Rent Repayment Orders Explained: The Hidden Risk Every Letting Agent Must Understand

Last Updated: November 2024
Reading Time: 10 minutes

What Is a Rent Repayment Order?

A rent repayment order (RRO) is a legal mechanism under the Housing Act 2004 and Housing and Planning Act 2016 that allows tenants or local authorities to reclaim rent paid while a landlord or letting agent committed certain housing offences. The most common trigger is operating an unlicensed property in a selective or HMO licensing area. Tribunals can order repayment of up to 12 months' rent, often totalling £10,000-£20,000 or more—money that comes directly from the landlord or managing agent's pocket.

For letting agents, RROs represent one of the most misunderstood financial risks in property management. Unlike civil penalties which go to the council, RRO money goes directly to the tenant—and the tenant has every incentive to pursue the claim.

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The Problem: A £15,000+ Liability You Might Not Know Exists

Here's what keeps compliance-conscious letting agents awake at night: a single unlicensed property could result in repaying an entire year's rent to the tenant.

Most letting agents understand civil penalty notices. They know about the £30,000 maximum fine for unlicensed properties. But far fewer understand that on top of that fine, they could also face a rent repayment order—effectively doubling or tripling their exposure.

The uncomfortable truth is that RRO claims are increasing rapidly. Tenants are becoming more aware of their rights. "No win, no fee" solicitors now specialise in RRO claims. And councils are actively publicising RRO rights to tenants as part of their enforcement strategy.

Why RROs Hit Harder Than Civil Penalties

When a tenant realises they've been living in an unlicensed property, they have a strong financial incentive to pursue a claim. That £15,000 RRO payment comes directly to them—not to the council.

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When Can Tenants Claim a Rent Repayment Order?

RROs aren't available for any housing dispute. They're specifically tied to certain offences under housing legislation. Understanding the triggers helps you understand your risk exposure.

Housing Act 2004 Offences

The original RRO provisions under the Housing Act 2004 cover:

• Section 72: Operating an unlicensed HMO
• Section 95: Operating an unlicensed property in a selective licensing area
• Section 30: Failure to comply with an improvement notice
• Section 139: Failure to comply with an overcrowding notice

Housing and Planning Act 2016 Expansions

The 2016 Act significantly expanded RRO scope to include:

• Illegal eviction or harassment of occupiers
• Breach of a banning order under section 21
• Violence for securing entry under Criminal Law Act 1977
• Using or threatening violence to secure entry

The Most Common RRO Trigger for Letting Agents

For letting agents, the overwhelming majority of RRO claims relate to operating unlicensed properties—either under selective licensing or HMO licensing requirements.

This happens when:

1. A property falls within a selective licensing designation and isn't licensed
2. A property meets HMO criteria but doesn't have the required licence
3. A licence application was submitted but rejected or withdrawn
4. A licence expired and wasn't renewed

Critical point: The tenant doesn't need to prove they suffered harm. They simply need to prove the property was unlicensed during their tenancy. The offence is complete the moment an unlicensed property is let.

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How Much Can Tenants Claim?

The headline figure is 12 months' rent—but the actual amount awarded depends on several factors the First-tier Tribunal considers.

The Maximum: 12 Months' Rent

Under both the Housing Act 2004 and Housing and Planning Act 2016, tribunals can order repayment of rent for a period not exceeding 12 months. For a property with £1,500 monthly rent, that's a maximum exposure of £18,000.

What Counts as "Rent"?

The definition of "rent" for RRO purposes includes:

• Base rent payments
• Payments towards rent made by Universal Credit housing element

It typically excludes:

• Service charges (unless they're rolled into a single "rent" figure)
• Council tax contributions
• Utility bills
• Deposits

Factors Affecting the Award Amount

The tribunal doesn't automatically award the maximum. The Housing and Planning Act 2016 introduced specific factors tribunals must consider:

Conduct of the landlord/agent:

• Was the offence deliberate or accidental?
• Did they try to comply once aware of the issue?
• Have they been convicted of similar offences before?
• Did they cooperate with council investigations?

Financial circumstances:

• What was the financial gain from the offence?
• What are the landlord/agent's financial circumstances?
• Has a civil penalty already been imposed for the same offence?

Conduct of the tenant:

• Did the tenant know the property was unlicensed?
• Did the tenant's behaviour contribute to the situation?

The Crucial Point About Tenant Knowledge

Here's what surprises many letting agents: even if the tenant knew the property was unlicensed, they can still claim an RRO.

The Supreme Court confirmed in Rakusen v Jepsen [2023] that tenant knowledge is a factor to consider, but it doesn't automatically bar a claim. A tenant who knowingly moved into an unlicensed property might receive a reduced award, but they can still receive something.

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The Application Process

Understanding how RRO applications work helps you assess your risk and prepare any defence.

Who Can Apply?

Tenants: Any tenant who paid rent during a period when a housing offence was being committed can apply. This includes:

• Current tenants
• Former tenants (within the time limit)
• Multiple tenants from the same property

Local authorities: Councils can also apply for RROs. When councils apply, the money goes to the council, not the tenant. Councils typically pursue RROs as part of broader enforcement action.

