Assessment of regulated rent – Relevance of comparable lettings on assured tenancies – Duty of rent Assessment Committee to give reasons – Whether scarcity discount can be expressed without arithmetical computation
The landlord owned two flats, nos 46 and 50, in a purpose-built block in London E17. Having been let unfurnished since 1950 both were held on regulated tenancies to which the fair rent provisions the Rent Act 1977 applied. In June 1993 annual rents of £3,400 and £3,100 were registered for nos 46 and 50 respectively. In July 1995 a rent officer registered rents of £3,900 and £3,640 as against the figures of £5,720 and £5,200 for which the landlord was contending. In February 1966 the rents determined by the rent officer were confirmed by the London Rent Assessment Committee notwithstanding that rents then being obtained for like flats let on assured tenancies in the same and similar blocks (and offered by the landlord as comparables) ranged between £5,720 and £6,240. The statement of reasons, having accepted those comparables as evidence of the market rent for relatively short assured tenancies of flats equipped to a modern standard, went on to state, “. . . the Committee have made appropriate deductions . . . for the differences commented upon. . . as well as a discount for the scarcity element [as required by the 1977 Act] . Having done so they saw no need to disturb the rent officer’s registrations. Nor did they consider that in the circumstances it was appropriate to offer artificial calculations, detailed workings or hypothetical percentages; they were entitled as a tribunal expert in valuation to rely upon a broad but well-founded approach.” Before the High Court the landlord sought to quash the decision on two quite distinct grounds. It was first contended (relying on Spath Holme Ltd v Chairman of the Greater Manchester Rent Assessment Committee [1995] 2 EGLR 80 per Morritt LJ) that the committee had failed to give the weighty reasons required before departing substantially from recently agreed market rents in the same block. The second contention related an alleged failure by the committee to give the landlord a full hearing on the question of the tenants’ responsibility for repairs.
Held The decision was quashed.
1. There was regrettably no case for quashing the decision on the first ground alleged. The court had to accept the committee’s finding of a scarcity of unmodernised flats in the relevant area. While it would have been helpful and far from difficult to express the discount made for scarcity in arithmetical terms the committee could not be “castigated” for that omission where as here the committee had otherwise dealt fully with the differences between the flats in issue and those offered as comparables.
2. However on the particular facts of this case the committee had failed to notify the landlord of a belated assertion by the tenants as to their repair burden. But for this failure the landlord would have certainly adduced evidence to show that variations in favour of the tenant had taken place over the long history of the tenancies and that may very well have affected the result.
James Bonney QC and Jonathan Gavaghan (instructed by Drewitt Willan, of Manchester) appeared for the applicant; John Hobson (instructed by the Treasury Solicitor) appeared for the respondent.
