Landlord and tenant – Rent determination – Housing Act 1988 – Appellant increasing service charge payable by respondent tenant – Appellant also giving notice under section 13 of 1988 Act proposing increase in rent – First-tier tribunal reducing rent on application by respondent under section 13(4)(a) of 1988 Act – Whether tribunal’s jurisdiction to make determination excluded under section 13(4)(b) on ground that tenancy agreement providing contractual mechanism for rent increase – Whether excluded on ground that respondent not objecting to proposed new rent but only service charge – Appeal dismissed
The respondent held an assured periodic tenancy of a flat in St Helens, Merseyside, let by the appellant landlord. The tenancy agreement entitled the appellant to increase the rent in April 2004, after the first year of the tenancy, by no more than the retail prices index (RPI) for the previous 12 months plus half a per cent. Thereafter, it could increase the rent “in accordance with sections 13 and 14 of the Housing Act 1988”, no more than once a year, by one month’s written notice, whereupon the rent would be the amount so notified unless an alternative figure was agreed or the respondent asked a rent assessment committee to set a different rent.
At first, the respondent’s rent included a small service charge of only 62p per week for ground maintenance and communal lighting. In 2010, the appellant introduced additional services which it described as “specialist housing related support to existing and new tenants who require advice and assistance to help them manage their tenancies”. The appellant initially met the cost of those services from its general revenue but, with effect from April 2014, it sought to fund them through a new weekly service charge of £33.02. At the same time, it gave notice to the respondent, under section 13(2) of the 1988 Act, to increase his rent from £72.87 per week to £77.65; the overall effect of those measures was to increase the respondent’s overall payment for rent and service charge to £110.67 per week.
The respondent referred the notice of increase to the first-tier tribunal (FTT), on the form prescribed for a challenge under section 13(4)(a) to a proposed new rent. He did not separately challenge his liability to pay the new service charge, although he indicated that he neither wanted nor needed the new housing support service which it funded. In its decision, the FTT reduced the respondent’s rent to £32.98 per week, which was to be payable from April 2014 in addition to the new service charge; the net effect of the decision was that the respondent’s combined rent and service charge was reduced to £66 per week.
The appellant appealed. It contended that the tenancy agreement, properly construed, provided for a contractual rent review mechanism falling within section 13(1)(b), the effect of which was to exclude the FTT’s jurisdiction to determine a challenged rent increase.
Held: The appeal was dismissed.
(1) The jurisdiction to determine disputes over proposed increases in rent, conferred on the appropriate tribunal by section 14 of the 1988 Act, was not engaged unless the tenancy was a statutory periodic tenancy or assured periodic tenancy to which section 13 applied, which, by section 13(1)(b), would not be the case if there was a “provision, for the time being binding on the tenant, under which the rent for a particular period of the tenancy will or may be greater than the rent for an earlier period”. Section 13(1)(b) was intended to cover all contractual provisions for increasing rent, whether for fixed increases, for example by reference to the change in the RPI or stepped increases to predetermined figures, or increases by reference to an objective standard such as open market value. If there was contractual machinery for increasing the rent, the parties were not entitled to make use of the statutory provisions for determining an increase in sections 13 and 14: Contour Homes Limited v Rowen [2007] EWCA Civ 842 applied.
The respondent’s tenancy agreement was not of the kind excluded by section 13(1)(b). The provision which it contained for a rent increase by reference to the RPI in April 2004 had no continuing effect after that date and, by the time of the respondent’s application to the FTT, could not be said to be a “a provision, for the time being binding on the tenant”. It was a provision that had been binding on the tenant but was now spent. It was no longer binding and therefore could not exclude the tenancy from the application of section 13.
Nor was the description of the rent increase mechanism applicable after April 2004 enough to take the tenancy outside section 13. The tenancy agreement included a number of statements of the general law which were intended as no more than information for the tenant concerning his rights. The description of the rent increase provisions was simply a statement of the effect of the general law under which, after the first year of the tenancy, the appellant had the right under sections 13 and 14 of the 1988 Act to increase the rent payable under the agreement. That statement had no independent contractual force. The parties had intended no more than that the respondent should be able to refer a notice of increase given under section 13 to the appropriate tribunal as the general law entitled him to do. The appellant’s entitlement to invoke the statutory rent review procedure did not convert that procedure into a contractual rent review clause with the perverse consequence of prohibiting access to the statutory procedure.
(2) The FTT was not deprived of jurisdiction by the fact that the respondent’s argument was really with the service charge and not the new rent. The prescribed form of application to the FTT did not require the tenant to state that he disagreed with the figure proposed. The procedure involved no more than a request for the FTT to consider the proposed new rent. The respondent had made a valid application under section 13(4)(a) and the fact that he was content with that part of the total increase represented by the rent did not deprive the FTT of jurisdiction to determine the rent at which it considered that the property might reasonably be expected to be let in the open market in accordance with the criteria identified in section 14(1). The FTT was relieved of the obligation to determine such a rent only if the landlord and the tenant gave notice in writing that they no longer required a determination: see section 14(8). In the absence of such a joint request, section 14(1) imposed an obligation on the FTT to reach a determination. It followed that the FTT had jurisdiction to make its determination.
Per curiam: The real dispute between the parties, concerning the appellant’s entitlement to impose the new service charge, had not been resolved by the FTT’s decision. The challenge that the respondent wished to make fell within section 27A of the Landlord and Tenant Act 1985, permitting an application to the FTT for a determination whether a service charge was payable. The FTT could have overlooked the form in which the respondent had made his challenge and treated it as an application under section 27A(1). While the application was not in the form appropriate to such an application, r 8(1) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 provided that any irregularity resulting from a failure to comply with any provision of the Rules did not itself render the proceedings void. The FTT had not treated the application in that way because neither party had asked it to do so and the real issue between the parties did not emerge clearly from the formal documents. The best course now was for the appellant to make an application of its own under section 27A for a determination of its entitlement to levy a service charge.
William Hanbury (instructed by Weightmans LLP, of Liverpool) appeared for the appellant; the respondent appeared in person.
Sally Dobson, barrister
