I am indebted to my former colleague Robin Stewart for highlighting what may be the first, post RRA rent appeal case, coming from London.
There are some interesting points which arise from this decision which are likely to be of importance going forward. However, an important caveat applies which is that FTT decisions are not binding on other FTTs in any way and there if frequently conflict between them so it should not be taken as a definitive statement of the law and more as an indication of where FTT judges are leaning.
For very brief background the property is a flat in a build to rent development. The rent includes the wide range of amenities that are common in build to rent developments these days including gym, gaming room, concierge etc with heating and hot water provided and billed by usage. The rent was £3102.82 and the landlord sought £3180 on a s13 notice. The tenant appealed that notice and proposed £3040. Both parties provided comparables. The tenant’s came from advertised rents in similar properties from the same landlord. The landlord’s were actual achieved rent on other similar flats within the same development and an adjoining one.
The first point to note is procedural. Neither party requested a hearing and so the FTT did this entirely on paper and without an inspection. I was concerned initially that the FTT would want to inspect properties but they are clearly not doing so if they are not being asked to. As a result of this the decision has been determined by judged in the Leicester region, so quite far from London. This shows that the FTT is dynamically allocating paper-based determinations around the regions, depending on judge availability. This is good in terms of getting things done but does mean that judges are unlikely to have much in the way of local knowledge in many cases and so if that is of importance a hearing may be worth asking for, not so much to actually have a hearing but more to ensure that the judge is in the same area.
Secondly, the FTT did not spend much time on gathering its own evidence. The decision is not clear on the evidence the Tribunal did gather saying that they relied on “on its own expert, general knowledge of rental values in the area, and the comparables provided by the Landlord”. That suggests to me that the comparables the landlord did provide were the route the FTT went with.
Third, the comparables. The FTT was very clear that it put “greater weight upon the Landlord’s evidence as it comprises actual agreed lettings rather than asking rents”. I had said pre-RRA that actual rent information would be important. However, I said this because I expected that advertised rents would be uplifted due to the new overbidding rules and so the FTT would then apply a reduction. In this case the tenant produced comparables from adverts which were lower and supported their contended rent level. The landlord’s comparables were above their contended rent level. Notwithstanding this the FTT still preferred the landlord’s evidence, even though the tenant highlighted that there was no clear evidence that these properties were entirely comparable. Even, then the FTT still went with rent evidence from actual rents achieved rather than marketed rents, and I suspect the landlord might have even got a slightly higher level if they had put a larger number on the s13 notice. As it was the FTT awarded the full amount the landlord sought while noting that their evidence showed a higher sum as a likely market rent.
There are lessons to learn here. Landlords who can provide good evidence of actual rents achieved will be in a strong position in the FTT. This is especially beneficial in flats and especially build to rent landlords who have a substantial number of very similar properties to show. Agents who have access to good comparables data showing achieved rents in similar property will be in a strong position here. Further, the landlord quite possibly left some money on the table here. There are two ways to look at this. Being reasonable in offering a sum on the s13 lower than the evidence suggests may score points with the FTT. But equally, the FTT cannot go over the sum on the notice so pushing a number at the top of the potential range on the s13 gives the FTT room to make a higher award and does not engage the statutory limit.
This is, of course, a developing area and this is merely an initial decision. It will be interesting to see if the view on achieved rents being the best evidence continues to be strong going forward.
This blog was first posted on LinkedIn by David Smith. You can subscribe to David’s updates here.
David Smith is a Partner in our expert Landlord & Tenant team.
Contact David by emailing dsmith@bishopandsewell.co.uk or call on 020 7631 4141.
