Leeds Combined Court
1 Oxford Row
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Mr Strachan appeared on behalf of the Defendant.
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Mr Justice Langstaff:
"…where a local authority, in accordance with regulations made under section 136(2) or (3) of the Social Security Administration Act 1992, applies to a rent officer for determinations in respect of a tenancy of a dwelling, a rent officer shall -
(a) make the determinations in accordance with Part I of Schedule 1 (determinations);
(b) comply with Part II of Schedule 1 when making the determinations (assumptions etc.); and
(c) give notice in accordance with Part III of Schedule 1 (notifications) [within the relevant period or as soon as is practicable after that period]."
"…the rent officer shall have regard to the levels of rent under assured tenancies of dwellings which -
(a) are in the same locality as the dwelling (or in as similar a locality as is reasonably practicable); and
(b) have the same number of bedrooms and rooms suitable for living in as the dwelling…"
Thus, interposing, under paragraph 3 the rent officer is to have regard not to the vicinity but to the locality: as will be explained below, a locality is composed of one or more neighbourhoods. In this case no issue arises directly as to the rent officer's determination that the rent payable for the tenancy of the dwelling at the relevant time was not exceptionally high for the neighbourhood.
R is the local reference rent;
H is the highest rent, in the rent officer's opinion, -
(a) which a landlord might reasonably have been expected to obtain, at the relevant time, for an assured tenancy of a dwelling which meets the criteria in sub-paragraph (2); and
(b) which is not an exceptionally high rent; and
L is the lowest rent, in the rent officer's opinion, -
(a) which a landlord might reasonably have been expected to obtain, at the relevant time, for an assured tenancy of a dwelling which meets the criteria in sub-paragraph (2); and
(b) which is not an exceptionally low rent"
The opinion to which the rent officer thus has to come is as to the highest reasonable rent. It is not directly as to what is or what is not exceptional. The purpose of paragraph 4(1) and the formula is not to establish the extremes of a range in which rents fall but it is designed to identify the mid point of the housing market so far as rents are concerned. It is worth noting at this stage that paragraph 4(1) appears to assume that a landlord might reasonably expect to obtain as between him and his tenant a rent which is reasonable but which is still exceptionally high or for that matter exceptionally low so far as the locality is concerned.
"The criteria are -
(a) that the dwelling under the assured tenancy -
(i) is in the same locality as the dwelling;
(ii) is in a reasonable state of repair; and
(iii) has the same number of bedrooms and rooms suitable for living in as the dwelling (or, in a case where the dwelling exceeds the size criteria for the occupiers, accords with the size criteria)"
And it goes on in respects which are not material for present purposes. Sub-paragraph (3) provides that:
"Where ascertaining H and L under sub-paragraph (1), the rent officer:
(a) shall assume that no one who would have been entitled to housing benefit had sought or is seeking the tenancy; and
(b) shall exclude the amount of any rent which, in the rent officer's opinion, is fairly attributable to the provision of services which are ineligible to be met by housing benefit."
It is worth noting that the tenancy here refers to the tenancy under which the highest reasonable rent or for that matter the lowest reasonable rent is established. It is an hypothetical tenancy; this does not relate to the tenancy which has given rise to the claim for benefit.
"For the purposes of this paragraph … 'locality' means an area -
(a) comprising two or more neighbourhoods, including the neighbourhood where the dwelling is situated, each neighbourhood adjoining at least one other in the area;
(b) within which a tenant of the dwelling could reasonably be expected to live having regard to facilities and services for the purposes of health, education, recreation, personal banking and shopping which are in or accessible from the neighbourhood of the dwelling, taking account of the distance of travel, by public and private transport, to and from facilities and services of the same type and similar standard; and
(c) containing residential premises of a variety of types and including such premises held on a variety of tenancies."
"Schedule 1 … shall apply in relation to a redetermination as they apply to a determination, but as if references in those Schedules to the relevant time were references to the date the application for the original determination was made or, if earlier, the date the tenancy ended."
and, significantly here:
"(2) … the rent officer shall seek, and have regard to, the advice of one or two other rent officers in relation to the redetermination."
"23. In exercising my professional judgment in selecting the H and L figures for each substitute re-determination, having regard to the available data, I did not believe that I was bound to exclude the evidence of rents supported by housing benefit from my consideration, nor am I aware of any policy to do so. Under the requirements of paragraph 4(3)(a) of Schedule 1 of the Order, my understanding and my approach in this case was that in ascertaining H and L figures, I was required to assume that no one who would have been entitled to housing benefit had sought or is seeking the tenancy for the H and L figures respectively."
