John HW Anderson v Igors Kokins & Anor

On a reference of a rent-increase notice, the First-tier Tribunal must determine the statutory open-market rent on the material fairly available to both parties. It acts as an independent valuer; the tenant need not prove that the proposed increase is unjustified.

The Tribunal acts unfairly if it resolves disputed allegations of disrepair against a landlord because they have not been answered in detail, where its directions gave the landlord no opportunity to answer the tenant’s later detailed case. Disputed facts ordinarily require further written evidence or an oral hearing.

Under Housing Act 1988, section 14, tenant-funded improvements are disregarded. Allowances for actual defects must reflect what willing parties would agree, including the likely cost of a modest remedy. Postponement for undue hardship requires sufficiently complete evidence of the tenant’s financial position.

The landlord served a notice under section 13(2) of the Housing Act 1988 proposing an increase in the rent of a two-bedroom assured shorthold tenancy. The tenants referred the notice to the First-tier Tribunal under section 13(4)(a).

The First-tier Tribunal determined the market rent in letting condition at £1,600 per month, but reduced it to £1,390 for alleged defects, replacement carpet and a tenant-provided washing machine. It decided the reference on the papers. The landlord appealed, contending that the deductions were based on disputed allegations which he had not been permitted to answer, and that the reasons for the valuation were inadequate.

The Upper Tribunal had to decide whether the procedure and deductions were lawful, whether it should remit the matter, and whether the rent should be postponed for undue hardship.

1. Appeal allowed. The First-tier Tribunal’s determination was set aside and replaced with a rent of £1,550 per month from 9 April 2023. Remittal was refused.

2. The landlord was not entitled to assume that material filed in an earlier, separate reference would be before the First-tier Tribunal. Its directions confined the evidence to the parties’ statements in the present proceedings. Nevertheless, his statement expressly disputed the alleged defects. The Tribunal could not fairly treat the tenants’ later, detailed allegations as uncontradicted when its directions gave the landlord no opportunity to answer them. Its resolution of those disputed facts was therefore irregular.

3. Further, disputed factual issues about the condition of the property could not safely be determined on the papers without clarification through further written evidence or an oral hearing. That conclusion accorded with Onyiliagha v You Move Lets Ltd [2023] UKUT 199 (LC).

4. The starting open-market rent of £1,600 was not erroneous. Applying section 14(1) of the Housing Act 1988, the Tribunal then assessed the rent for the flat in its actual condition while disregarding the tenants’ improvements. A defective heating controller justified only a modest allowance because it could be replaced at modest cost. The worn carpet and tenant-funded washing machine also justified allowances. No deduction was justified for the extractor or refrigerator, because the evidence did not establish a defect beyond matters for which the tenant was responsible. A total deduction of £50 per month was appropriate.

5. The tenants’ request under section 14(7) to defer the increase was refused. Their late and incomplete financial material did not enable the Tribunal to find that backdating the increased rent would cause undue hardship.

• Upper Tribunal (Lands Chamber): allowed the landlord’s appeal, set aside the First-tier Tribunal’s rent determination, and substituted a rent of £1,550 per month from 9 April 2023.
• First-tier Tribunal (Property Chamber): on 6 June 2023 determined the rent at £1,390 per month following a reference under sections 13 and 14 of the Housing Act 1988.