Landlord and tenant – Assured tenancy – Jurisdiction – Appellant landlord granting assured shorthold tenancy to respondent – Appellant serving notice under section 13 of Housing Act 1988 proposing rent increase – Respondent referring rent to First-tier Tribunal – FTT striking out notice as defective – Appellant appealing from FTT’s reasoning – Whether FTT having jurisdiction to grant permission for reasons appeal – Whether FTT’s reasoning wrong in law – Appeal allowed
The appellant granted a tenancy of flat 9, Charles Court, Tunbridge Wells to the respondent. Under clause 1.1, the tenancy began on 28 May 2018 and was an assured shorthold tenancy for an initial term of one month continuing month to month thereafter until it was brought to an end.
On 23 February 2023, the appellant sent to the respondent a notice in the prescribed form under section 13 of the Housing Act 1988 proposing a new rent to commence on Saturday 1 April 2023.
The respondent referred the rent to the First-tier Tribunal (FTT) which notified the parties that it was minded to strike out the reference because the notice did not provide for the new rent to take effect on the first day of a new period of the tenancy, as section 13(2) of the 1988 Act required.
The appellant said that it had served the section 13 notice in error and the tenancy agreement included provision for the increase of rent so that the FTT had no jurisdiction to determine the rent under section 14 of the 1988 Act.
The FTT said that, in light of clause 1.1 of the tenancy agreement, the initial fixed term of the tenancy had expired and the tenancy was now a statutory periodic tenancy. It therefore struck the reference out because the section 13 notice was defective and, to increase the rent, the appellant would have to serve a new notice. The appeal appealed.
Held: The appeal was allowed.
(1) The appellant appealed, not the FTT’s decision to strike out the reference, but its reasons for deciding that the tenancy was a statutory tenancy and that the rent could only be increased by service of a notice complying with section 13.
In refusing permission to appeal its reasons, the FTT had misdirected itself. Section 11 of the Tribunals Courts and Enquiries Act 2007 provided that the right of appeal was to the Upper Tribunal on any point of law arising from a decision made by the FTT other than an excluded decision. Any party had a right of appeal.
The appellant sought to argue that the FTT’s reasoning was wrong in law, and that was a point of law arising from the FTT’s decision. Accordingly, the application for permission to appeal was proper.
(2) The Housing Act 1988 introduced two new forms of tenancy: the assured tenancy and the assured shorthold. The principal difference between them was that the assured tenant had security of tenure while an assured shorthold tenant did not. Section 19A of the 1988 Act now provided that every assured tenancy entered since 28 February 1997 was an assured shorthold tenancy unless it was within the exceptions in schedule 2A to the 1988 Act.
Under paragraph 3 of schedule 2A, one if those exceptions was an assured tenancy which contained a provision to the effect that the tenancy was not an assured shorthold tenancy: A tenancy of a house let as a dwelling where the tenancy agreement stated that it was an assured tenancy was not an assured shorthold tenancy.
If an assured tenancy was a periodic tenancy, it could not be brought to an end by notice to quit; the landlord could recover possession only by obtaining an order of the court on one of the grounds set out in schedule 2 to the 1988 Act. A fixed term assured tenancy would expire at the end of its term, but the tenant was then able to remain in possession under a statutory tenancy arising under section 5 of the 1988 Act and, again, the landlord could recover possession only by proving a statutory ground.
(3) If an assured periodic tenancy contained provision for the rent to increase, then rent could be increased in accordance with that provision. However, where an assured periodic tenancy did not contain such provision, or when a statutory tenancy came into effect after the end of a fixed term assured tenancy, the rent might be increased by following the procedure in section 13. The provisions for rent increase in a fixed term assured tenancy were no longer in effect during the statutory tenancy that arose after the end of the assured tenancy: London District Properties Management Ltd v Goolamy [2009] EWHC 1367 (Admin); [2009] 3 EGLR 67 considered.
The procedure was initiated by the landlord sending a notice which had to propose a new rent to take effect at the beginning of a new period of the tenancy, no less than a month after the date of the notice and in most cases on a date at least 52 weeks after the start of the tenancy.
Section 13(4) enabled the tenant to refer the notice to the FTT. The reference was not an appeal; in response, the FTT would determine a market rent for the property as prescribed by section 14 of the 1988 Act.
(4) The tenancy agreement created a monthly periodic tenancy; a periodic tenancy was one that comprised a consecutive series of terms arising one after the other until one of the parties gave notice to bring it to an end: see Prudential Assurance Co Ltd v London Residuary Body [1992] EGCS 100; [1992] 2 AC 386.
If the parties had intended a letting for a fixed period of one month, the clause would have been worded differently, and would not have stated that the tenancy would continue from month to month, after the first month, if all went well. Therefore, this was an assured periodic tenancy with provision for the rent to be increased and, in light of section 13(1)(b) of the 1988 Act, section 13 had no application. The FTT had no jurisdiction, but not for the reasons it gave.
(5) Whilst the FTT was correct to strike out the reference, it did so for the wrong reason. The tenancy was not a statutory periodic tenancy, and the increase of rent was not subject to the provisions of sections 13 and 14 of the 1988 Act. The reasons given by the FTT for its decision would be set aside, although the decision itself stood. The tenancy agreement was an assured periodic tenancy, and the appellant was free to follow the contractual provisions for the increase of rent.
The appeal was determined on written representations.
Eileen O’Grady, barrister
Click here to read a transcript of Salvation Army Housing Association v Kelleway
