R (on the application of Wolters (London) Ltd) v London Rent Assessment Committee and others

Landlord and tenant — Rent Acts — Fair rent — Respondent determining fair rents for appellant’s premises pursuant to section 70 of Rent Act 1977 — Appellant challenging methods by which determination made — Appeal allowed The appellant was the landlord of a building containing 22 studio flats. Most of the flats were let on assured shorthold tenancies, but four were subject to regulated tenancies. The respondent rent assessment committee determined fair rents, under section 70 of the Rent Act 1977, in respect of the four flats. The appellant appealed those findings under section 11(1) of the Tribunals and Inquiries Act 1992. He challenged the methodology of the determination and the committee’s decision on the issue of scarcity. The committee had made a scarcity deduction of 20% under section 70(2). In general terms, the appellant contended that the respondent had failed to give intelligible, adequate or proper reasons for its findings. Held: The appeal was allowed. The wording of the respondent’s determination letter made it very difficult for even an informed reader to understand the reasoning process, but it was possible to determine that process upon detailed analysis of the letter. On that basis, the inadequacy of the reasoning did not amount to an error of law. The claimant had contended, inter alia, that the committee had made a deduction of rent in respect of one flat on the ground that it had been damaged by cigarette stains. If it had done so, it would have been in error. Under section 70(3)(a), any such damage should have been considered as a disrepair or defect attributable to the tenant’s failure to comply with the terms of her regulated tenancy, and should have been disregarded. It was not clear from the determination letter whether a deduction for that damage had been made, so that a deficiency existed in the reasons given for the deduction. On that basis, the appeal was successful. It appeared that the committee had concluded that, in respect of maintenance and decoration, the terms of the regulated tenancies of the subject premises were less onerous to the landlord than the terms of the shorthold tenancies, and the committee had therefore reduced the rent. If it had reached such a conclusion, it had been in error to do so; in any event, its conclusions on this aspect were neither clear nor adequately reasoned so that the appeal was successful also on that ground. The purpose of the scarcity deduction was to deprive the landlord of a “wholly unmeritorious” increase in rent that had arisen due to a broad overall shortage of houses in the locality, the locality being “a really large area”. It was necessary for the committee to bear in mind the purpose of section 70(2) when considering the matter. It should have distinguished between scarcity that flowed from the amenity value of the dwelling itself and its immediate locality, and scarcity that arose from an excess of demand over supply in the “really large area”. The committee had failed to give any real explanation for taking the three London boroughs of Westminster, Camden, and Kensington and Chelsea as the appropriate area, and had failed to make express reference to the purpose underlying section 70(2). Quantifying a deduction for scarcity value was an inherently imprecise calculation, but it was necessary to spell out the reasoning behind the calculation in order to demonstrate that the correct approach had been adopted. The committee’s reasoning in that respect was deficient, and the appeal was allowed also on that basis. Jonathan Gavaghan (instructed by Willan Bootland, of Manchester) appeared for the appellant; Martin Rodger (instructed by the Treasury Solicitor) appeared for the first respondent. Vivienne Lane, barrister