District Estates Ltd v Merseyside and Cheshire Rent Assessment Committee and others

Regulated tenancies – Principles to be applied in the determination of fair rents in the light of increasing availability of actual market comparables – Adequacy of reasons may require making and disclosure of arithmetical computation The plaintiff landlords were aggrieved that rent determinations in respect of 19 regulated tenancies had been based wholly or largely on registered comparables as distinct from the much higher levels achieved for assured tenancies of similar properties, some in the same block. Proceeding under section 11(1) of the Tribunals and Enquiries Act 1992 the plaintiffs contended, inter alia, that the committee had failed to follow the guidelines laid down by the Court of Appeal in Spath Holme Ltd v Chairman of the Greater Manchester and Lancashire Rent Assessment Committee [1995] 2 EGLR 80 and had in particular failed to give intelligible reasons in a two-page document dealing with all 19 properties. Held The defendants accepted that the reasons were ‘poorly expressed and opaque’ and consented to the following: 1. An order quashing the decisions and remitting the applications for determination by a fresh panel. 2. That the new panel proceed according to the following propositions of law (judge’s emphasis supplied in italics): (a) A fair rent under section 70(1) of the Rent Act 1977 has to be fair to the landlord as well as the tenant and does not mean a reasonable rent nor one providing a reasonable increase over the existing registered rent. (b) Though any reasonable lawful method of assessment can be used, the best guide is to use comparable rents with a discount for scarcity which, where relevant, must relate to a substantial area and disregard local authority and housing association lists save in so far as they include genuine seekers of the type of private rented accommodation in question. Any decision to depart from this guide should be explained. (c) Earlier guidance on using registered rents as the best evidence of fair rents must be read in the legislative context at the time, which did not include actual market rents obtained under assured tenancies. Such rents now provide the best indication of the market rent and, when discounted for scarcity, the primary measure of comparability and the starting point. Given such comparables, particularly where relating to flats in the same block, good reasons have to be given for adopting another method or for departing substantially from them. (d) The soundness of a registered rent where used must be reconsidered both in terms of market value and the allowable discount for scarcity. (e) Reasons must be formulated so as to enable a sensible assessment of their soundness, thus arithmetical workings will need to be made and disclosed if those reasons would be otherwise unintelligible or inadequate. Contrary dicta in older cases (eg Metropolitan Property Holdings Ltd v Laufer (1974) 29 P&CR 172) must be read in the light of legislative and market changes referred to above. (f) The court would be suspicious of bare assertions that the determination has been made having regard to the evidence, the relevant law and according to the committee’s knowledge and experience. James Bonney QC and Jonathan Gavaghan (instructed by Drewitt Willan, of Manchester) appeared for the appellant; John Hobson (instructed by the Treasury Solicitor) appeared for respondent Committee; two tenants of the properties listed as respondents did not appear and were not represented.