Peabody Trust v Carole Welstead

On a reference of a landlord’s rent-increase notice, the First-tier Tribunal must determine the open-market rent prescribed by Housing Act 1988, section 14. The reference is not an appeal against a presumptively valid proposed rent, and the tenant need not disprove the increase.

An expert tribunal may use its general knowledge and experience without first identifying every matter on which that experience is based. Procedural fairness requires disclosure only of specific external matters, comparables, or specific personal experience that will influence the decision. A landlord seeking an increase will ordinarily be the party able to explain the services and costs underlying it.

Peabody Trust, successor to the original social-housing landlord, appealed from the First-tier Tribunal (Property Chamber)’s determination of the weekly rent under an assured tenancy. The FTT set an open-market rent of £300, including a fixed service charge of £39, rather than accepting the proposed service-charge component of £58.53.

The landlord contended that the FTT acted unfairly by identifying the unexplained managing-agent-block charge, by relying on material not exposed for comment, and by giving inadequate reasons. The appeal concerned the FTT’s statutory task under section 14 of the Housing Act 1988 and the limits on an expert tribunal’s use of its own knowledge.

1. Appeal dismissed. A tenant’s reference of a section 13 notice under the Housing Act 1988 is not an appeal against the landlord’s proposed rent. Under section 14(1), the FTT must itself determine the rent reasonably obtainable in the open market on the statutory assumptions. The proposed rent has no special status, and the tenant need not establish that it is unjustified: the parties are on a level playing field.

2. The landlord had adequate notice of the issue. The tenant’s reply clearly sought justification for the sharp service-charge increase. The unexplained “managing agent block” item accounted for 86% of that increase. In any event, the landlord was the party able to explain its proposed increase and the underlying costs. The FTT was not required to adjourn after the landlord’s chosen representatives could not explain the charge.

3. The FTT did not breach natural justice by relying on its general knowledge of typical management charges. Arrowdell Ltd v Coniston Court (North) Hove Ltd and Zermalt Holdings SA v Nu-Life Upholstery Repairs Ltd require an expert decision-maker to expose specific matters, including particular comparables or specific personal experience, for comment. They do not require disclosure of the tribunal’s general professional knowledge and experience. The FTT relied on the latter, not on undisclosed examples.

4. The FTT gave adequate reasons. It accepted the other service-charge items but reduced the total by substituting a management charge at the market level identified from its general experience.

• Upper Tribunal (Lands Chamber): appeal dismissed; the First-tier Tribunal’s rent determination was upheld.

• First-tier Tribunal (Property Chamber): determined the open-market weekly rent at £300 inclusive of a fixed service charge of £39, by decisions dated 13 October 2022 and, on review, 29 November 2022.