Where Applications Are Made

All RRO applications go to the First-tier Tribunal (Property Chamber). This is a specialist housing tribunal, not a standard court.

The process is designed to be accessible without legal representation, though the amounts at stake mean many parties do instruct solicitors.

The Timeline

Time Limits for Applications

For tenant applications: The application must be made within 12 months of the offence ceasing. For licensing offences, this means 12 months from when the property became licensed or the tenancy ended.

For council applications: Councils must either convict the person of the offence or give them a financial penalty notice before applying for an RRO.

The Hearing Process

RRO hearings are relatively informal compared to court proceedings:

1. Written submissions: Both parties submit evidence bundles
2. Oral hearing: Typically 1-2 hours, conducted in person or via video
3. Evidence presented: Tenancy agreements, rent receipts, licensing status evidence
4. Questioning: Both parties can be questioned by the tribunal
5. Decision: Usually reserved (issued in writing later)

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Can Letting Agents Be Liable for RROs?

Yes—and this is the point many letting agents miss.

The Housing Act 2004 creates liability for anyone "having control of or managing" a property that should be licensed. This explicitly includes letting agents acting as property managers.

The Legal Position

Section 95 of the Housing Act 2004 states that a person commits an offence if they are "a person having control of or managing a house which is required to be licensed... but is not so licensed."

"Managing" is defined as receiving rent or other payments from occupiers, whether directly or through an agent.

As a letting agent with property management responsibilities, you're directly within scope.

Joint and Several Liability

Here's where it gets complicated: both the landlord and the letting agent can be liable for the same RRO.

A tenant can pursue:

• The landlord only
• The letting agent only
• Both landlord and letting agent

In practice, tenants often pursue whoever appears most able to pay—and letting agents with established businesses and professional indemnity insurance can look like attractive targets.

What This Means for Your Agency

If you manage properties and one falls within an unlicensed area:

• You could face an RRO claim directly
• The landlord could face a claim and seek to recover from you
• Your professional indemnity insurance may or may not cover RRO awards
• Your management agreement may or may not protect you

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How Tribunals Decide RRO Amounts

Tribunals have significant discretion in determining RRO awards. Understanding their approach helps you assess likely outcomes.

The Starting Point

Tribunals typically start with the total rent paid during the claim period (maximum 12 months) and then adjust based on the statutory factors.

Aggravating Factors (Increase Award)

Deliberate non-compliance:

• Knew about licensing requirements but didn't apply
• Ignored council warnings or notices
• Tried to conceal the offence

Financial gain:

• Avoided licensing fees
• Continued letting despite warnings
• Large portfolio suggesting professional knowledge

History:

• Previous licensing offences
• Previous civil penalties
• Pattern of non-compliance

Mitigating Factors (Reduce Award)

Genuine ignorance:

• New scheme with limited publicity
• Boundary changes not communicated
• First offence

Swift remediation:

• Applied for licence immediately upon learning of requirement
• Cooperated with council
• Implemented compliance measures

Tenant factors:

• Tenant knew property was unlicensed
• Tenant contributed to the situation
• Property was otherwise well-maintained

Typical Award Ranges

While every case is different, tribunal decisions suggest these patterns:

Important: These are indicative only. Tribunals have wide discretion and each case turns on its facts.

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Real-World Examples

These hypothetical scenarios illustrate how RRO claims typically unfold for letting agents:

Scenario 1: The Boundary Change

Background: ABC Lettings manages 75 properties across South London. One property in Lambeth has been in their portfolio for 5 years. In 2024, Lambeth expands its selective licensing scheme to cover new wards. The property falls within the expanded area.

What happened: ABC Lettings doesn't notice the expansion. No licence application is made. Six months later, the tenant contacts a "no win, no fee" solicitor after reading about RROs online. The tenant applies for an RRO.

The claim: 6 months' rent at £1,400/month = £8,400

Tribunal decision: The tribunal finds ABC Lettings committed the section 95 offence. However, they note:

• First offence
• Property was well-maintained
• ABC Lettings applied for licence immediately upon notification
• No deliberate intent

Award: £4,200 (50% of rent claimed)—plus ABC Lettings' legal costs and the disruption of tribunal proceedings.

Scenario 2: The Portfolio Risk

Background: PropertyFirst manages 200 properties across Greater Manchester. Three properties fall within a selective licensing area that's been in place for two years. PropertyFirst never checked licensing requirements for these properties.

What happened: A council enforcement officer visits all three properties as part of a proactive inspection programme. Civil penalty notices are issued. The tenants are informed of their RRO rights.

The claims: All three tenants apply for RROs:

• Property A: 12 months at £950/month = £11,400
• Property B: 12 months at £875/month = £10,500
• Property C: 8 months at £1,100/month = £8,800
• Total exposure: £30,700

Tribunal decision: Given the scheme had been in place for two years, PropertyFirst should have been aware. The tribunal awards:

• Property A: £9,120 (80%)
• Property B: £8,400 (80%)
• Property C: £7,040 (80%)
• Total awarded: £24,560

Plus: Civil penalties of £45,000 (£15,000 x 3 properties) from the council.

