Queensway Housing Association Ltd v Chairman of the Chilterns, Thames and Eastern Rent Assessment Co

Fair rents – Rent assessment committees determining fair rents – Landlords appealing approaches taken – Whether determinations in accordance with principles of Curtis v Chairman of the London Rent Assessment Committee [1998] 1 EGLR 79 – Rent Act 1977 section 70 – Appeals allowed Pursuant to section 11 of the Tribunals and Inquiries Act 1972, six landlords appealed the decisions of their respective rent assessment committees in their determinations of fair rents under section 70 of the Rent Act 1977. The principal issue, common to all the appeals (heard jointly), was whether the rent assessment committees approached their determinations in accordance with the prinicples laid down in Curtis v Chairman of the London Rent Assessment Committee [1998] 1 EGLR 79. Other issues included the correct approach towards the assessment of “scarcity” under section 70(2) of the Act and the adequacy of reasons given by the committees for the decisions. Held The appeals were allowed. 1. The appellants correctly submitted that most of the determinations had taken a wrong approach. Applying all due caution, the general approach was that a fair rent was a market rent for the property in its current state under section 70(1) of the Act, adjusted for any scarcity under section 70(2) and any disregards under section 70(3). It was not a “reasonable” rent in any other sense; it was to be fair to the landlord as well as the tenant. The starting point was to identify market rent for the property in its current state. The process required precise analysis and was not just a question of experience of the rental property market in the area. Where close market rent comparables were available, they were to be treated as the best evidence for determining market rent. In fact, market rent comparables were to be used, with adjustments, whenever capable of giving guidance, whether or not they were strictly “close comparables”. Where adjustments were required, whether to reflect differences in the properties or for scarcity or disregards, a committee was to use its knowledge and experience to assess the matters. This approach was not followed in most of the decisions under appeal. 2. The reaching of a clear-cut conclusion was hindered by the very elusiveness of the concept of “locality”, referred to by section 70(2). The choice of area was for the committee to decide and was not to be tied to any particular formula, as emphasised in Metropolitan Property Holdings Ltd v Finegold [1975] 1 EGLR 75. What was important was that committees directed themselves by reference to the purpose of section 70(2). They should choose an area that, in their judgment, was sufficiently large to give effect to that purpose. Applying section 70(1), the market rent was to reflect any enhancement in the value of a property that was attributable to the inherent amenities and advantages of the property itself or its locality. By section 70(2), parliament was seeking only to deprive a landlord of any “wholly unmeritorious” element in the market rent that was attributable simply to a scarcity of properties and an excess of demand over supply. Thus, amenity advantages that increased the market rent under section 70(1) did not result in a set-off under section 70(2) merely because those features attracted more people to a particular property or locality than could live there. The issue of scarcity had not been properly considered in some of the cases. 3. Although the committees had to give reasons that were proper, intelligible and adequate, such reasons could be briefly stated, and they need only deal with the principal controversial issues. Some of the decisions had not done so. James Bonney QC and Jonathan Gavaghan (instructed by Willan Bootland White, of Manchester) appeared for the appellants; John Hobson (instructed by the Treasury Solicitor) appeared for the respondent committees; David Watkinson (instructed by Legal Services Trust, of Preston) appeared for the third and fourth respondents. Sarah Addenbrooke, barrister