"The identification of the H and L figures has always required the rent officer to use his professional judgment, knowledge and experience and to consider the 'full market' or as much of the market as the rent officer had knowledge of. In this way the data, which would include rents funded by the provision of housing benefit, would form a part of the overview of rents for the locality."
And he went on to repeat the assumption to which he had earlier referred.
"In order to ascertain the highest rent that was not exceptionally high, I viewed the whole data set to get as clear a picture as possible of the whole of the local market. I considered there to be a type of plateau of rents at the £138.46 per week (£600.00 pcm) mark, and I took the view on balance, that this was the point at which the rents within the locality were not exceptionally high. Rents in the area are generally quoted on a calendar monthly basis and for that reason it is important that the H figure relates to a monthly rental. I noted that in addition to eight unsupported rents at this level, there are also 2 supported rents supporting the same view. Above this point I considered there to be a marked rise in rent until the next smaller plateau of 6 rents of £150.00 per week or £650.00 pcm, which I considered to be exceptionally high for the locality in the light of the market data overall. This view based on the market data, and my own judgment and experience was shared by the rent officers with whom I consulted, and who had detailed knowledge of the market in the locality."
This last sentence refers to the duty to which the rent officer was subject under Schedule 3 of the Order.
"I took the view that this was the point at which the rents were the highest that might reasonably be obtained in the locality, without being exceptionally high. Above this point I considered there to be a marked, steep rise to £155.77 per week (£675.00 pcm) in rent, which rent I considered to be exceptionally high for the locality. I considered that generally the incidence of each rent level reduced above the £150.00 per week mark (with the exception of four housing benefit supported rents at £171.92 per week) and the curve was generally steeper…" [the curve is a reference to the presentation of the data in terms of a bar graph]. "Again, the view that I formed based on the market data and my own judgment and experience was shared by the rent officers with whom I consulted, who have detailed knowledge of the market in the locality."
So far as the L figures were concerned he said at paragraph 34:
"In relation to the substitute re-determination of the April 2004 referral I approached the identification of the L figure, applying the relevant statutory assumptions, as follows. I considered that the lettings database generally showed a steady rise in rents from the market evidence item of a rent unsupported by housing benefit at £317.00 pcm or £73.15 per week. I did not consider that this rent was exceptionally low. I considered it to be supported by evidence of other lettings in the locality at around this range. The supporting evidence was in the form of several rents at around this level supported by housing benefit. However, as there were at least four at comparable levels, I was satisfied that the housing benefit support for these rents was not distorting the picture. For one entry, there may sometimes be a greater concern that the availability of housing benefit has affected the rent a tenant might pay, but where there are several entries it would generally be very unlikely that they were all led by the availability of benefit. It seemed that slightly below the £73.15 per week unsupported rent, the market evidence showed exceptionally low rents, with a drop off from £69.23 per week (£300.00 pcm) for a housing benefit supported rent to £60.00 per week (£260.00 pcm). Again, the opinion I formed based on the market evidence and my knowledge and experience was confirmed by the judgment of the rent officers with whom I consulted, who have detailed knowledge of the market in the locality".
MR STRACHAN: My Lord, will it assist that I just identified I think six points of the judgment where there may be some … typographical …
MR JUSTICE LANGSTAFF: I am sure there may be quite a number. It is an ex tempore judgment, not reserved but considered overnight.
MR STRACHAN: I offer it in that spirit and, my Lord, there are just two notes, I think earlier on in the judgment your Lordship referred to local reference rate whereas it should be rent.
MR JUSTICE LANGSTAFF: Thank you. I think I have called it both throughout.
MR STRACHAN: I think you did, my Lord. There were two references earlier on. My Lord, secondly, your Lordship referred to the claimant's applying for re-determination. It doesn't particularly matter but in this case because the House of Lords decision quashed the ….
MR JUSTICE LANGSTAFF: Yes, I follow.
MR STRACHAN: … re-determine in any event, my Lord. Your Lordship referred to the claimant's rent as being in excess of £700 but there were two different rents …
MR JUSTICE LANGSTAFF: £695 it was in the end, wasn't it?
MR STRACHAN: There was one at £750 and one at £695, so again it's not a significant matter …
MR JUSTICE LANGSTAFF: Around the £700 will do, it was a broad-brush figure, simply, the actual figures don't really matter as to the judgment but I will correct that. Thank you for that.
