Evidence heard in final day of landmark rent-to-rent court case – LandlordZONE

The Supreme Court is debating a key legal case around rent-to-rent operators today to decide if the superior landlord, or any landlord in the chain, should be responsible for a rent repayment order.

Judges are hearing interventions in the Rakusen v Jepsen case including from the NRLA, represented by property lawyer David Smith (pictured), concerning landlord Martin Rakusen who agreed to let his flat on Finchley Road, London, to a rent-to-rent company in May 2016.

However, by November 2018, the flat had become an HMO but a licence wasn’t applied for, and the former tenants sought a RRO against him – as the superior landlord – instead of the rent-to-rent company.

The Upper Tribunal ruled that the order could be applied for against the superior landlord, however the Court of Appeal subsequently found in the landlord’s favour.

As the final day of hearings draw to a close, David Smith adds that he won’t get to speak to the court and will have to wait several months for a decision. “It is frustrating to watch and wait with nothing more that can be done,” he told BBC News.

“But it is also an important case which will affect landlords and tenants and illustrates the importance of Parliament getting this stuff right first time around.”

Going wrong

NRLA chief executive Ben Beadle (pictured) says both tenant and landlord are the victims when it comes to dodgy rent to rent operators going wrong.

“We want to see absolute clarity,” he says. “You’ve got arrangements where the landlord has made an agreement with a provider who collects the rent and executes the repairs, and then situations which the landlord might not be aware of – in this case they get clobbered through no fault of their own.”

If the Supreme Court was to change the position adopted by the Court of Appeal, then authorised rent-to-rent arrangements will likely become less common, leading to a lower availability of budget accommodation to rent on a room-by-room basis, says the NRLA.

But critics of the rent-to-rent model of letting point out that for too long both landlords and many tenants have been ripped off by dodgy operators within this market, as the many articles LandlordZONE has published on this topic highlight. Also, last year Beadle told an audience at a landlord show that the ‘bad eggs’ in the rent-to-rent sector urgently needed kicking out.