Scenario 3: The Informed Tenant

Background: HomeSafe Lettings takes on a new property in an area with selective licensing. They advise the landlord a licence is needed, but the landlord refuses to apply, citing cost. HomeSafe continues to manage the property.

What happened: The tenant discovers the property is unlicensed and applies for an RRO—against both the landlord and HomeSafe Lettings.

The claim: 12 months' rent at £1,200/month = £14,400

Tribunal decision: The tribunal finds both parties liable. However:

• HomeSafe Lettings advised the landlord about licensing
• HomeSafe Lettings documented their advice
• The landlord made the decision not to apply

Award: £14,400 total, with 90% (£12,960) allocated to the landlord and 10% (£1,440) to HomeSafe Lettings.

Key lesson: Documenting your advice to landlords doesn't eliminate liability, but it can significantly reduce your share of any award.

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How to Protect Your Agency from RRO Claims

Prevention is the only reliable protection against RRO claims. Once a property is proven unlicensed, defences are extremely limited.

1. Know Your Licensing Requirements

The foundation of RRO protection is comprehensive licensing awareness:

• Map every property against current selective licensing schemes
• Track HMO status for every property you manage
• Monitor council announcements for new schemes and boundary changes
• Document your compliance checks in case of future disputes

2. Build Licensing Checks Into Every Instruction

When taking on any new property:

• Check if the address falls within a selective licensing area
• Verify HMO status based on tenant configuration
• Confirm licence status and expiry dates
• Document all checks in your property file

3. Create Clear Landlord Agreements

Your management agreement should address licensing explicitly:

• Landlord warranty that property is properly licensed
• Obligation for landlord to maintain valid licence
• Indemnity from landlord for licensing failures
• Right to terminate management if landlord refuses to comply

Note: These provisions help protect you, but they don't eliminate tenant claims against you directly.

4. Document Everything

If an RRO claim ever arises, your defence depends on documentation:

• Records of licensing checks performed
• Advice given to landlords about licensing
• Landlord responses to licensing advice
• Copies of all licence applications and certificates
• Council correspondence

5. Act Immediately on Any Issues

If you discover a licensing problem:

• Apply for the licence immediately (even if late)
• Document when you discovered the issue
• Keep records of your remediation steps
• Consider proactive communication with the tenant

Speed of response can significantly affect tribunal awards.

6. Use Technology to Monitor Compliance

Manual monitoring across dozens of councils is error-prone. Purpose-built compliance tools can:

• Track all properties against licensing requirements
• Alert you to boundary changes and new schemes
• Provide deadline reminders for renewals
• Document your compliance efforts automatically

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Frequently Asked Questions

Can a tenant claim an RRO if they knew the property was unlicensed?

Yes. Following the Supreme Court decision in Rakusen v Jepsen [2023], tenant knowledge of an unlicensed status is a factor the tribunal considers, but it doesn't bar a claim entirely. A tenant who knowingly rented an unlicensed property might receive a reduced award, but tribunals have still made substantial awards in these circumstances.

How long does a tenant have to make an RRO claim?

Tenants must apply to the First-tier Tribunal within 12 months of the offence ceasing. For licensing offences, this typically means 12 months from when the property became licensed or when the tenancy ended—whichever is later.

Can I recover RRO payments from the landlord?

This depends on your management agreement. If your agreement includes an indemnity clause covering licensing failures caused by the landlord, you may be able to recover. However, pursuing this recovery is a separate legal matter and can be costly and uncertain.

Does professional indemnity insurance cover RRO awards?

Coverage varies significantly between policies. Some PI policies explicitly exclude licensing failures; others may cover them as "civil liability" claims. Review your policy carefully and discuss with your broker. Don't assume you're covered.

Can the council and tenant both claim an RRO for the same period?

No. The legislation prevents double recovery. If a council obtains an RRO, a tenant cannot obtain one for the same period (and vice versa). However, the council could pursue a civil penalty while the tenant pursues an RRO—these are separate mechanisms.

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Stop RRO Risk Before It Starts

Rent repayment orders represent a significant and growing risk for letting agents. Unlike civil penalties, RROs put money directly in tenants' pockets—creating strong incentives for claims. And with "no win, no fee" solicitors now marketing RRO services directly to tenants, claims are increasing.

The only reliable protection is proactive compliance. You need to know exactly which properties require licences, track boundary changes as they happen, and ensure every property in your portfolio is properly licensed at all times.

ProperLet Protect monitors all 317 English councils for licensing changes, alerting you within 24 hours when a scheme affects your portfolio. No more manual checking. No more missed boundaries. No more RRO exposure from compliance gaps you didn't know existed.

Book a Demo → and see how ProperLet eliminates the licensing blind spots that create RRO risk.

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This article is for informational purposes only and does not constitute legal advice. For specific guidance on rent repayment orders or licensing requirements, consult a solicitor specialising in housing law.