Some build-to-rent (BTR) developments are increasingly falling foul of Rent Repayment Order (RRO) legislation, in a move away from its original aim to tackle poor HMOs, it has been claimed.

This is impacting operators of purpose-built and converted blocks who can receive multiple RRO claims, according to Karl Anders (main picture), partner housing management and litigation at Walker Morris.

Private sector landlords of residential blocks are finding themselves caught up in housing legislation that was intended to tackle problems more typically associated with overcrowded, unsafe, and poorly maintained HMOs.

Anders explains that there is a growing trend for RRO claims in respect of licensing breaches and that those BTR developments most likely to be affected are co-living schemes where, like purpose-built student accommodation, the living arrangement could fall within a local authority additional licensing scheme set up to tackle HMO type properties.  

Unregulated

He tells LandlordZONE that the application of licensing requirements to the large purpose-built or converted blocks sector makes them particularly attractive for unregulated claims management companies to make multiple tribunal applications and obtain a substantial share of the RRO awards.

Says Anders: “It appears the business model of these claim management entities is to take a share of the RRO award as their remuneration for representing the tenant. In our experience, this can be up to 20% of the award amount.”  

He adds that tribunals have significant latitude when assessing the quantum of RROs because, unlike other ‘damages’ assessments under English law, they are not based on compensation for loss. By contrast, the premise for a RRO award is punitive, as the intention is to act as a deterrent to errant landlords.