A First-tier Tribunal has ordered Mio Real Estate Ltd to repay £31,436.23 after operating an unlicensed six-bedroom HMO in Bethnal Green, underlining a point many landlords and rent-to-rent operators still get wrong: if a company takes a tenancy and sublets rooms in its own name, it can end up carrying the landlord’s legal duties too.
The case concerned a property in Tower Hamlets, where additional licensing rules apply to many smaller HMOs. Mio argued it was acting only as an agent for the freeholder. The tribunal disagreed, finding that the company had taken a lease, collected rent directly from occupiers and granted the sub-tenancies itself. That was enough to put the business on the hook for licensing duties and a rent repayment order when no licence was in place.
Tribunal says rent-to-rent structure does not remove HMO duties
The ruling matters because rent-to-rent deals are often sold as a way to separate ownership from day-to-day management. In practice, that separation can break down fast when the operator signs the agreement, controls occupation and receives the rent.
According to the tribunal, the Bethnal Green property fell within Tower Hamlets’ additional licensing scheme, but no licence had been obtained during the relevant period. Five tenants were awarded 70 percent of the rent claimed. The judge also noted that the respondent’s lack of intent was not a defence.
For landlords using rent-to-rent models, the practical lesson is blunt. The lease wording, who signs the tenancy agreements and who receives the rent all matter more than the label attached to the arrangement. Landlord Knowledge’s previous coverage of a crucial rent-to-rent appeal showed how quickly these arrangements can end up in court when responsibility is disputed. This latest ruling points the same way: judges will look at who actually controls the property, not who says they are only introducing tenants.
Licensing gaps can become expensive very quickly
The £31,436.23 order is not just a warning for agents. It is a warning for property owners who assume their operator has compliance covered, and for investors building rent-to-rent portfolios across boroughs with patchwork local rules. In London in particular, additional licensing schemes can catch smaller shared properties that fall outside the old assumption that only the largest HMOs need attention.
This follows Landlord Knowledge’s report on HMO form errors leaving landlords open to council fines, which highlighted how technical mistakes can still lead to enforcement action even where a landlord believes they are broadly compliant. The latest tribunal decision pushes that risk further. It suggests landlords and operators cannot rely on informal understandings, verbal instructions or loose management agreements when licensing duties are in question.
A second risk sits behind the headline figure. Once a dispute reaches tribunal, the damage is no longer only financial. Operators face wasted management time, scrutiny of their agreements and possible reputational harm with both tenants and owners. For landlords thinking about using rent-to-rent to reduce workload, due diligence on the operator’s compliance systems now looks far more important than promised headline returns.
What this means for landlords
- If you’re using rent-to-rent: check who is named on tenancy agreements, who collects rent and who is responsible for licensing in writing.
- Watch for: additional licensing areas where smaller HMOs still need a licence, especially in London boroughs.
- If you own but do not manage: do not assume the operator has dealt with HMO licensing – ask for proof and keep copies.
- Bottom line: if the structure gives an operator control of the property, a tribunal may treat that operator as the landlord when compliance fails.
Editor’s view
Rent-to-rent still appeals because it promises cleaner, lighter-touch income. Cases like this show the legal reality is often messier. For landlords, the smart move is not to avoid every operator – it is to stop treating compliance as someone else’s problem once the agreement is signed.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 17 April 2026
Sources: First-tier Tribunal decision, Tower Hamlets Council additional licensing scheme, Housing Act 2004
Related reading: Landlord wins crucial appeal in rent-to-rent legal battle
