Spath Holme Ltd v North Western Rent Assessment Committee and another

JurisdictionEngland & Wales
CourtQueen's Bench Division (Administrative Court)
JudgeMR JUSTICE COLLINS
Judgment Date12 July 2001
Neutral Citation[2001] EWHC 541 (Admin)
Docket NumberCase No: 0917/2001
Date12 July 2001

[2001] EWHC 541 (Admin)

IN THE HIGH COURT OF JUSTICE

ADMINISTRATIVE COURT

QUEENS BENCH DIVISION

Before:

The Hon Mr Justice Collins

Case No: 0917/2001

Spath Holme Ltd
Appellant
and
(1) Chairman
First Respondent
(2) Mrs Vera Bigio
Second Respondent

Mr Jonathan GAVAGHAN (instructed by Willan Bootland White), Solicitors for the Appellant

MR MARTIN RODGER (instructed by The Treasury Solicitors) for the first Respondent

MR JUSTICE COLLINS
1

This is an appeal by Spath Holme Limited against the decision of the North Western Rent Assessment Committee dated 17 January 2001 whereby they determined a fair rent for flat 20, occupied by the second respondent, Mrs. Bigio, in a block owned by the appellants in Manchester of £624.50 per quarter. That figure was reached because of the application of the Rent Acts (Maximum Fair Rent) Order 1999 ('the 1999 Order') which set a cap on the amount which could be determined. But for the cap, the Committee would have determined a fair rent of £950.00 a quarter. The appeal lies only on a point of law.

2

Mr. Willan is a director of the appellant Company and a practising solicitor. He has considerable expertise in dealing with rent assessments and Committees. He also has built up a detailed knowledge of this branch of the law. He signed the application for the registration of a fair rent for Flat 20 dated 1 August 2000 which resulted in the appeal to the rent assessment committee following the rent officer's decision which the appellants considered unsatisfactory.

3

The background and history, so far as material, is as follows. Flat 20 is a one bedroom flat and is virtually identical in layout to other flats, in particular numbers 4, 28 and 36. Mrs. Bigio is an elderly lady. Before 1990 she was the tenant of Flat 33 on a regulated tenancy, but she was finding it difficult to manage stairs. Accordingly, she asked to be moved to a ground floor flat if one fell vacant. Flat 20 did fall vacant in 1990 and, following its redecoration, Mrs. Bigio moved into it in late 1990. She remained protected by a regulated tenancy. There was some confusion whether the change of flats had occurred in 1990 or 1993, but it was, I think, common ground by the time the hearing before me took place that it was in late 1990. The precise date is immaterial.

4

The previous tenant of Flat 20 was a Mr. Smith who held it under a regulated tenancy. In January 1990 a fair rent had been fixed at £412.00 a quarter. It seems from Mr. Willan's statement that for some reason, although Mrs. Bigio had always been charged the same rent as applied to identical units occupied under regulated tenancies, no figure for Flat 20 was ever formally registered in her name. Nor was any subsequent application made to the rent officer to register a fair rent for Flat 20 until that made on 1 August 2000.

5

Before going further, I should set out the legislative background. The Rent Act 1965 introduced regulated tenancies and registration of fair rents, initially only for unfurnished tenancies but subsequently by the Rent Act 1974 extended to furnished tenancies. This regime was considered to result in an unnecessary and undesirable hindrance to a market in private lettings. The Housing Act 1988 saw the introduction of assured and assured shorthold tenancies. Fair rent registration did not apply to either of these. Security of tenure is similar for assured tenancies as for regulated tenancies, but assured shortholds (now, perhaps, for obvious reasons, the most common form of tenancy) have very limited security. The result of the changes is that now there is and really since 1989 there has been no market in regulated tenancies since no landlord would normally wish to create a new regulated tenancy which was subject to control over the amount of rent which could be charged.

6

Rents under regulated tenancies are now dealt with in Part III (Sections 44 to 61) of the Rent Act 1977 and registration of rents under Part IV (Sections 62 to 75). Section 44(1) reads:-

"Where a rent for a dwelling-house is regulated under Part IV of this Act, the rent recoverable for any contractual period of a regulated tenancy of the dwelling-house shall be limited to the rent so registered."

