Landlord Amlendu Kumar has successfully overturned a Rent Repayment Order (RRO) issued against him after a property he leased out was illegally sublet by a ‘rent to rent’ company, transforming it into an unlicensed House in Multiple Occupation (HMO) without his knowledge.
Kumar had initially let his Tooting property to Like Minded Living Ltd (LML), a company that guarantees rental income by subletting properties. Despite a contractual clause prohibiting LML from housing more than three individual tenants, the company re-let the property to five tenants, violating local housing regulations and turning the property into an illegal HMO.
The case against Kumar was first brought to the First-tier Tribunal by three of the tenants. Under current housing regulations, following a landmark 2023 ruling, only the landlord who directly receives rental payments, known as the “immediate landlord,” can be subjected to a Rent Repayment Order. In this instance, LML was the immediate landlord, not Kumar, the superior landlord who owned the property.
However, the tribunal initially ruled against Kumar, ordering him to repay 60% of the annual rent, amounting to £7,549.25. This decision was based on the fact that the tenants continued to pay rent to LML even after Kumar’s contract with the company had ended. As a result, Kumar was deemed to have inadvertently become the immediate landlord.
Kumar appealed the decision, and in a significant ruling from the Upper Tribunal, his appeal was upheld. The Tribunal determined that Kumar was not liable for the Rent Repayment Order because he had not received any rent directly from the tenants. The ruling was described by David Smith, a partner at JMW Solicitors and a leading property law expert, as “an important new Upper Tribunal decision.”
The Tribunal acknowledged that while there was a technical breach of the law, the intention of the parties involved was clear. It further noted that Kumar had a reasonable excuse for unknowingly being in control of an unlicensed HMO, as LML had been recommended by the reputable estate agency Chestertons, and there was no reason for Kumar to suspect wrongdoing.
Like Minded Living Ltd was reportedly liquidated in 2023, according to Companies House records.