Many Registered Social Landlords (RSLs) still have a number of tenants who benefit from the protection of the Fair Rent regime. They are tenants who have been with the housing association since before 2nd January 1989 and have not moved home voluntarily since 30th September 2002.
When fixing a rent for one of these houses, RSLs must be aware that their decision on the rent can be appealed to the Rent Registration Officer and thereafter to the First-tier Tribunal (Housing and Property Chamber).
An RSL tenant has been successful in an appeal before the inner house of the Court of Session against a decision of the PRHP determining what was 'fair rent' for a property in the case of James Wright v Elderpark Housing Association [2017] CSIH 54.
Mr Wright had been a tenant of the property since 1996, and a tenant of the housing association for 20 years prior to that, and had retained his right to apply for determination of fair rent. When the RSL attempted to increase the rent of the property from £3500 per annum to £4791 per annum, Mr Wright requested that the PRHP determine what was fair rent for the property. The PRHP returned a decision that fair rent was in fact £6200 per annum. Mr Wright appealed this decision to the Court of Session.
The PRHP Committee, in making their determination of fair rent were required to have consideration to 'current rents of comparable property in the area'. Therefore, they had obtained details of a number of other similar sized properties available to lease in the area from the Internet. The rent from comparable 3 bedroomed properties ranged from £632-£765 per month. The Committee concluded that the average market rent of properties comparable to Mr Wright's was £7,800 per annum and after applying a deduction on the basis that the RSL did not provide any appliances, decoration , floor coverings and due to the fact that the windows were in a poor condition, they concluded that fair rent was £6200.
The questions of law for the opinion of the court were
- Whether the Committee erred in law in its interpretation of the term 'current rents of comparable property in the area'.
- Whether the Committee erred in law in failing to have regard to social rented sector rents and instead by having sole regard to open market rents in the private rented sector in determining a fair rent.
The court determined that the approach taken by the PRHP was 'fundamentally flawed' and that they had erred in law by:
- Failing to consider rents of all other comparable properties. The PRHP committee had been of the opinion that rents should not be considered if they were 'registered rents' as in fixed by a rent officer, as opposed to by a PRHP committee decision. The court determined that this was incorrect and registered rents should have been taken in to consideration, as they indicated that the rent of those properties was acceptable to both landlord and tenant and therefore can be viewed as an indicator of fair rent. The PRHP had therefore failed to consider rents of all other comparable properties.
- Considering rental costs from properties over a wide area in Glasgow. The internet search included too wide an area, and the social and economic variety over this area in Glasgow meant that the PRHP had failed in their requirement to consider rents of properties that could actually be regarded as comparable.
- Giving priority in their consideration to market rents from private tenancies as opposed to from Housing Association properties. The court determined that rents from both markets should be considered in order to determine fair rent.
The decision was then made to quash the Committee's decision and remit the case back to a differently constituted Committee in order that a fair rent may be determined. However, it should be noted that this decision was made by majority with one Judge disagreeing.
It will be interesting to see the determination which is made by the new committee in respect of this rent. It should be noted that this appeal was in respect of one decision made by that particular committee on that particular date. They also made decisions in respect of two other properties on the same date and in both cases fixed fair rents in excess of £6,000.00 per annum. Neither of those decisions appear to have been appealed and both relate to houses with the same Association.
More interestingly, there are two separate decisions in respect of two nigh identical properties in the same street in Govan, where one committee has fixed a fair rent at £4,000.00 per annum and another has fixed a fair rent at £6,900.00 per annum.
Accordingly, it would appear that there is little consistency in these fair rent decisions and RSLs who are subject to this regime should always seek advice should they have any queries with regard to any determination made by the Rent Officer or the FTT.
Our team are always happy to help with advice in these matters and can be contacted here
