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By D
24/01/2010

Heffernan v The Rent Service (Again)

Heffernan v Rent Service [2009] EWHC 3539 (Admin)
Mr Heffernan has renewed his battle with Sheffield’s rent officers with a new appearance before the High Court.

The ongoing issue is one in which Sheffield has been attempting to assess H’s entitlement to housing benefits. Essentially this is carried out by the rent officer deciding what is the highest and lowest rents a landlord might reasonably expect to obtain in the locality for an assured tenancy of a property of a similar size and state of repair as the target property and then taking an average. This forms the reference rent by which the benefit entitlement is calculated. In doing this the Rent Officer should disregard rents which he deems to be exceptional and should also exclude any distorting effects on the market caused by the availability of housing benefits as he should assume for the purpose of determining the high and low range rents that the person seeking to rent is not in receipt of nor seeking housing benefit.

After an earlier appearance before the House of Lords (as it then was), which was reported on by NL here, the House ruled on the meaning of locality and how far it could stretch. In that case the decision by the rent officer that a locality could include the whole of Sheffield was held to be wrong and it was ruled that the officer should have regard to the statutory minimum number of neighbourhoods (two including the one in which the target property is) but that adding more requires justification by their being insufficient numbers of properties in the reference neighbourhoods to allow calculation of the high and low rent levels. The Lords held that the rent officer had erred (actually they were less nice than that) in adding more neighbourhoods without such a justification and sent the matter back to Sheffield for them to recalculate the reference rent in the light of their decision.

Basically, H is not happy with the new calculation and has returned to the fray in Heffernan v Rent Service [2009] EWHC 3539 (Admin) on the basis that the new calculation is also unlawful. Ultimately the issue is that the reference rent has been set at about £500 pcm while H is paying £700 pcm.

Phew, background over!

H contended that the new assessment was reached unlawfully or, alternatively, was insufficiently explained to comply with the law. At the nub of the argument was the manner in which the rent officer excluded high and low field properties as exceptional.

At the upper end of the scale, in his determination of the proper figure in 2004 the rent officer concluded that there was a plateau in rents at about £600 pcm above which there were 16 properties. There was then a marked rise until there was a further plateau at £650 pcm above which there were 16 properties. The rent officer took the lower plateau (at £600 pcm) as the limit of reasonableness and classified all 16 properties above that as exceptional and therefore excluded them from the calculation. He found support from the fact that there were 2 other benefit supported rents at £600 pcm but none above. In 2005 a similar determination occurred and the plateau figure was found to be at £650 pcm. H argued that this was wrong and stated that the exclusion of 16 properties from a sample of just 111 demonstrated that the 16 properties were not really so exceptional. It was therefore argued that this exclusion was irrational, and if rational, was not supported by sufficient reasoning and therefore the decision was insufficiently explained.

In regard to the low figure the rent officer found an unsupported rent at £317 pcm which had a number of benefit supported rents at the same level. He also found a plateau at £300 pcm followed by a steep drop to £260 pcm. The officer concluded that although most rents at £300 pcm were benefit supported the availability of benefit was not distorting the market and that the rent at £317 pcm was not exceptionally low and thus he set the low figure at that level. H argued that the fact that there was only one unsupported rent at £317 pcm was in itself sufficient evidence that it was exceptional and that the rent officer had again failed to provide proper reasoning for his decision that benefit availability had not significantly altered rents in the low range.

In relation to both fields the rent officer had recourse to his own experience and judgment which he considered confirmed the view he took from the data itself. It was conceded by H that the rent officer could pay attention to benefit supported rents, a concession which the court considered to be right. It was inevitable in a fairly small dataset, which was a natural consequence of the Lords decision as to what could reasonably constitute a locality, that both supported and unsupported rents would be considered.

Mr Justice Langstaff sitting at the Administrative Court in Leeds began by reminding himself of the proper approach to take as set out in R (Asha Foundation) v Millennium Commission [2003] EWCA Civ 88. While the rent officer was not required to give reasons for his decision he had chosen to do so and that reasoning was therefore available for consideration by the Court. Looking at the dataset alone the Court agreed that there was a clear change in the slope of the rent figures when plotted on a graph which supported the plateaus set out by the rent officer. Looking at the data alone the Court could find no fault with the decision.

Turning to the opinions of the officer and the reasoning given the Court also concluded that it could find no fault with his decision making. He was entitled, and indeed was supposed to, use his knowledge and experience in setting the level of the high and low rents. A broad discretion must necessarily be allowed to decision makers in making decisions of this type.

An opinion which is evaluative is inevitably more difficult to subject to scrutiny, at least where it is not obviously capricious. There are situations where the subtle nuances of fact, the lessons learnt from experience and all those matters which go to professional judgment of value come into play. Valuing rentals and understanding the rental market, particularly with what is necessarily a limited selection of data, involves such issues.

The explanation given was sufficient to indicate to H why the reference rent had been set as it was and what conclusions had been reached in making that decision. Neither the decision itself or the methodology which led to it were irrational.

This is a carefully reasoned decision, despite being given ex tempore. However, it might not end there. Permission to appeal was sought and refused. However, the Court did concede that while it did not consider there to be reasonable prospects of success on an appeal this case was a suitable one for consideration to be given as to how a rent officer should deal with the situation of other supported rents and their distorting effects on the market which “matter of compelling interest that the Court of Appeal should consider”. Therefore a permission hearing before the Court of Appeal is presumably likely despite Counsel’s assertion that no considered decision on that point had been made.

D is a solicitor specialising in landlord and tenant matters with a London firm.

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