Be aware: not all rent repayment order claims are what they seem

Rent repayment orders have quietly become a favoured enforcement tool in the tenants’ arsenal. And in the private rented sector under the Renters' Rights Act 2025, this enforcement tool has just been sharpened.

But frivolous and bogus claims can rebound on the tenants, as the recent VHGK Limited claim demonstrates – see below – the result may not always go in the tenant’s favour.

What’s changed?

From 1 May 2026 the maximum award under an RRO has doubled to two years' rent, and the application window during which a claim can be brought has also doubled to two years.

In addition, liability under an RRO stretches to superior landlords and company directors who previously sat behind any intermediary. That means those owners who hand their property over to a professional management company, or an individual, to rent out – and receive a guaranteed rent – (known as Rent-to-Rent) can find themselves liable for the sins of these managers.

So, understanding how RROs work — and how to avoid one — has never been more important. But a recent tribunal decision involving VHGK Limited is a useful reminder that the system is not always a one-way street. It’s not totally weighted only in tenants' favour. The case in point shows that claims pursued unreasonably can result in costs awarded against the tenants who bring them.

This article relates to the law in England. Rent repayment orders operate differently in Wales. It is intended as general guidance and does not constitute legal advice. Landlords facing an actual or threatened RRO claim should seek advice from a specialist property solicitor.

What is a rent repayment order?

A rent repayment order (RRO) is made by the First-tier Tribunal (Property Chamber). It requires that a landlord committing a specified housing offence repay rent already received, either to the tenant/s or, where housing benefit or the housing element of Universal Credit was involved, to the local authority. 

This action is outside of the county court system, being dealt with by a property tribunal with no reference to the courts. Claimants use Form RRO1.

So, no reference to the courts, no need for a prior criminal conviction. All the tribunal must do is satisfy itself "beyond reasonable doubt” — which is the criminal standard of proof — that an offence was committed. It can conclude the case itself and impose a penalty.

A brief history

The RROs originated with the Housing Act 2004, which first allowed tenants and local authorities to recover rent where a licensable HMO or selective licensing property was let without the required licence. The way it operated then was quite narrow and little used outside of HMO licensing.

The Housing and Planning Act 2016 transformed the RRO into a more potent tool. Sections 40 to 46 broadened qualifying offences beyond licensing. Illegal eviction and harassment, breach of a banning order, and the use or threat of violence to secure entry were added, and it gave the First-tier Tribunal a single, consistent procedure for all RRO applications, whether brought by a tenant or a council.

Next, the courts rather than Parliament brought about a change. In a landmark judgement in Rakusen v Jepsen [2021], later upheld by the Supreme Court, the courts held that an RRO could only be made against a tenant's immediate landlord.

A superior landlord who owned the property but had let it via an intermediary could not be held liable to a financial penalty. This created a rent-to-rent loophole, thought the government: operators running unlicensed HMOs through a chain of lettings could shield the ultimate owner from liability. That gap has now been closed by the Renters' Rights Act (RRA).

How an RRO claim works

For a claim to succeed, an applicant must satisfy the tribunal, to the criminal standard, that the landlord committed one of the offences listed in section 40(3) of the Housing and Planning Act 2016.

The most common claims are for failure to licence an HMO or selective licensing property (sections 72 and 95 of the Housing Act 2004), but these may also involve illegal eviction, breach of an improvement notice or prohibition order, or breach of a banning order.

Where the tribunal has discretion over the amount mainly on licensing offences rather than eviction or harassment, it must weigh the circumstances. These involve the landlord's financial circumstances, the landlord's conduct, whether the landlord has been convicted, fined, or already subject to an RRO for the same type of offence, or the conduct of the applicant tenant.

The Upper Tribunal has said in several instances that the full award should be reserved for the most serious cases. Failing to licence a property, while a serious offence, is not automatically at the top of the tribunal’s scale. 

In practice, awards for straightforward licensing breaches have tended to cluster around the 40 to 60 per cent range of the rent paid, though the facts of each case matter, including aggravating conduct, determining the seriousness. 

