QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
B e f o r e :
|THE QUEEN ON THE APPLICATION OF WOLTERS (LONDON) LIMITED||(CLAIMANT)|
|THE CHAIRMAN OF THE LONDON RENT ASSESSMENT COMMITTEE||(DEFENDANT)|
Smith Bernal Wordwave Limited
190 Fleet Street London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)
MARTIN RODGER (instructed by Treasury Solicitor) appeared on behalf of the DEFENDANT
Crown Copyright ©
i) Flat 6, which is on the third floor, the tenant of which is Ms Nash who is the second respondent.
ii) Flat 14, which is on the first floor, the tenant of which is Mrs Klimke who is the third respondent.
iii) Flat 18, which is on the ground floor, the tenant of which is Ms Mijatovic who is the fourth respondent.
iv) Flat 19, which is on the ground floor, the tenant of which is Miss Parra who is the fifth respondent.
"(1) In determining for the purposes of this Part of this Act, what rent is or would be a fair rent under a regulated tenancy of a dwelling-house, regard shall be had to all the circumstances (other than personal circumstances) and in particular to -
(a) the age, character, locality and state of repair of the dwelling-house
(b) if any furniture is provided for use under the tenancy, the quantity, quality and condition of the furniture, and
(c) any premium, or sum in the nature of a premium, which has been or may be lawfully required or received on the grant, renewal, continuance or assignment of the tenancy.
(2) For the purposes of the determination it shall be assumed that the number of persons seeking to become tenants of similar dwellinghouses in the locality on the terms (other than those relating to rent) of the regulated tenancy is not substantially greater than the number of such dwellinghouses in the locality which are available for letting on such terms.
(3) There shall be disregarded -
(a) any disrepair or other defect attributable to a failure by the tenant under the regulated tenancy or any predecessor in title of his to comply with any terms thereof;
(b) any improvement carried out, otherwise than in pursuance of the terms of the tenancy, by the tenant under the regulated tenancy or any predecessor in title of his".
"64. When determining a fair rent the Committee, in accordance with the Rent Act 1977, S.70, had regard to all the circumstances including the age, location and state of repair of the property and disregarded the effect of any relevant tenant's improvements on the rental value of the property.
65. The Committee found the landlord's comparables, Nos 2 and 8, to be helpful. The Committee considered that if flat 6 was improved and let on a typical assured shorthold tenancy, it would let for a rent in the region of £900 per lunar month. If flats 14, 18 and 19 were each improved and let on typical assured shorthold tenancies, they would each let at a rent in the region of £800 per lunar month.
66. If the subject flats were let unimproved in the market on the terms of the regulated tenancies of the subject flats, they would let for considerably less than the starting point AST rents. In their present condition and disregarding any tenant's improvements the Committee considered the market rents for the subject flats would be as follows: Flat 6 - £684 per lunar month, Flat 14 - £720 per lunar month, Flat 18 - £648 per lunar month and Flat 19 - £648 per lunar month.
67. In reaching these conclusions, the Committee had regard to the parties' representations and to its own observations at the inspections of the subject flats and comparable flats. The Committee noted the differences in the terms of the regulated tenancies of the subject flats compared with the terms of the typical AST tenancy agreements produced by Mr Walford. The Committee considered that the terms of the regulated tenancies are more restrictive to the tenancies than those of ASTs, for example the restrictions on leaving time for visitors and prohibition of overnight guests. The Committee considered that the terms of the regulated tenancies of the subject flats are less onerous to the landlord in terms of maintenance and decoration. The Committee saw the overall high standard of presentation of the comparables, and notes that in respect of the flats let on ASTs the landlord will need to maintain the current high standard of presentation of the interiors, fixtures and fittings.
1] The Committee considered that No 6, which is on the 3rd floor, is a single room in a similar style to No 8. However, having inspected both flats, the Committee considered that this flat felt smaller than No 8. The Committee noted what appeared to be cigarette smoke stains and there was a washing machine in this flat, as had No 8. The Committee deducted £140 from the starting point AST rent of £900 per lunar month to reflect the physical differences and then deducted 10% to reflect the differences in terms between the regulated tenancy and AST, to arrive at a market rent of £684 per lunar month.
