A First-tier Tribunal has ordered Mio Real Estate Ltd to repay £31,436.23 to tenants through a Rent Repayment Order (RRO) after operating an unlicensed House in Multiple Occupation (HMO) in Bethnal Green, east London.
The ruling highlights the legal risks for letting agents and landlords operating rent-to-rent arrangements, particularly as regulatory compliance challenges intensify across the sector.
Tribunal rejects agency defence
Mio Real Estate Ltd, operated by Marco Scanu, had entered into a rent-to-rent agreement with the freeholder of a six-bedroom property, allowing the firm to sublet individual rooms and collect rent directly from occupants. The company argued it was acting merely as an agent on behalf of the property owner.
However, the tribunal found that by taking a lease and subletting in its own name, the company assumed landlord responsibilities, including the legal requirement to obtain an HMO licence. The property fell within Tower Hamlets’ additional licensing scheme, but no licence had been obtained during the period in question.
The judge stated: “Whilst the respondent may well have acted neither deliberately nor with reckless disregard of the legislation, this in itself does not amount to a defence.” The tribunal noted that Scanu, given his experience running a lettings business, knew or should have known about licensing requirements.
Financial penalty and market implications
Five tenants were awarded the combined sum, equivalent to 70% of rent paid during the unlicensed period. The tribunal based the repayment level on the licensing offence, poor conduct, and failures around deposit protection.
Nick Kyriacou, Director of Mi Homes, commented: “This ruling serves as a clear and costly reminder of how serious non-compliance can be. Rent repayment orders are becoming increasingly common, and they’re just one of several enforcement tools available to local authorities and tenants.”
Kyriacou noted that the case resulted in both financial loss and reputational damage for the business. He added that with the Renters’ Rights Act on the horizon, enforcement scrutiny is expected to increase further.
Industry implications
The case underscores the legal distinction between standard agency agreements and rent-to-rent arrangements, where agents take on tenancies and sublet properties. In such arrangements, the agent typically assumes landlord obligations, including compliance with HMO licensing schemes.
The tribunal’s decision comes as enforcement bodies demonstrate increased willingness to pursue non-compliance cases. For landlords and agents operating in areas with additional or selective licensing schemes, the ruling reinforces the importance of understanding local authority requirements and maintaining proper licensing documentation.
Property investors using rent-to-rent models face particular exposure, as they may be liable for repayment orders even if they were unaware of licensing requirements. The tribunal made clear that lack of knowledge or intent does not constitute a legal defence against licensing breaches.
