Landlord and tenant – Fair rent – Determination – Rent officer determining fair rent for flat let by respondent landlord on regulated tenancy – Appellant tenant challenging increase in rent following improvements – First-tier tribunal (FTT) determining fair rent payable more than double previously registered rent – Whether FTT giving sufficient reasons for decision – Appeal allowed
The appellant was the tenant of 22 Causewayside, Cambridge, a first-floor flat in a purpose-built block which comprised a living room, kitchen, bathroom and two bedrooms. The building was constructed with a communal heating system with a central boiler. The appellant had been granted a regulated tenancy under the Rent Act 1977. The rent included an element to cover the costs of services and fuel for the central heating and hot water. From 2006, a fair rent of £1,257 per quarter was registered under Part IV of the 1977 Act, including an amount for fuel charges of £176.49 per quarter. In 2007 the boiler was decommissioned and an independent heating system installed. The respondent also provided new kitchen and bathroom fittings, a cooker, fridge and new carpets. The rent payable was reduced to reflect the fact that the appellant had assumed responsibility for his own heating costs.
In April 2016, the respondent applied to increase the fair rent payable under the tenancy. The appellant regarded the proposed increase as excessive, unreasonable and grossly unfair. He also objected to the increase because each of the other flats in the building which was subject to a regulated tenancy enjoyed a fair rent capped under the Rent Acts (Maximum Fair Rent) Order 1999. He considered it unfair that he alone should be required to pay an uncapped rent. The rent officer took the view that the 1999 Order did not apply because of the work carried out by the respondent in 2007 and registered a new rent with effect from 14 June 2016 of £2,630 per quarter.
The First-tier Tribunal (FTT) dismissed the appellant’s appeal against that decision on
written representations. In its reasons, the FTT explained that the open market rent for the flat was £1,100 per month to which it had applied a 15% allowance for scarcity, leaving a fair rent of £935 per month or £2,805 per quarter. The appellant appealed on the ground that the FTT had failed to give any intelligible explanation for concluding that the amount of rent attributable to the 2007 works was in excess of 15% of the previously registered rent.
Held: The appeal was allowed.
Fairness required that parties should be left in no doubt why they had won or lost. Without reasons the losing party would not know whether the court had misdirected itself, and thus whether he might have an appeal on the substance of the case. Transparency had to be the watch word. The reasons need not be elaborate or lengthy but they had to be intelligible and deal with the substantial points raised. Having read the reasons the parties had to be able to understand why the decision had been reached: Flannery v Halifax Estate Agencies Ltd [2001] 1 WLR 377 and Trustees of the Israel Moss Children’s Trust v Bandy [2015] UKUT 276 (LC); [201] PLSCS 181 applied.
A fair rent under section 70 of the 1977 Act was the market rent adjusted for scarcity under section 70(2) and disregarding the personal circumstances mentioned in section 70(1) and the matters specified in section 70(3). The question for consideration in any determination of a rent under section 70 was therefore how the market would value the premises, and not its value to the current tenant: Spath Holme v Manchester & Lancashire Rent Assessment Committee [1995] 2 EGLR 80 applied.
In the present case, the FTT had given no proper explanation for its critical conclusion, which made the difference between a rent increase pegged to RPI since 2006 and an increase of more than 100%. The appellant had raised a number of specific points in his letter of objection going to the extent and effect of the improvements on which the FTT relied. It was incumbent on the FTT to consider the appellant’s objections, clearly articulated in the correspondence provided, in a systematic way. As a minimum, the tribunal’s reasons had to engage with and respond to the main arguments presented to it. They had to explain to the unsuccessful party why they had been unsuccessful. The reasons given by the FTT in this case fell below that standard and it would not have been obvious to the appellant why his contention that there had been no significant improvement to his flat had been rejected.
It was not enough for the FTT to satisfy itself that work had been done in the flat. It ought first to have focussed on the question raised by article 2(7) of 1999 Order namely whether there had been “a change in the condition of the dwelling house … as a result of repairs or improvements (including the replacement of any fixture or fitting)”. Any work or expenditure which brought about no change in the condition of the flat was irrelevant. Once the FTT had identified the changes brought about in the condition of the flat, it was necessary to consider the extent to which those changes had caused the fair rent of the flat to increase. The question was by how much the rental value of the flat had been increased in 2016 by the works done in 2007 in the condition they were in at the date of the FTT’s determination.
The FTT had to decide whether its views on all the issues arising out of the appellant’s written case, could be explained compositely, treating all of the changes together, or whether it was necessary to distinguish them and explain what it made of the individual changes. It was not necessary for it to attribute specific changes in rental value (up or down) to specific features, but it was necessary for it not just to state that the increase in rent attributable to the changes was more or less than 15% of the previously registered rent, but to provide the figures, with and without the changes, on which it based that comparison. The decision of the FTT was flawed and had to be set aside. The matter would be remitted for reconsideration by a differently constituted tribunal.
The appellant appeared in person; The respondent appeared by its representative.
Eileen O’Grady, barrister
Click here to read transcript: Ljepojevic v University of Cambridge Accommodation Service