Court rules on regulated tenants’ status

The High Court has ruled that 400 former regulated tenants whose homes have been transferred by the Crown Estate to housing association Peabody are assured tenants. However, the case is heading to the Court of Appeal, where representative tenant Margaret Poplak hopes to win a ruling that she and the other affected residents enjoy the greater protections of secured tenants. In October 2010, the Crown signed a deal to transfer to Peabody the ownership of 1,230 affordable homes on five estates in central London for £150m. Under the Housing Act 1988, the status of regulated tenancies automatically changes after a sale. The court was asked to decide whether the leases of the regulated tenants in Cumberland Market, Millbank, Victoria Park and Lee Green estates would become secure tenancies or assured tenancies. The former are the most common form of tenancy provided by local authorities and offer greater protections to tenants, allowing them to remain in their homes provided that they abide by the rules, while assured tenants enjoy fewer statutory rights.  The Crown Estate and Mrs Poplak argued that the tenants have become both secure tenants under the 1985 Housing Act and housing association tenants under the Rent Act 1977. They claimed that parliament could not have intended section 38(5) of the 1985 Act – a key provision aimed at preserving tenants’ rights when their homes are transferred from a public body to a private landlord – to have what they accepted was its literal effect in this case. However, Deputy Judge Charles Hollander QC backed Peabody’s argument that the literal interpretation was correct, and that the tenants have assured tenancies. Describing the legislation as “labyrinthine” and “replete with exceptions to exceptions”, he said that the words of section 38(5) were ultimately clear, adding: “I reject the argument that the literal construction is contrary to the intention of parliament.” He said that the effect of his ruling had been mitigated because Peabody has issued each regulated tenant with an individual tenancy addendum, enforceable against it, conferring rights on them similar to those they enjoyed as regulated tenants. Nevertheless, he said that the determination of the applicable statutory code would affect issues of management, rent-setting, succession and possession, and the circumstances in which recourse will need to be made to those undertakings. The judge granted Mrs Poplak permission to appeal. The Crown Estate Commissioners v Governors of the Peabody Trust and another Chancery (Deputy Judge Charles Hollander QC) 10 June 2011. Ranjit Bhose (instructed by Trowers & Hamlins LLP) appeared for the claimant; Jon Holbrook (instructed by Peabody) appeared for the first defendant; Martin Westgate QC (instructed by Hansen Palomares Solictors) appeared for the second defendant.