Moat Homes Ltd v Carlo; Longhurst Group v Gristwood and another

Landlord and tenant – Rent determination – Assured periodic tenancy – Appellant landlords seeking to increase rents under weekly assured periodic tenancies – Respondent tenants challenging proposed increases – First-tier Tribunal determining amounts payable – Appellants appealing – Whether contractual rent review clauses precluding reference of proposed new rents to FTT – Appeals allowed  Three appeals were heard together because they each raised the same issue whether the First-tier Tribunal had jurisdiction to determine a rent under sections 13 and 14 of the Housing Act 1988 where the parties’ tenancy agreement included a contractual rent review clause which entitled the landlord to increase the rent. Sections 13 and 14 of the 1988 Act provided a statutory scheme for landlords to obtain increases in the rent payable under assured periodic tenancies. Section 13 provided for the landlord to serve a notice proposing a change in rent and for the tenant to refer the proposal to the FTT for determination if they did not agree to the proposal. If an increase was referred to the FTT, it then had to determine the new rent in accordance with valuation principles provided in section 14. In each case the appellant landlords had let properties on weekly assured periodic tenancies which included contractual rent review clauses providing for the rents to be reviewed each year and allowing the landlords to increase the rent payable each week. The appellants gave notice in the form prescribed for use as a landlords’ notice proposing a new rent under an assured periodic tenancy of premises situated in England in accordance with section 13 of the 1988 Act.  The respondent tenants challenged the proposed rent increases and the FTT determined the sums payable. The appellants appealed arguing that each tenancy was not one to which section 13 applied because the agreement allowed the landlord to increase or reduce the rent and so brought the tenancy within the exception in section 13(1)(b). Held: The appeals were allowed. (1) The right to refer a notice of increase to the FTT was available only where the assured tenancy was a periodic tenancy. Section 13(1) of the 1988 Act identified the tenancies to which sections 13 and 14 applied. The statutory periodic tenancy referred to in section 13(1)(a) was one which arose under section 5 of the 1988 Act on the termination of an assured tenancy which was a fixed term tenancy. Section 13(1)(b) covered other periodic tenancies which were assured tenancies except a tenancy “in relation to which there is 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”.   (2) In Contour Homes Ltd v Rowen [2007] EWCA Civ 842; [2007] PLSCS 136; [2007] 1 WLR 2982, the first instance judge held that because the landlord had invoked the statutory procedure and provided the tenant with information about referring the increase to the appropriate tribunal, it could not later deny that the tribunal had jurisdiction to determine the new rent. The Court of Appeal rejected that approach and held that section 13(1)(b) excluded a tenancy where provision was made for an increase in rent, and that exclusion applied not simply, as the judge thought, to cases where the amount of the increase in the rent was set by the tenancy agreement, but also in cases where the tenancy agreement merely provided machinery for increasing the rent. The inclusion of a contractual rent review clause in an assured periodic tenancy excluded the jurisdiction of the FTT to make a determination under section 14. (3) The Upper Tribunal had followed the decision in Contour in Chouan v The Earls High School [2016] UKUT 405 (LC); [2016] PLSCS 255 and Salvation Army Housing Association v Kelleway [2024] UKUT 53 (LC); [2024] PLSCS 39, finding in each case that a clause in a weekly or monthly assured periodic tenancy which gave the landlord the right to increase the rent to a figure of its own choice was within the exception in section 13(1)(b), so that the FTT did not have jurisdiction to determine a new rent. In Helena Partnerships Ltd v Brown [2015] UKUT 324 (LC); [2015] PLSCS 220, the tribunal reached a different conclusion and construed the relevant provision in the tenancy agreement as merely providing information to the tenant about the landlord’s right to implement a statutory review, rather than having any contractual force in its own right. But despite the different result, the tribunal did not cast any doubt on the principle that the inclusion of a contractual rent review clause in an assured periodic tenancy excluded the jurisdiction of the FTT to make a determination under section 14.        (4) In the present appeals, the tenancies were assured periodic tenancies which included contractual rent review clauses which allowed the landlord to increase the rent payable each week.  Those clauses were of the sort described in clause 13(1)(b) and the effect of their inclusion was to oust the jurisdiction of the FTT to determine a new rent under section 14. It followed that the FTT did not have jurisdiction to determine the rents in any of the present cases and the appeals would be allowed. Accordingly, the rents payable under the tenancies would be the sums specified in the notices given by the appellants. Per curiam: In the hope that the waste of resources which the appellants had inflicted on themselves and on the justice system in these cases might be avoided in future, it should be noted that the significant expense and inconvenience of these proceedings to all parties, and the distress which the respondents might have experienced, had been caused in each case by the inappropriate and misleading use of the statutory prescribed form for increasing rent under section 13 of the 1988 Act. Section 13 did not apply and the prescribed form served no purpose where the tenancy agreement included a contractual rent review clause. The form was worse than useless, because it created the false impression, and false hope, that the FTT might be able to determine a different rent, when it could not. It was in the hands of social housing providers to avoid the waste and confusion which the inappropriate use of the prescribed form provoked. The appeal was determined on written representations Eileen O’Grady, barrister Click here to read a transcript of Moat Homes Ltd v Carlo; Longhurst Group v Gristwood and another