Specialist claims organisations, most prominently in the VHGK Limited case, Justice for Tenants, now handle a significant proportion of RRO applications on tenants' behalf. They will typically peruse a claim on the tenant’s behalf for a fee calculated as a percentage of any sum recovered. 

Their involvement in these cases has raised awareness of the potential of RRO among tenants, but as the VHGK case below illustrates, the quality of the investigation and the evidence behind a claim matter enormously.

What are the key changes under the Renters' Rights Act?

The Renters' Rights Act 2025 amends the Housing and Planning Act 2016 sections 98, 103 and 104, with the revised RRO regime in force for offences committed on or after 1 May 2026.

What are the main changes:

1 – The maximum award is doubled from 2 months' to two years' rent.

2 – The application window is also doubled from 12 months to two years.

3 - Superior landlords are now brought into the line of liability. This reverses the Rakusen ruling, so now an RRO can now be made against a superior landlord as well as the immediate landlord.

4 - Company directors can be held personally liable; they cannot hide behind limited liability where the offence was committed with their consent or through their neglect.

5 – There is a mandatory maximum penalty for repeat offences. 

6 – There are now new qualifying offences: knowingly or recklessly misusing a possession ground; breaching the new restrictions on re-letting or marketing a property after regaining possession; and providing false or misleading information to the private rented sector database.

For those small-scale landlords who use agents or management companies, the superior landlord measures have important implications. Owning a property through a company or leasing it to be managed by a third party no longer provides a shield if that third party commits a qualifying offence.

The VHGK Limited case

Not every tenant’s RRO application will necessarily succeed, as illustrated by this case. This First-tier Tribunal decision, published in July 2026, is an example of what can go wrong on the applicant's (tenant’s) side.

Six tenants at a house in Tower Hamlets were represented by Justice for Tenants. They applied for an RRO against their landlord, VHGK Limited. They were claiming twelve months' rent. The tenants ultimately withdrew the application, and the landlord applied for costs under rule 13(1)(b) of the Tribunal Procedure (First-tier Tribunal). (Property Chamber) Rules 2013. This allows a costs order where a party has acted unreasonably in bringing or conducting proceedings.

The tribunal found unreasonable conduct by Justice for Tenants. Its initial claim about the property's licensing history was misleading when, in fact, council records produced by VHGK showed a continuous HMO licence record throughout the tenancy. 

The demand of 85 per cent of that rental sum was, the tribunal found, “grossly exaggerated” and made to intimidate the landlord rather than give a genuine assessment of the claim's merits.

The tribunal awarded the landlord £3,240 in costs, covering both its agent's time in responding to the claim and the barrister's fee for the costs hearing itself. This held the six tenants jointly and severally liable.

The decision does not mean that landlords should take these things lightly, but it does show that an ill-founded claim is winnable given the correct documentary evidence. It emphasises yet again the importance of landlords maintaining excellent data surrounding their tenancies. 

Avoid RRO claims

Treat licensing applications and renewals as a priority and follow the rules to the letter. Keep a diary of events and renewal dates well in advance. Never assume a managing agent or intermediary has renewed a licence without written confirmation from the council.

Retain past evidence by keeping all licence certificates, renewal application receipts, and all correspondence with the local authority. This was the evidence VHGK Limited relied on. 

Always respond promptly to tenant and council correspondence and don’t ignore tribunal deadlines. Any delays and silence can be construed as poor conduct by a tribunal. Take legal advice immediately if you receive a claim.

Conclusion

The Renters' Rights Act has significantly increased your exposure to the risk of an RRO claim that comes with getting licensing and other compliance wrong.

Doubling the previous award application window increases your liability, and extending it to superior landlords increases the reach of this liability. 

Most landlords will maintain good licensing discipline and good record-keeping and will be in the clear. Should you receive a bogus claim, the VHGK Limited decision is a useful indicator of what can be done in defence – costs can be awarded against tenants for frivolous or bogus claims.