MR STRACHAN: My Lord, the other matter is, or just three other matters, one is that your Lordship quoted from paragraph 32 of Mr Harrison's statement, my Lord, and I just note that that was corrected by the second witness statement so as to include…
MR JUSTICE LANGSTAFF: Thank you.
MR STRACHAN: My Lord, two very small matters. I believe your Lordship referred to page 250 of the bundle for the figures or the tables, whereas I think the reference should be 252.
MR JUSTICE LANGSTAFF: 252.
MR STRACHAN: And finally, my Lord, it appears in the transcript, I think Crumpsty should be Cumpsty, without the 'r'.
MR JUSTICE LANGSTAFF: Thank you.
MR STRACHAN: I hope those are of assistance, my Lord.
MR JUSTICE LANGSTAFF: Yes they certainly are.
MR STRACHAN: My Lord, in those circumstances I would ask for an order that the claim be dismissed and I would also ask for an order that the claimant pay the defendant's costs to be subject to detailed assessment if not agreed, but subject to Section 11 of the … Section 11 of the costs order in respect of those costs incurred before the date that the claimant's certificate expired. I say that, my Lord, because I understand … sorry, my Lord, may I just …?
MR JUSTICE LANGSTAFF: Yes, certainly.
MR STRACHAN: My Lord, I am grateful. (Inaudible) so, my Lord, I seek, can I just confirm, I seek an order the claimant pay the defendant's costs subject to Section 11. I don't know if that is sufficient for the purposes of drawing up the order although …
MR JUSTICE LANGSTAFF: Well, since you are going to have to draw up the first draft of the order you have to determine that, I think.
MR STRACHAN: Yes, my Lord.
MR JUSTICE LANGSTAFF: I am certainly happy to grant whatever the appropriate order for costs is in whatever the appropriate form is.
MR STRACHAN: I am grateful, my Lord. It is obviously to protect the ….
MR JUSTICE LANGSTAFF: I understand the purpose of it but … Mr Burton?
MR BURTON: My Lord, I am most grateful for a very detailed and considered judgment. There are just two matters. The first is a matter of possible concern but at the moment I am not putting it in the form of an application for permission to appeal, and it relates to in fact the as it were caveat position that your Lordship in saying that if you are wrong about the initial analysis (inaudible) points to be made about the extent of reasons given. I would simply ask your Lordship to confirm that it is in the circumstances of this case that you are saying that what Mr Harrison did was enough.
MR JUSTICE LANGSTAFF: Yes. Well, reasons have always to be viewed in their particular context.
MR BURTON: Quite. I am most grateful.
MR JUSTICE LANGSTAFF: And I am certainly not saying that rent officers are free to give short reasons. In fact I had hoped that was obvious by my, not only reference, but so far as it's worth anything, express acceptance of that which Lord Neuberger said.
MR BURTON: : No, my Lord, I think that was very much clear. I think the reason I am asking for this to be clarified and therefore be put in the transcript is that we lawyers sometimes have a habit of extracting particular sentences from judgments and then using them for purposes which after all is necessary and entirely foreseen by ….
MR JUSTICE LANGSTAFF: So you want me to qualify that by making it quite plain it is the circumstances of this case?
MR BURTON: I would be most grateful for that if that were the case. My Lord, in terms of permission to appeal I shall be frank. I don't think any considered view about whether or not the claimant will seek permission has even been reached at this stage, but if we do intend to do that it is right that we ought to put a brief submission to your Lordship this morning, and I do that in really just a couple of sentences. It relates to the issue of the consideration of housing benefit which, whilst I understand your Lordship's decision to be in effect that Mr Harrison provided sufficient reasons, it would be my submission that the data evidence irrespective of Mr Harrison's opinion was suggestive that the guidance indicates some overt consideration of whether or not an adjustment, not a decision to exclude altogether, but an adjustment…
MR JUSTICE LANGSTAFF: Yes I didn't deal with that, did I, in the decision?
MR BURTON: Not particularly.
MR JUSTICE LANGSTAFF: Which I meant to do but I missed.
MR BURTON: Well one of the dangers of a welcome ex tempore judgment, because obviously the parties have been waiting for some time, I mean I don't have an objection if your Lordship wants to say anything about that now, it may assist consideration of matters at a later stage.
