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Reduction of a Residential Lease

Reduction of a Residential Lease

Since 25 May 2015 it has been possible to raise an action challenging the existence of a lease in the Sheriff Court by way of an action for reduction.

In the recent case of SW v Chesnutt Skeoch Limited the Upper Tribunal considered whether the First-tier Tribunal (Housing and Property Chamber) had jurisdiction to consider reduction of an assured tenancy.

The case concerned an application for payment of rent arrears and losses following termination of an assured tenancy. The tenant initially argued that the tenancy agreement was voidable owing to the tenant’s lack of capacity to enter into the tenancy agreement. On the morning of the hearing the tenant’s representative did not insist on that argument and instead sought to reduce the tenancy agreement on the basis of facility and circumvention.

What is facility and circumvention? This is the principle that a party should not to be bound by a contract if he was too weak due to ill-health or otherwise to resist undue pressure from another.

The First-tier Tribunal (Housing and Property Chamber) determined that it did not have jurisdiction to consider reduction and that even if it did have jurisdiction an application for reduction had not been properly made. An order for payment was granted in favour of the landlord.

The tenant appealed to the Upper Tribunal which upheld the decision of the First-tier Tribunal on the basis that no valid application for reduction had been made.

Can a lease be reduced by the First-tier Tribunal?

The Upper Tribunal but did not make a conclusive decision either way determining that it will be for the First-tier Tribunal to consider based on the individual circumstances of a case whether or not it has jurisdiction. Nonetheless, it did assert that the legislation transferring the functions and jurisdiction of the sheriff court to the First-tier Tribunal (Housing and Property Chamber) is “potentially wide enough to cover a wide jurisdiction” and “invites a wide, inclusive approach”.

While this issue has not been conclusively determined, it is likely such applications will now be attempted before the First- tier Tribunal given the free nature of the process in comparison to the sheriff court.

For more information or advice, contact Claire Mullen —

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Written by : Claire Mullen

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