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Controlling or managing an unlicensed House of Multiple Occupation (HMO) is a criminal offence. If the First-Tier Tribunal (Property Chamber) is satisfied beyond reasonable doubt that a landlord has committed an offence it may make a “rent repayment order” requiring the landlord to repay some or all of the rent to the tenant, to a maximum of 12 months rent. In Rakusen v Jepson it was held that a tenant cannot apply for a rent repayment order against a superior landlord but is limited to an application against their immediate landlord.
In the case of Cabo v Dezotti [2024] EWCA Civ 1358 Ms Cabo was the freeholder of a house. Her husband was the sole director of a company called Top Holdings Ltd. She entered into an agreement with the company whereby it would deal with the house on her behalf, including by letting rooms. The company subsequently granted licences to various occupiers; it held itself out as being the licensor under those agreements. The claimant, Ms Dezotti, was an occupier under one of those agreements. She contended that the property was an unlicensed HMO and applied for a rent repayment order against Ms Cabo.
The FTT found in favour of Ms Dezotti. It held that the involvement of Top Holdings Ltd was “artificial” and “something of a sham”. The true position was that Ms Cabo was the landlord and therefore made a rent repayment order against her in the sum of £9,600. Ms Cabo appealed contending that Top Holdings Ltd was the immediate landlord of Ms Dezotti and – applying the case of Rakusen - that no order could be made against her.
The Upper Tribunal dismissed the appeal. Properly analysed, the evidence showed that Top Holdings Ltd was acting as agent for Ms Cabo so that she was the true landlord under the lettings; there was therefore no impediment to making a rent repayment order against her.
The Court of Appeal dismissed a further appeal by Ms Cabo. In letting the rooms, Top Holdings Ltd was plainly acting as agent for Ms Cabo. It followed that Ms Cabo was indeed the landlord and the FTT had been right to make a rent repayment order.
Published on 08/01/2025