A couple of cases, one Upper Tribunal, one Court of Appeal, both concerned with the Tribunal’s jurisdiction on proposed rent increases in assured  and assured shorthold tenancies. The Court of Appeal one we are very late on reporting – somehow it slipped by.

Salvation Army Housing Association v Kelleway (LANDLORD AND TENANT – RENT DETERMINATION – assured tenancy) (2024) UKUT 53 (LC)

Mr Kelleway had a tenancy from the Salvation Army. It was expressed to be a start tenancy, being a monthly assured shorthold tenancy and then, unless the ‘starter’ period was extended, it became a monthly assured tenancy after the first 12 months.

The tenancy had a clause on rent stating:

“(1) We will not give less than 28 days’ notice in writing of any increase in the Net Rent.

(2) We will normally increase the Net Rent on the first Monday in April following the start of this tenancy and then on the first Monday in April in each year after that. Whilst we are your landlord, any increase will not exceed the amount permitted by any applicable guidance set by the Social Housing Regulator. We may increase the rent at other times if required to do so by government legislation or guidance.

(3) We may decrease the Net Rent at any time.”

Mr Kelley’s tenancy had lasted longer than the first 12 months, with no notice of extension of the starter period, so was an assured tenancy.

The Salvation Army served a section 13 notice on 23 February 2023 proposing a new rent to start from 1 April 2023. Mr Kelleway filed a referral to the First Tier Tribunal of the increase under section 14 Housing Act 1988.

The FTT in response sent notice to the parties that it was minded to strike out the reference on the basis that the notice did not provide for the new rent to take effect on the first day of a new period of the tenancy, as section 13(2) requires.

The appellant made representations in response saying that it had served the section 13 notice in error and that in fact the tenancy agreement included provision for the increase of rent so that the FTT indeed did not have jurisdiction to determine the rent under section 14 of the 1988 Act.

The FTT (a surveyor member sitting alone) said in its decision that in light of the words of clause 1.1 of the tenancy agreement the initial fixed term of the tenancy had expired and that the tenancy is now a statutory periodic tenancy. It therefore struck the reference out because the section 13 notice was defective, and stated that in order to increase the rent the landlord would have to serve a new section 13 notice in the prescribed form 

The Salvation Army appealed – not the outcome but the reasoning.

The Upper Tribunal upheld the appeal.

Clause 1.1 of the tenancy agreement creates a monthly periodic tenancy; a periodic tenancy is one that is comprised of a consecutive series of terms arising one after the other until one of the parties gives notice to bring it to an end (this is long-established, but for a recent statement see Prudential Assurance Co Ltd v London Residuary Body (1992) 2 AC 386 at paragraph 394). If the parties intended a letting for a fixed period of one month – highly unlikely for anything other than a holiday letting – then the clause would have been worded very differently, and would not have stated that the tenancy would continue from month to month after the first month. Any doubt is readily dispelled by the provisions later in the agreement for the “starter tenancy” to turn into an assured tenancy if all went well.

Therefore this is an assured periodic tenancy with provision for the rent to be increased, and in light of section 13(1)(b) of the 1988 Act section 13 has no application to this tenancy. The FTT indeed had no jurisdiction, but not for the reasons it gave.

And then in from the Court of Appeal there was a decision with wider ramifications.

Mooney v Whiteland (2023) EWCA Civ 67

Ms Whiteland had a weekly periodic tenancy from Mr Mooney, commencing in 1991, with rent due on a Monday. However, Ms Whiteland had habitually paid the rent on the preceding Friday. The tenancy was in Wales, which is why references are made to the Rent Assessment Committtee (the RAC having ended in England with the FTT being the appropriate Tribunal).

Mr M had served a section 13 notice in 2018 proposing a rent increase from £25 per week to £100 per week. Ms Whitehead did not accept this, but did not refer the notice to the rent assessment committee. She did not pay the increased rent. Mr M brought a possession claim for rent arrears.

Ms W defended on the basis that the notice was not valid because it did not specify the first date of the new rent being to “take effect at the beginning of a new period of the tenancy specified in the notice” as per section 13(2) Housing Act 1988. The notice said 7 December 2018, a Friday, not 10 December, the Monday.

At first instance, the DDJ held that the notice was valid as it was:

obvious that a reasonable recipient of the landlord’s notice would understand it as meaning that “from 7th December 2018, a day when the defendant would be paying the rent anyways, being a Friday, she would have to pay the increased rent and it seems to me that in reality there can be no doubt or difficulty about that. That after all is the primary purpose of this notice, to achieve an increase in rent from the days specified, be that day correct or incorrect, and being a day on which the defendant would in any event usually pay rent on her own evidence”.

