Preston v Area Estates Limited & Anor

When determining a rent under Housing Act 1988, ss 13 and 14, a tribunal must use a proper stepped process. It must assess the property’s rental value in its current condition, identify the value attributable to relevant tenant improvements, and disregard that value when fixing the rent. The tribunal must give reasons enabling the parties and any appellate court to understand the essential reasoning, including the evidence relied upon and rejected. A tribunal may not rely on undisclosed market information or general knowledge without giving the parties an opportunity to comment. Failure to comply with these requirements renders the determination defective and justifies remittal.

John Preston, an assured periodic tenant, appealed against a rent determination by the London Rent Assessment Panel. The Panel assessed the rent at £1,020 per month after the landlord had proposed an increase from £338 to £1,050 per month. The tenant alleged that the Panel had failed to disregard the value of improvements he had undertaken, failed to give adequate reasons, and relied on undisclosed general knowledge of local market rents. The jurisdiction ground was withdrawn by consent. The issue was whether the determination under ss 13 and 14 of the Housing Act 1988 was legally defective.

1. The appeal was allowed on all three limbs of ground 2. The determination was remitted to the First-tier Tribunal (Property Chamber) for a fresh determination of the rent under ss 13 and 14 of the Housing Act 1988.
2. Section 14(2) requires the tribunal to disregard any increase in value attributable to relevant tenant improvements. Following Rowe v South West Rent Assessment Panel [2001] EWHC (Admin) 865, the tribunal must determine the property’s rental value in its current state, determine the value attributable to the improvements, and then disregard that value in fixing the rent. The Panel’s decision did not show that it had followed this process.
3. The Panel also failed to provide adequate reasons. Following English v Emery Reimbold & Strick Ltd [2002] 1 WLR 2409, reasons must enable the parties and any appellate tribunal readily to analyse the reasoning essential to the decision. The Panel did not explain the value it attributed to the property before disregarding improvements, the value assigned to the improvements, or how it reached £1,020 per month.
4. A fact-finding tribunal must disclose material evidence or information on which it proposes to rely and allow the parties a fair opportunity to comment. The principles stated in R v Deputy Industrial Injuries Commissioner ex parte Moore [1965] 1 QB 457 applied. The Panel’s reference to its members’ general knowledge of local market rents was unexplained and gave the parties no opportunity to challenge the material allegedly relied upon.
5. The same natural justice concern was reinforced by R v Mental Health Review Tribunal ex parte Clatworthy [1985] 3 All ER 699. A decision based on a basis known only to the tribunal and not disclosed to the parties cannot stand. There was no order as to costs.

The judgment describes an appeal from the London Rent Assessment Panel’s rent determination dated 24 October 2012, following a hearing on 12 December 2012 and a decision issued on 4 February 2013. The jurisdiction ground was withdrawn by consent. The appeal on the improvements, reasons and natural justice grounds was allowed, and the matter was remitted to the First-tier Tribunal (Property Chamber).