High class London flat let under assured tenancy – Application for determination of rent at a level which would deprive tenancy of assured tenancy status – Whether rent assessment panel bound to cap the rent at £25,000 pa
By an agreement dated October 5 1994 a predecessor of the applicant landlord let a flat in Cadogan Place, London, to a relative (T) for a fixed term expiring on September 27 1995 at a rent of £700 a month, such rent being significantly below the market rent. On September 29 1995 the applicant became the immediate landlord of T, who was by then occupying the flat as a statutory periodic tenant under the Housing Act 1988. In January 1996 the applicant served a notice on T proposing that the rent be increased to £3,375 per month. That notice was referred by T to the respondent rent assessment panel which by section 14(1) of the Housing Act 1988 was required to determine “the rent at which . . . the dwelling-house might reasonably be expected to be let under an assured tenancy”. In response to the applicant’s claim to a rent of £40,000 pa the respondents declared, pointing to the £25,000 rental value limit imposed by para 2A of Part I of Schedule 1 to the Act (replacing the earlier rateable value limits), that they had no power to determine a rent above that limit since they would thereby be purporting to fix a rent for a tenancy which was no longer an assured tenancy. In its challenge to the decision the applicant contended that the respondents were bound to record the full market rent regardless of its effect on the status of the tenancy.
Held The application was allowed.
The dispute had arisen because the draughtsman of the amendment to Schedule 1, made by the References to Rating (Housing Regulations) 1990, had failed to appreciate how the new provision would interact with section 14(1) of the 1988 Act, which could only operate sensibly if the words “let under an assured tenancy” were construed without regard to the limit on rental values inserted into the Schedule. The introduction of the cap contended for by the respondents would defeat the purpose of the section as no landlord could be “reasonably expected” to let at or near a figure incapable of being increased. Furthermore, it could not have been the intention of parliament to allow an amendment which was purely consequential upon changes in local taxation to have such a profound effect on the assured tenancy regime. The respondents’ argument could not be pursued without casting doubt on the validity of the 1990 regulation.
Anthony Redevsky (instructed by Lee & Pembertons) appeared for the landlord; John Hobson (instructed by the Treasury Solicitor) appeared for the respondent panel; the tenant did not appear and was not represented.
