Fair rent — Method of assessment — Regulated tenancies — Committee not assessing rent on basis of comparability of flats in same block let on assured tenancies — Whether committee erring in law — High Court quashing determinations and remitting for redetermination by differently constituted committee — Chairman appealed — Appeal dismissed
When a purpose-built block of flats in a good residential area in Spath Road, Didsbury, South Manchester, set in well maintained landscaped grounds were completed they were let on regulated tenancies, as defined in section 18 of the Rent Act 1977. Rent was therefore limited to a fair rent as determined in accordance with section 70. Under the Housing Act 1988 assured tenancies were introduced and the increase in rent was to be determined by a rent assessment committee. By section 14 the rent was what the committee considered the premises would be let for in the open market by a willing landlord under an assured tenancy. Flats in Spath Holme were relet on assured tenancies under the 1988 Act. The landlord considered that those lettings justified a higher rent in respect of the regulated tenancies and made a series of applications to the rent officer to determine the fair rent. The rent assessment committee reduced the fair rents set by the rent officer on the ground, inter alia, that it did not “consider that the letting of the subject properties were comparable with the lettings in the same block on assured tenancies, having regard to the difference in the terms of the two types of tenancy”. The landlord appealed to the High Court on the ground that the committee erred in law.
Judgment was given in their favour with the judge stating that the issue in the case was whether the rent assessment committee were wrong in using the registered fair rent comparables rather than assured tenancy comparables. He concluded that weighty reasons needed to be shown to depart substantially from market rents recently agreed on similar flats within the same block. The fact that those market rents related to assured tenancies rather than to regulated tenancies could provide the “weighty reason to depart from them in favour of registered fair rents for comparable properties nearby, but in that case, an adequate explanation should be given by the committee to justify such a conclusion”. The 1977 Act called for the “scarcity” factor to be eliminated. The chairman of the committee appealed stating that they were entitled to reject the assured tenancy rents as comparables and had done so for good stated reasons, viz that they would have to be discounted for security of tenure (which was personal to the tenant) and scarcity.
Held The appeal was dismissed.
1. The court accepted the argument that the two types of tenancy had substantially the same security of tenure. Thus, it was not a circumstance to be disregarded.
2. Further, market rent adjusted for scarcity was precisely what the fair rent was required to be.
3. While it was quite true that determining a fair rent was a matter for the committee, in the present case, there were a number of flats in the same block let on assured tenancies at open market rent. The flats were virtually identical to those let on regulated tenancies. If a committee wished to adopt some other comparable it failed in its duties if it did not explain why. Leave to appeal to the House of Lords was disallowed.
John Furber QC (instructed by the Treasury Solicitor) appeared for the chairman; James Bonney QC (instructed by Drewitt Willan, of Manchester) appeared for Spath Holme.
