Landlord and tenant – Assured periodic tenancy – Rent determination – Valuation – Assessment of comparables – Determination of rent under section 14 Housing Act 1988 – First-tier Tribunal disregarding additional comparables as irrelevant or for unspecified reasons – Appeal allowed in part
Bourne House, 189 Sloane Street, London, SW1, was a mixed-use building with retail premises on the ground floor and eight flats on the first to fourth floors. The appellant held a lease of flat 5 (the property) which was on the third floor and was served by a lift from the entrance lobby. The property comprised an entrance hall, a reception room, a dining room, kitchen, four bedrooms and a bathroom. There was a small shower room between the kitchen and the bathroom. The kitchen and bathroom fittings were out of date and the internal décor was tired. The flat was let unfurnished. There was a communal heating and hot water system. The cost of all services was included in the rent. There was no porter or caretaker. The reception room and three of the bedrooms faced a noisy road and the appellant had installed secondary glazing. The flat was leased for a term of seven years and six months from 29 November 1985. Upon expiry of the lease it became an assured periodic tenancy. It was assigned to the appellant in August 1998 on the same terms.
In August 2017, the First-tier Tribunal (FTT) determined the rent payable for the assured periodic tenancy at £31,952 per annum from 29 May 2017 (the valuation date) under section 14 of the Housing Act 1988. For the purpose of the valuation, the appellant put forward 13 comparables, six of which were also used by the respondent landlord. The FTT disregarded seven of the comparables relied on by the appellant, four of which were in the same blocks as those on which the FTT relied, the remainder being in similar blocks. Permission to appeal was granted on the basis that the FTT had disregarded the seven additional comparables as either irrelevant or for other unspecified reasons.
The appellant appeared by one of its partners (R) who also gave expert evidence. The respondent submitted, amongst other things, that in undertaking the dual role of advocate and expert, R had compromised the independence and validity of his evidence. The appeal was directed to be a rehearing of the application to determine a rent, limited to the issue of the prevailing level of rent suggested by comparable lettings.
Held: The appeal was allowed in part.
(1) It was difficult and undesirable for the same person to act as both an advocate and an expert witness. The principal duties of each role were different. The RICS Practice Statement and Guidance Note: Surveyors Acting as Expert Witnesses stated at PS 9.1 that a surveyor should only act in a dual role where: “(a) Neither the Rules nor the customs of the particular tribunal prohibit you from so acting; and (b) Other relevant factors make it appropriate (for example, the disproportionality of retaining two persons in separate roles) and where it is in the public interest to do so by providing access to justice which otherwise may not be available”. The principal disadvantage of the dual role was said at GN 17.4(b) to be: “The weight to be attached to the evidence given by you as an expert witness and to the submissions you make as surveyor-advocate, may be adversely affected if the dual role of surveyor-advocate and expert witness is undertaken”. The tribunal’s current rules and practice directions did not prohibit a person from acting in a dual capacity and that role was sometimes undertaken in simplified procedure cases where PS 9.1(b) was a relevant factor. The present appeal was heard under the standard rather than the simplified procedure but the dispute was limited to a straightforward rental valuation and did not involve any issues of law. R acknowledged the desirability of having separate representation and in his closing submissions (but not his evidence) said that he had expected counsel to be appointed. R was not instructed in either role on a contingency fee basis. He was an experienced expert who had regularly appeared before the tribunal. The court was satisfied that he tried to separate the roles of expert and advocate as best as he could but nevertheless it was inevitable that at times his evidence strayed into advocacy. It was particularly difficult to undertake a dual role where, as here, the evidence being given was a response to the other party’s expert. There was a sufficient confusion of the dual roles to affect the weight given to R’s evidence. Those occasions where his evidence was at risk of becoming impartial were easy to identify and the court had taken that into account in its analysis of such evidence.
(2) In property transactions, the valuer looked for a comparable as close as possible to that which he had to value, and which had been the subject matter of a real transaction. He then worked on the premise that if the subject matter of his valuation were to be the subject of a similar transaction, it would command the same value as the comparable. The valuer had to make adjustments to the value revealed by the comparable in order to reflect the differences between it and the subject matter of his own valuation. In a property valuation, typical adjustments would reflect differences between the comparables in location, terms of letting and so on. Those adjustments were essentially a matter of valuation judgment. The fewer the differences between the comparable and the subject of the valuation, the greater the weight that could be given to the comparable. Analysing the 12 adopted comparables in the present case, their average rent was £0.453 per ft2 per week. Applying that to the agreed gross internal area of 1,257.5 ft2 gave a value for the subject flat of £569.65 per week or £29,622 per annum, rounded to £29,600. Therefore, the rent would be determined under section 14 of the 1988 Act at £29,600 per annum: Marklands Ltd v Virgin Retail Ltd [2004] 2 EGLR 43 and Mundy v Sloane Stanley Estate Trustees [2018] EGLR 7 followed.
The appellant appeared in person; Toby Boncey (instructed by Pemberton Greenish LLP) appeared for the respondent
Eileen O’Grady, barrister
