A letting agency has been ordered to repay more than £31,000 via a Rent Repayment Order (RRO) for an unlicensed HMO after a First-tier Tribunal found it had taken on responsibility for the six-bed flat in Bethnal Green (main image).

This is despite the firm’s arguments it was acting on behalf of the freeholder.

Mio Real Estate Ltd, which is run by Marco Scanu, had entered into a rent-to-rent agreement with the owner, allowing the firm to rent the property and sublet rooms, receiving the rack rent from occupants. The tribunal heard that tenants paid rent directly to his company, which had taken over the tenancy and day-to-day running of the property.

Claim rejected

The tribunal therefore rejected his argument that he was “merely an agent”, finding that his arrangement went beyond a standard agency role: by taking a lease and subletting in his own name, the company assumed landlord responsibilities, including the requirement to license the HMO.

Although the flat fell within Tower Hamlets’ additional licensing scheme, no licence had been obtained during the period in question, despite the property being occupied by multiple households sharing facilities.

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 judge said: “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.”

He added that he had “no doubt” Scanu knew, or should have known, about licensing requirements given his experience running a lettings business.

Five tenants were awarded a combined £31,436.23 through a Rent Repayment Order, equivalent to 70% of the rent paid, reflecting both the offence, poor conduct and failures around deposit protection.

Industry comment

“This ruling serves as a clear and costly reminder of how serious non-compliance can be,” says Nick Kyriacou , Director of Mi Homes.

“Rent repayment orders are becoming increasingly common, and they’re just one of several enforcement tools available to local authorities and tenants.

“In this instance, the agent’s failure to operate within legal requirements resulted not only in financial loss, but also reputational damage that could have long-term consequences for their business.

“This example reinforces a message we consistently communicate to clients: if you are negligent in your compliance responsibilities, you are exposed to significant penalties, including fines and possible banning orders. The regulatory environment is tightening, and enforcement bodies are showing more and more willingness to act.

With the Renters’ Rights Act on the horizon, the stakes are only getting higher.”

“With the Renters’ Rights Act on the horizon, the stakes are only getting higher. The legislation is expected to further strengthen tenant protections and increase scrutiny on landlords and agents alike. As a result, ensuring full compliance is no longer optional, it’s essential.

“Landlords must recognise that property investment operates within a professional and highly regulated landscape. It requires the same level of diligence, structure, and accountability as any other serious business venture. For those who lack the time or expertise to stay fully compliant, outsourcing to a knowledgeable and experienced firm is most certainly the safest route.

“Ultimately, this case is not just an isolated incident, it’s a warning. Compliance failures are no longer slipping through the cracks, and the financial consequences can be severe.

“The message is clear: take compliance seriously, or risk paying the price.”

Image credit: Google Streetview.