Section 45 extends this to cover statutory tenancies arising on the conclusion of any contractual tenancy. Section 67 deals with applications for registration of rent, which can be made by the landlord, by the tenant or by both jointly (s.67(1)). Section 67(2) (which was inserted by the Housing Act 1980) reads, so far as material:-

"Any such application must be in the prescribed form and must-

(a) specify the rent which it is sought to register; … and

(c) contain such other particulars as may be prescribed"

S.67(3) provides that, save where there have been specified material changes to the condition of the premises or the terms of the tenancy, no application by the landlord or by the tenant alone can be made at intervals of less than 2 years from any registration. The relevant prescribed forms are those in Schedule 1 to the Rent Act 1977 (Forms etc) Regulations 1980 ( S.I. 1980 No. 1697). Section 75(1) of the Act provides that "references to a prescribed form include references to a form substantially to the same effect as the prescribed form" and this is picked up in Paragraph 2(2) of the Regulations which states:-

"In these Regulations any references to a numbered form shall be construed as a reference to the form bearing that number in Schedule 1 hereto or to a form substantially to the like effect."

7

Section 70 deals with determination of fair rent. It provides, so far as material:-

"70. Determination of fair rent

(1) In determining, for the purposes of this Part of this Act, what rent is or would be a fair rent under a regulated tenancy of a dwelling-house, regard shall be had to all the circumstances (other than personal circumstances) and in particular to -

(a) the age, character, locality and state of repair of the dwelling-house …

(b) if any furniture is provided for use under the tenancy, the quantity, quality and condition of the furniture, and

(c) any premium, or sum in the nature of a premium, which has been or may be lawfully required or received on the grant, renewal, continuance or assignment of the tenancy

(2) For the purposes of the determination it shall be assumed that the number of persons seeking to become tenants of similar dwelling-houses in the locality on the terms (other than those relating to rent) of the regulated tenancy is not substantially greater than the number of such dwelling-houses in the locality which are available for letting on such terms.

(3) There shall be disregarded -

(a) any disrepair or other defect attributable to a failure by the tenant under the regulated tenancy or any predecessor in title of his to comply with any terms thereof;

(b) any improvement carried out, otherwise than in pursuance of the terms of the tenancy, by the tenant under the regulated tenancy or any predecessor in title of his;

(c), (d) …

(e) if any furniture is provided for use under the regulated tenancy, any improvement to the furniture by the tenant under the regulated tenancy or any predecessor in title of his or, as the case may be, any deterioration in the condition of the furniture due to any ill- treatment by the tenant, any person residing or lodging with him, or any sub-tenant of his."

The purpose was that fair rents should reflect the market rent for a particular tenancy less any scarcity element (see s.70(2)). But there never was a particularly active market in regulated tenancies. Thus there was a tendency for rent officers and rent assessment committees to fix fair rents by reference to previous figures and not by reference to comparables, largely because there were so few comparables. The introduction of assured tenancies in 1988 at least meant that some comparables could be identified since, apart from rent control, assured tenancies provided much the same security of tenure as regulated tenancies. In Spath Holme Ltd v Chairman of the Greater Manchester etc Committee (1995) 28 H.L.R. 107, the Court of Appeal emphasised that fair rents were to be open market rents discounted for scarcity and that assured tenancies provided satisfactory comparables. The security of tenure attributable to both regulated and assured tenancies might properly mean that the open market and so the fair rent for them exceeded that for assured shorthold tenancies which did not give the same protection. In Curtis v London Rent Assessment Committee [1999] Q.B. 92 (a decision reached in October 1997) the Spath Holme case was reaffirmed. It seems that some committees had, notwithstanding Spath Holme, been relying more on past registered rents than on the comparables afforded by assured tenancies and so keeping fair rents at a lower level than was appropriate.

8

Following those decisions, rents were fixed at higher levels with the result that some tenants faced sudden steep rises in the amounts payable. Accordingly, the Secretary of State decided to exercise his powers under Section 31 of the Landlord and Tenant Act 1985, which enabled him by order to provide for "restricting or preventing increases of rent for dwellings which could otherwise take place". He introduced the 1999 Order, which came into force on 1 February 1999, and which set a cap on fair rent determination by limiting them to increases of inflation plus 5% or 7 1/2% depending on whether previous capping applied. Article 2(6) and (7) provides:-

"(6) subject to paragraph (7), this article applies where an application for the registration of a new rent in respect of a dwelling-house is made after this order comes into force and, on the date of that application, there is an existing registered rent under Part IV in respect of that dwelling-house.

(7) This article does not apply in...

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