News

Tenants ordered to pay £3,240 after Tribunal finds RRO claim was pursued unreasonably

Tuesday, September 22nd, 2026 - London Property Licensing

A First-tier Tribunal decision highlights the financial risks tenants can face when pursuing a Rent Repayment Order claim.

Six East London tenants have been ordered to pay their landlord’s £3,240 legal costs after withdrawing a Rent Repayment Order (RRO) application that the Tribunal found had been pursued unreasonably. The case concluded in July 2026.

The RRO application

In May 2025, six tenants living in Tower Hamlets submitted an RRO application to the First-tier Tribunal. They alleged their landlord had committed an HMO licensing offence under section 72(1) of the Housing Act 2004. The offence involves letting out a licensable property without applying to the local council for the required licence.

The tenants sought to recover 12 months’ rent. The Tribunal reported that the rent was approximately £60,000 a year, making this a substantial claim.

The tenants were represented by Justice for Tenants, a no win no fee organisation specialising in RRO claims. The Tribunal’s decision states that the organisation was charging the tenants 30% plus VAT, equivalent to 36%, of all rent recovered from the landlord.

In October 2025, five months after submitting the claim, the tenants asked to withdraw their RRO application. The withdrawal was agreed by the Tribunal.

The landlord’s costs application

The landlord submitted an application for costs against the tenants for unreasonable behaviour in bringing, defending or conducting the proceedings under Rule 13 of the Tribunal Procedure Rules. Costs awards are rare in the First-tier Tribunal. Normally, each party bears their own costs, and there is a high evidential threshold to secure costs.

An oral hearing was held to consider the costs application. Both parties accepted the Tribunal had to apply the three-stage approach set out in Willow Court Management Company (1985) Limited v Alexander [2016] UKUT 290 (LC) when determining the application for costs.

The Tribunal’s findings

At the core of the case was Justice for Tenants’ communication with the council and the tenants about the legal basis for the claim. The Tribunal found the questions they put to the council about the property’s licensing status were defective because they did not ask whether a licence had been in force throughout the relevant period. The property was later found to have complied with the licensing requirements, meaning that no licensing offence had been committed.

The Tribunal also criticised Justice for Tenants for failing to explain why it had initially believed there was no licence between 8 May and 29 July 2024. It further questioned how the RRO application sought repayment of 12 months’ rent despite no justification for such a claim. The Tribunal described this discrepancy as the most egregious example of unreasonable conduct in the case.

The Tribunal also raised concern about Justice for Tenants’ ‘without prejudice save as to costs’ letter that offered to settle the claim at 85% of 12 months’ rent. The Tribunal described this as ‘grossly exaggerated’, as such a high award would be exceptional. The Tribunal said:

‘We do not accept that Justice for Tenants can have had any genuine belief that 85 per cent was a reasonable settlement figure. On the contrary, we find it was made to intimidate the landlord, who had no legal advice at that point.’

Costs award made

On 10 July 2026, the Tribunal ordered the six tenants jointly to pay the landlord’s £3,240 costs within 28 days.

London Property Licensing contacted Justice for Tenants by email on 15 September 2026 to ask whether they would pay this cost or require the tenants to pay. At the time of publication, no response had been received. Any update will be published here.

Richard Tacagni, MD, London Property Licensing commented:

“With so many councils referring tenants to no win no fee organisations, it is important tenants understand Rent Repayment Order applications are a complex legal process and if care is not taken, the expected financial windfall can instead become an unwelcome financial burden.”

Check whether your property requires a licence

Failure to obtain the required mandatory HMO, additional or selective licence is one of the main reasons that justifying an RRO claim. To find out if your property needs to be licensed, click on ‘select borough’ at the top left of this webpage and read the free property licensing guide covering your London borough.

With the maximum RRO claim increasing to two years’ rent under the Renter Rights Act 2025, and tenants having up to two years to apply, London Property Licensing anticipate such claims will continue to escalate in value and complexity.

Tenants considering an RRO should verify the alleged offence, the relevant dates and the amount that may realistically be recoverable before making an application. Landlords in receipt of an RRO application should obtain specialist legal or professional advice and preserve all licensing records and correspondence.

You can read the full First-tier Tribunal decision for 19 Alderney Road, London E1 4EG, LON/00BG/HMF/2025/0807 here.

Our free guide containing information about property licensing and HMO planning rules in Tower Hamlets is available here.