03 April, 2009
When the rent paid for a property is several hundred pounds per month, it may be presumed that because of the amounts involved, greater protection would be provided to the tenant. However, the recent decision in Cherry Sheila Hughes v Borodex Limited  EWHC 565 has shown that this is not necessarily the case. Paying rent which is above the 'upper limit' set out in the Housing Act 1988 can mean that the tenancy is not assured. This can have obvious consequences for the tenant involved.
The tenant (H) rented a flat, consisting of the ground and first floors of a building in Chelsea, London. She had previously held a long residential tenancy with her landlord (B). Upon the ending of this tenancy in 2003, it was intended for H to become a periodic assured tenant by virtue of the Local Government and Housing Act 1989. Agreement was not reached on the level of rent to be paid under the 'new' tenancy and therefore, a reference was made to the Rent Assessment Committee to adjudicate on an appropriate level. In determining a monthly figure, the Committee disregarded, in H's favour, improvements that she had carried out to the property in previous years.
Under the Housing Act 1988, tenancies entered into after April 1990 would not be classified as an assured tenancy, if the annual rent paid exceeded £25,000, through applying the formula set out in the Local Government and Housing Act 1989. Therefore, a second application to the Committee was made by B in 2007, where it was deemed that the annual rent did go beyond the ceiling of £25,000.
It was also noted by the Committee that the apparent effect of the relevant statutory provisions meant that a tenant who had paid substantial sums to make improvements to a property during the term of a long tenancy would only have those works disregarded for as little as a year.
H appealed against this second decision of the Committee. The appeal was dismissed by the High Court. It was held that when an initial reference to a Rent Assessment Committee was made, following the creation of an assured tenancy, a tenant could rely upon the provisions of the 1989 Act relating to the disregarding of improvements undertaken. However, any subsequent applications made to the Committee would be made under section 13 of the Housing Act 1988 which meant that the 1989 Act would not apply in these circumstances. Accordingly, H could not enjoy the protection offered to her in the first application in any later hearings.
The High Court also said that the enactment of the 1989 Act was undoubtedly to tip the balance in favour of landlords and to encourage the expansion of letting of properties. It was the Court's view that it was difficult for it to be satisfied that the abolition of the previous protection offered was unintentional and was not done so with this aim in mind.
This case has shown that there is legislation in place for landlords to seek possession of their properties, regardless of the size of the annual rent. Provided that landlords use the correct procedures, such as using the Rent Assessment Committee to determine levels of rent, then the process can become more straightforward.
It is also important to remember that although tenants are provided with protection in the first application to the Committee in relation to improvements, these are removed for later claims made.