances of the landlord.
Furthermore, local authorities will be entitled to impose both a civil penalty of up to £30,000 and a rent repayment order for certain offences. Therefore, landlords could be looking at a hefty bill!
How does it work?
- The relevant offence must have been committed within the preceding year of notice of an application being given to a landlord.
- A local authority applying for a RRO must have served the landlord with a notice of intended proceedings explaining why the application is being made and the amount recoverable.
- The landlord will have 28 days to make representations.
- The local authority must consider any representations made during the notice period and must wait until the notice period has ended before applying for a RRO.
- A tenant does not need to follow the same steps. They can merely make an application to the Tribunal setting out their supporting reasons. They do not need to serve notice but must apply within 12 months of the relevant offence being committed.
- The landlord can appeal to the Upper Tribunal with permission.
- If the landlord fails to pay the penalty the case can be referred to the County Court for an Order and bailiffs can be used to enforce the debt.
What are Civil Penalty Notices (CNPs)?
Local authorities can now impose financial penalties of up to £30,000 upon landlords as an alternative to prosecution for certain offences.
What are examples of offences where a CPN can be imposed?
- Failing to comply with an improvement notice served by a local authority
- Offences in relation to licensing of HMOs
- Offences in relation to management regulations in respect of HMOs (this is likely to be problematic because expectations in relation to HMOs are forever changing and are often interpreted differently between various Council members judging them)
How much will I have to pay?
The penalty must not exceed £30,000. Given that the offences listed can carry unlimited fines if successfully prosecuted in the criminal courts, the amount of up to £30,000 to avoid prosecution could be an attractive option in the long term as opposed to also having a criminal conviction on your record. Local authorities will not be able to impose both a criminal and a civil penalty on a landlord for the same offence. However, civil penalties can be imposed on both landlords and agents for the same offence.
It is thought that it will be much quicker, easier and cheaper for local authorities to award a penalty than prosecute landlords and so these civil penalties are likely to be more widely used.
Unlike fines in criminal cases which are simply passed to the Treasury, local authorities are allowed to pocket financial penalties. However, there are regulations in place which restrict the use of funds to matters related to enforcement of standards in the private rental sector. Local authorities will need to make sure they have calculated those figures to justify the allocation of funds. Overall, it appears that the enforcement of housing standards is going to become increasingly self-funding.
Local authorities are expected to use their existing powers to assess a landlord’s assets and income when determining the level of penalty. The elements which the Government have suggested local authorities ought to consider when setting the penalty are, for example the severity of the offence, the harm caused to the tenant and the landlord’s track record.
How will it work?
- A notice of intent must first be served by the local authority setting out the proposed penalty, the reasons and information on the landlord’s rights to make representations.
- The recipient of the notice may make representations within 28 days. Those representations must be considered by the local authority.
- If a penalty is to be imposed, a final notice must be given and the penalty must be paid within 28 days.
- The landlord can appeal to the First-tier Tribunal against the decision to impose the penalty or the amount. The notice is suspended until the appeal is determined.
- If the landlord fails to pay the penalty, the local authority will refer the case to the County Court for an Order and can use bailiffs to enforce the debt.
- Receipt of two or more penalties in 12 months may lead to the landlord’s name being recorded on the database for rogue landlords which is due to come into play from October 2017.
- Being on the receiving end of a CPN may cause a landlord to fail the fit and proper person test when applying for a property licence.
Unfortunately, the Government’s guidance was only published the same day that these new penalties came into force and so in practice it will take time for it to be reviewed by local authorities and for them to implement their own policies. Until they do so, they will not be able to make effective use of their new powers. Bristol City Council are currently seeking feedback from all interested parties by way of this survey: https://www.surveymonkey.co.uk/r/BristolCPNsRROs.
As landlords will be subject to the way Bristol City Council chooses to apply these changes, we would suggest you may want to partake in this survey and the formation of local policy.