Supreme Court ruling regarding rent-to-rent companies and the benefit it brings to landlords

31st July 2023
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A recent landmark ruling from the Supreme Court in the case of Rakusen v Jepsen has brought about significant changes in the responsibilities of ‘rent-to-rent’ companies. This ruling is a welcome one for landlords and is set to impact the private rented sector as a whole. 

What are rent-to-rent companies? 

For those unfamiliar with the term, rent-to-rent companies are entities that rent residential properties and re-let it to a third party and so effectively take over the running of a residential property for a landlord.  

They act as an intermediary between the landlord and the tenants, handling all day-to-day responsibilities of property management.  

However, the recent Supreme Court ruling has clarified the legal obligations of these companies, especially in cases where they are acting as a landlord. 

In the Rakusen v Jepsen case, Mr Rakusen, the landlord and property owner, agreed to let a flat to a rent-to-rent company.  

The property required a licence, but the company did not apply for one. When the tenants sought a Rent Repayment Order (RPO) due to the failure to be licensed, they targeted Mr Rakusen, even though he had not received rent directly from the tenants.  

This led to a legal battle that eventually reached the Supreme Court. 

The initial tribunal ruled that the RPO could be applied for against Mr Rakusen.  

However, the Court of Appeal later overturned this decision, ruling in Mr Rakusen’s favour.  

The Supreme Court upheld this decision, stating that rent-to-rent companies cannot “shirk responsibility” and expect to leave the property owner to pay for their legal failings. 

This ruling is a significant victory for landlords, as it clearly outlines the responsibilities of rent-to-rent companies.  

Responsibility of rent-to-rent companies 

The Supreme Court’s ruling makes it clear that rent-to-rent companies are acting as a landlord in their own right and it is their responsibility to ensure that relevant legal requirements are met since it is they who receive tenants’ rent.  

This ruling provides important clarity for landlords and tenants alike. It underscores the importance of understanding the legal obligations associated with property management and reinforces the need for rent-to-rent companies to uphold their responsibilities. 

Landlords should be aware of this ruling and its implications. It is crucial to ensure that any rent-to-rent company you engage with understands and is prepared to meet its legal obligations.  

For completeness, the role and responsibilities of a rent-to-rent company should not be confused with those of an agent appointed by a landlord. 

If you are a landlord that has faced any disputes or problems with a rent-to-rent company, Ansons are here to help. Contact our expert Dispute Resolution team today.