Wolters (London) Ltd., R (on the application of) v London Rent Assessment Committee

Reasons given by a rent assessment committee must enable an informed reader to understand the reasoning without substantial mental leapfrogging or reconstruction. A committee may use comparable properties as the starting point, but it must identify that methodology and explain material adjustments.

In assessing a fair rent under Rent Act 1977, defects attributable to a tenant’s failure to comply with the tenancy must be disregarded. The scarcity deduction under section 70(2) concerns broad, overall excess demand over supply in a sufficiently large locality. The committee must distinguish that scarcity from amenity value under section 70(1), explain why the selected locality is appropriate, and give intelligible reasons for the percentage deduction.

The claimant landlord appealed under section 11(1) of the Tribunals and Inquiries Act 1992 against the London Rent Assessment Committee’s determination of fair rents for four regulated studio flats.

The Committee had used rents for other flats in the same building, made deductions for physical differences and tenancy terms, and applied a 20 per cent scarcity deduction. The claimant challenged the adequacy of the Committee’s reasons, its treatment of cigarette smoke stains and tenancy obligations, and its approach to the locality and quantification of scarcity.

1. Appeal allowed. The Committee’s determination was quashed and remitted to a differently constituted Committee for redetermination.
2. The Committee’s reasoning on the starting rents and physical adjustments was unsatisfactory, but detailed analysis of the decision letter showed that the Committee had used the rents for flats 2 and 8 as starting points. That inadequacy alone did not amount to an error of law.
3. It was unclear whether cigarette smoke stains in flat 6 had contributed to the deduction. If they had, that would be an error of law, since a defect attributable to the tenant’s failure to comply with the tenancy had to be disregarded under section 70(3)(a) of the Rent Act 1977. The stains were not properly disregarded as a personal circumstance under section 70(1).
4. The Committee was entitled to conclude that flat 6 felt smaller than its comparable. That evaluative conclusion required no further elaboration.
5. The Committee either wrongly concluded that the tenancy terms differed as to maintenance and decoration, or failed adequately to explain the deduction based on that alleged difference. That ground therefore succeeded.
6. For scarcity under section 70(2), the relevant shortage must be broad and overall, arising from excess demand over supply in a really large area. The Committee had to distinguish that element from scarcity or rental value attributable to the amenity of the premises and their immediate locality. Its selection of Westminster, Camden and Kensington and Chelsea required explanation, particularly because the area was a small, high-amenity part of London.
7. The Committee had also failed to address material evidence concerning the wider availability of studio flats and a Central London letting-agent survey. Although precise statistical reasoning was unnecessary, the Committee had to explain how it arrived at a 20 per cent deduction. Reliance on a previous 35 per cent deduction did not itself explain the figure.

The claimant received its costs against the first respondent. An interim payment was refused, and permission to appeal was refused.

The appeal was brought under section 11(1) of the Tribunals and Inquiries Act 1992 from the determination of the London Rent Assessment Committee dated 26 July 2002, with extended reasons dated 28 January 2003.