2] The Committee considered that No 14, which is on the first floor, is arguably less noisy than the flats on the ground floor. The committee considered that the location of the shower on the lower level rather than adjoining bedroom platform, was a disadvantage. The roof terrace, although lacking some privacy, provided a balancing advantage. No adjustment was therefore made for physical differences. The Committee deducted 10% from the starting point AST rent of £800 to reflect the differences in terms between the regulated tenancy and the assured shorthold tenancies to arrive at the market rent of £720 per lunar month.
3] The Committee considered that No 18, which is on the ground floor, is arguably a noisier flat than flats on the upper floors. The Committee considered that there was less headroom on the bedroom platform because of a beam on the ceiling. The Committee deducted £80 from the starting point AST rent of £800 to reflect the physical differences and then deducted 10% to reflect the differences in terms between the regulated tenancy and the assured shorthold tenancies to arrive at the market rent of £648 per lunar month.
4] The Committee considered that No 19, which is on the ground floor, is similar to No 18 except that the shower is on the lower level rather than the upper level. The Committee found the positioning of the shower room on the lower level to be a disadvantage. Although the ceiling height in the bedroom platform was restricted, it was not as restricted as in No 18. The Committee deducted £80 from the starting point AST rent of £800 to reflect the physical differences and then deducted 10% to reflect the differences in terms between the regulated tenancy and the assured shorthold tenancies to arrive at the market rent of £648 per lunar month".
"The services that related to regulated tenancies were caretaker, cleaning, lighting and carpeting of common parts, lift and visual door entry telephone".
"71. The Committee next considered whether on the assumption set out in section 70(2) of the Act there was any 'scarcity'. Lord Widgery CJ in Metropolitan Property Holdings v Finegold and Others  1 All ER 389 HL, stated that '... the sort of scarcity we are concerned with is a broad, overall, general scarcity affecting a really substantial area..."
72. Mr Beirne argued that at [sic] deduction of 35% for scarcity should be adopted, as it was consistent with the decision relating to Hatherley Grove. The Committee took note of the tenants' submissions and is aware that in the recent past deductions in the region of 35% have been applied for scarcity.
73. The Committee does not agree with Mr Walford that no scarcity exists, despite his able and interesting presentation of the landlord's case. The Committee considered that:
(i) The marking of the flats in the same building as the subject flats was at particular rents and on the terms of AST's. In Spath Holme Ltd v Chairman of the Greater Manchester Assessment etc Committee  28 HLR 107 and Curtis v London Rent Assessment Committee  QB 92 the Court of Appeal emphasised that ordinarily a fair rent is the market rent for the property discounted for 'scarcity' i.e. that element, if any, of the market rent that is attributable to there being a significant shortage of similar properties in the wider locality available for letting on similar terms other than as to rent to that of the regulated tenancy. Application of these principles of law must take into account the requirement to disregard levels of rent being quoted in the market. For that reason the Committee did not regard short term fluctuation in supply and demand as being a conclusive reflection of scarcity but preferred instead to assess the underlying supply/demand ratio in the absence of the quoted rent levels on which short term variations may depend.
(ii) The Committee also notes that the evidence related mainly to properties in the subject building available for letting shortly before Christmas 2001, and following the events of September 11th 2001, and that seasonal/post September 11th fluctuations in interest also should not be a conclusive reflection of scarcity.
(iii) Mr Walford's evidence in respect of scarcity related mainly to flats in the same building/very immediately locality of the subject flats. The Committee considers that in accordance with the authorities, it should have regard to the broader picture in respect of locality for the purposes of scarcity and in these cases has had regard to the London boroughs of Westminster, Camden and Kensington and Chelsea.
74. The Committee considers that there is an unsatisfied demand for flats of a similar type in the locality and that there is scarcity for the purposes of section 70(2) of the Act. However, having heard the persuasive evidence of Mr Walford, the Committee came to the conclusion that a lower deduction than 35 per cent proposed by Mr Beirne should be applied. Without claiming to make a precise statistical analysis, the Committee considered the appropriate deduction under section 70(2) of the Act in these particular cases to be 20%".