We previously reported on the Court of Appeal decision in the rent repayment order (RRO) case of Rakusen v Jepson & Ors. Both the First and the Upper Tier tribunals had decided in favour of the applicant tenants but the Court of Appeal, and now also the Supreme Court, decided in favour of the long leaseholder, Mr Rakusen.

Mr Rakusen had bought a 999 year lease on the property but subsequently moved to live elsewhere and so rented the property to a property investment company. The company then rented the property out to a number of unrelated tenants and should have applied for an HMO licence to operate the property but didn't.

At the end of the contract term between Mr Rakusen and the company, Mr Rakusen did not renew the agreement and subsequently the former tenants applied for an RRO against Mr Rakusen - who had never received any payment of rent from the former tenants.

The Supreme Court's view was that "A straightforward interpretation of the words in section 40(2) [of the Housing and Planning Act 2016] is that a Rent Repayment Order cannot be made against a superior landlord and can only be made against the immediate landlord of the tenancy that generates the relevant rent" and "it would be unnatural to interpret 'landlord under a tenancy' " any other way and that "It would strain the language to say that a superior landlord is 'repaying' rent to a tenant from whom it had never received any rent".

The Supreme Court's belief was that the purposes of the legislation and its surrounding context "was to restrict Rent Repayment Orders to those who directly benefit from the payment of rent - i.e. immediate landlords.". The court went on to say that "where there is any doubt as to whether a statutory provision imposes a penalty on someone it should be resolved in favour of not imposing the penalty.".

The above excerpts are provided from the Supreme Court's "Press Summary" of the case. The full case transcript can be accessed here.

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