MR JUSTICE LANGSTAFF: Yes, well, certainly. My view is this: that it was accepted by Mr Burton on behalf of the claimant that the rent officer was entitled to look at housing benefit assisted rents. It is plain from the size of the dataset that indeed he would have to have regard to that if he was going to have a decent number of comparables within which to establish the range, the point of the exercise being to find out the true centrepoint of that range. The argument has been that there is plainly a possibility that housing benefit might interfere with the market. It is suggested that when one looks at the lower end of the scale -- see page 252 -- that the £73.15 rent which the rent officer adopted as the bottom end of his range stands on its own, and similarly for the 2005 determination the figure of £80.77 in a range of its own. The rent officer considered whether it was appropriate not only as a matter of general practice to take account of the housing benefit supported rents which it is accepted he was entitled to do, but whether so far as he could see the presence of housing benefit rents had disturbed the rental values which he was considering more generally. He concluded that it had not. He did so in these terms (paragraph 34):
"The supporting evidence was in the form of several rents at around this level [at £73.15] supported by housing benefit. However, as there are at least four comparable levels, I was satisfied that the housing benefit support for these rents was not distorting the picture. For one entry, there may sometimes be a greater concern that the availability of housing benefit has affected the rent a tenant might pay, but where there are several entries it would generally be very unlikely that they were all led by the availability of benefit."
It seems to me that he has there set out reasons why he felt that fixing in particular upon the lower end of the market, which is where Mr Burton's arguments have been focussed, why it is that he took the view that housing benefit had not distorted the market. I cannot say that that view is irrational, and it seems to me, taking account of the point which I made earlier reflective of his general approach of taking a graphical view of the data that it fits entirely with that approach.
So it seems to me that he was entitled to regard the low negotiated rents, negotiated without the support of housing benefit of £73.15 for the 2004 determination and £80.77 for the 2005 determination, as not simply being outliers or exceptional or extreme cases, but ones which fell within the market generally, established as it was by both housing benefit and non housing benefit supported rents.
It follows that I cannot conclude that his decision was flawed in this respect.
MR BURTON: My Lord, in that respect then I do make the following application which is as follows: that it is irrational, certainly without the benefit of further reasons, to say that a supported rent is not an indication of a supported market where there are other similar rents, where those other similar rents are similarly supported rents and not unsupported rents, and I take as my guide for that submission the guidance produced by the rent service which would seem to suggest that a distortion may occur when housing benefit rentals, ie supported rents, generally do not reflect unsupported rents at any point in the market. And in my submission that is the case that this court was presented with and indeed Mr Harrison was presented with, and therefore, as I say, in the absence of additional reasons, it was irrational to conclude that there was no distortion and that therefore no consideration of an adjustment was necessary.
I might just add at that stage that, perhaps unlike your Lordship's very considered reasons in relation to the issue of exceptionality, the point about paragraph 4(3) and the issue of the assumption that the person seeking the tenancy is not in receipt of housing benefit nor seeking it is clearly an important one which runs through all four paragraphs. It has never been considered by a court before. It is not perfectly drafted in my submission. It may not be entirely consistent with the guidance that the rent service has produced in accordance with it. But all of those reasons in my view make it all the more pertinent that it may be necessary to have further consideration by the Court of Appeal on that particular issue.
MR JUSTICE LANGSTAFF: The test I apply is whether a) there are reasonable prospects of success upon appeal; b) whether for some other compelling reason an appeal ought to be heard. In my view there are not reasonable prospects of success on the appeal for the reasons broadly which I have set out in the judgment, and I do not regard the opposite as being sufficiently arguable notwithstanding Mr Burton's further points as to justify permission under that ground. I do consider this as the right case in which to examine 4(3) and its impact so as to make it a case in which it is a matter of compelling interest that the Court of Appeal should consider it. So accordingly Mr Burton you have to seek your permission elsewhere.
MR BURTON: I am most grateful, my Lord.
MR JUSTICE LANGSTAFF: Do you want to say anything about costs?
MR BURTON: No I don't think I can resist my learned friend's (inaudible).
MR JUSTICE LANGSTAFF: Would you be so kind, then, Mr Strachan, to draw up the appropriate order, preferably run it past Mr Burton to make sure that he is content with its … that it reflects the order of the court, and that will be the order the judge will make. I shall be here all day. But, Mr Burton, I am sorry that you were delayed…
MR BURTON: I did intend to apologise for that, yes …
MR JUSTICE LANGSTAFF: You didn't miss very much of the judgment …
MR BURTON: Okay, well I am most grateful. I am sure my learned friend will fill me in on anything I did miss.