Landlord Amlendu Kumar has emerged victorious in a significant legal appeal concerning rent-to-rent agreements and Rent Repayment Orders (RROs). The case, which involved Kumar’s property in Tooting, has been described by leading property lawyer David Smith as an “important new decision” that could impact the future of similar disputes.
The Tooting property dispute
The dispute began when Kumar leased his Tooting property to Like Minded Living Ltd (LML), a rent-to-rent company that promised guaranteed rent. Unbeknownst to Kumar, LML sublet the property to more tenants than permitted by their agreement, turning it into an illegal House in Multiple Occupation (HMO). Despite a clear clause in their contract restricting the number of tenants to three, LML allowed five people to move in, violating housing regulations.
The initial case was brought against Kumar by three of the tenants, leading to a Rent Repayment Order being issued by the First Tribunal. This order demanded Kumar repay 60% of the annual rent, amounting to £7,549.25, even though he had not directly received any rent payments from the tenants.
Landmark legal clarification
This case gained prominence following a landmark 2023 ruling that clarified only the immediate landlord—typically the one receiving rent payments—could be subject to a Rent Repayment Order, not the property owner or superior landlord. However, in Kumar’s case, the court initially held him liable, arguing that he had inadvertently become the immediate landlord after his contract with LML ended but the tenants continued to pay rent to LML.
Kumar’s appeal against this judgement was eventually upheld by the Upper Tribunal. The tribunal recognised that while there was a technical breach of the law, Kumar had not received any money from the tenants and had no knowledge of the unlicensed HMO, as LML had been recommended to him by the reputable estate agents Chestertons.
Implications for landlords and rent-to-rent agreements
This decision is particularly significant for landlords involved in rent-to-rent arrangements. It highlights the potential risks and the importance of ensuring thorough due diligence when entering such agreements. David Smith, a respected property lawyer, emphasised the ruling’s importance, noting that it provides crucial legal clarity for landlords who may unknowingly find themselves in similar situations.
The case also raises questions about the practices of rent-to-rent companies like LML, which has since been liquidated according to Companies House records. Landlords and property investors in the UK are advised to seek expert legal advice when considering or managing rent-to-rent agreements to avoid similar legal entanglements in the future.