On first appeal, the CJ accepted that there

were three possible interpretations of the notice. These were:
(1) the landlord was seeking to change the period of the tenancy so that, from 7th December 2018, the weekly period began on a Friday;

(2) the rent was to be increased from Friday 7th December, part way through a period of the tenancy; and

(3) the date of 7th December was a mistake and the landlord had meant to insert 10th December as the starting date for the new rent.

In order for the notice to be valid, it would have to be obvious to the reasonable recipient that the last of these interpretations was intended. Because this was not obvious, the notice was invalid.

The CJ also held that the validity of the notice was an issue that the County Court had jurisdiction over, not the RAC.

Mr Mooney appealed

On the main ground, that a reasonable recipient of the notice would understand it, the Court of Appeal noted that Mr Mooney had advanced two contradictory arguments in support of this ground – that the notice should have been for 10 Dec, and that the notice intended to vary the period of the tenancy (as argued at first instance). This did not help the landlord’s case that the recipient would have no reasonable doubt as to what the notice intended.

It seems to me that the starting point (and in most cases the finishing point) is that a reasonable tenant, reading those notes, would be entitled to conclude that if the date inserted in paragraph 4 is not the beginning of a period of the tenancy, the landlord has failed to comply with the requirements of section 13 and the notice is invalid: that is what the prescribed form tells her. Generally speaking, the tenant is not required in such circumstances to consider whether the notice may be saved because the landlord has made a mistake and intended to insert (or should be treated as having inserted) a different date into paragraph 4 of the form. This is not to say that there may not be cases where a mistake is so obvious that a reasonable tenant would recognise that a mistake had been made and would know precisely what the landlord had meant to say. An example would be where the landlord gets the year wrong, as in Pease v Carter (where a notice of possession proceedings served on 7th November 2018 stated that court proceedings would not begin until after 26th November 2017, an obvious typographical error). In such a case, there is scope for the notice to be interpreted in accordance with the Mannai principle. But this is not such a case.

The landlord’s second ground was that the effect of Ms W’s failure to refer the increase to the rent assessment committee was that the increase took effect, and that a the rent assessment committee had jurisdiction to determine the validity of the notice, the County Court was excluded from considering it by way of section 40 Housing Act 1988.

The Court of Appeal held otherwise.

In my judgment, however, it is clear that the rent assessment committee does not have jurisdiction to determine the validity of a section 13 notice. That is a matter for the court. Section 40(1) of the 1988 Act confers jurisdiction on the county court to determine any question arising under section 13 other than a question which falls within the jurisdiction of a rent assessment committee by virtue of a provision of Chapter I of the Act. Thus the basic rule is that the county court has jurisdiction, unless there is a provision of the Act which provides otherwise.

Section 14 does not provide otherwise. As section 14 makes clear, the jurisdiction of the committee is to determine what is an appropriate rent, having regard to market conditions and disregarding the various matters specified in subsection (2). The section contemplates that the members of the committee will have expertise in determining the appropriate rent, which a county court judge cannot be expected to have. In contrast, a judge does have expertise in determining whether a notice complies with the various statutory requirements for a valid notice set out in section 13. In short, there is no provision in the 1988 Act which confers on the rent assessment committee jurisdiction to determine whether a section 13 notice is valid.

This did not mean that the rent assessment committee (or FTT) could not take a view on the validity of a notice. It could, for example, decline to proceed on a section 14 referral until the validity of a notice had been determined by a court. Or, if of the view that a notice was valid, it could proceed to assess the rent, but this would not affect any later court proceedings as to the validity of the notice.

Appeal dismissed.

Comment

Given that section 14 notices and section 14 referrals to the First Tier Tribunal are a current legislative issue, first in the deceased Renters (Reform) Bill and now in the forthcoming Renter’s Rights Bill, this raises a question.

The CoA judgment would appear to be right in that the Tribunal is wholly a creature of statute and has no powers except those given by statute.

Renters (Reform) did not broaden the Tribunal’s powers with respect to referrals of section 13 notices and determination of rent.

Is it worth considering an extension of the Tribunal’s powers to include deciding on the validity of a section 13 notice that has bene referred to it?

As things stand, the Tribunal can decline to proceed with a referral if it takes the view that the notice is possibly invalid, until a court has determined the validity. That would, of course, entirely depend on the tenant taking the issue to court, which – unless there are errant possession proceedings, as in this case – seems to be very unlikely to happen.

But, as things now stand, that would not stop the landlord serving a further, valid, section 13 notice straightaway after the Tribunal refused to proceed, without any determination of the validity of the original notice. (It strikes me as unlikely that the tenant would then contend that the second notice was invalid because the first was valid.)

I don’t think Renters (Reform) would have made any difference to that. I don’t know if Renter’s Rights will.

But for jurisdictional efficiency, there is surely an argument that the Tribunal should be able to decide on both the validity of the section 13 notice and the amount of the rent increase it proposes?

It certainly seems that referral of in tenancy rent increases to the Tribunal is to gain more importance than we have previously taken it to have.