Rent to Rent Case going to the Supreme Court after High Court Ruling – Rakusen v Jepsen
High Court cas citation: Neutral Citation Number: [2021] EWCA Civ 1150
Case No: C3/2021/0562
Date: 29 July 2021
Rent-to-rent divides opinion like few other issues in private renting. It is viewed by many as little more than a scam, or a shady business model used by those looking to make money out of letting without raising the capital needed to invest in property. And in some cases, I have to agree.
However, we shouldn’t be too quick to tar all rent-to-rent businesses with the same brush. There are many well run, transparent, and honest individuals and businesses who rent property in order to sub-let.
It is for this reason that the National Residential Landlords Association – NRLA has applied to intervene in the Rakusen v Jepsen Supreme Court appeal. This does not mean that we are directly supporting either litigant or have become party to the case.
It means that we believe that the outcome of the case may affect other landlords whose interests should be heard and whom we wish to represent. You can see David Smith’s statement below.
The case will be heard on the 26 January 2023, with a decision later in the year. Thanks to our ever wise legal counsel David Smith for his assistance in the case.
Here’s a summary:
The case itself is complicated, and those interested in understanding all of the minutiae may read the Appeal Court judgment cited at the top of this article but in short:
• The landlord agreed to let their property to a rent-to-rent company
• The property was deemed licensable
(No licence was applied for)
• The former tenants sought a rent repayment order (RRO) against the superior landlord (not the rent-to-rent company)
• The Upper Tribunal held that a rent repayment order could be applied for against the superior landlord, however the Court of Appeal found in the landlord’s favour.
Subsequently, permission has been granted for an appeal to the Supreme Court.
Why all the confusion?
Ultimately, a property which required a licence was not licensed. That is not in dispute. The question resolves around whether ‘the landlord’ (i.e. the immediate landlord who receives the rent directly, manages the property and is named on the tenancy agreement) should be responsible for a rent repayment order. Or can ‘a landlord’ i.e. (a superior landlord, or any landlord in the chain) be held responsible.
The Housing and Planning Act 2016 specifies that an order can be made against ‘a landlord’. The Court of Appeal decision found that had parliament wished the legislation to act as a deterrent to superior landlords, it could have made “clear and express provision for it”, which it did not.
In our intervention we do not seek to defend bad practice or provide a route for rogue rent-to-rent operators to evade sanctions. We intend to make clear the potential implications for other superior landlords who may equally be victims of unscrupulous rent-to-rent firms.