Calculation of damages where a property is unfit for habitation pursuant to s9A Landlord & Tenant Act 1985

A lengthy judgment was made in the case of Godagama & Another v Hanson [2024] at Circuit Judge level relating to the calculation of damages due to tenants, where properties are found to be in breach of the landlord’s obligation of fitness for habitation. Acknowledgment is hereby given to the nearlylegal.co.uk website for publishing the otherwise unreported judgment, a link to which is as follows https://nearlylegal.co.uk/wp-content/uploads/2024/09/Godagama-v-Hanson-Approved-Judgment-3-5-2423.pdf

Calculation of damages in housing conditions claims typically follows the decision in Wallace v Manchester City Council [1998].  The sum required to compensate the tenant for the distress and inconvenience of the landlord’s breach of obligation relating to the condition of the property is normally ascertained as a notional reduction in the rent for the period during which the defect in condition persisted (the more serious the disrepair, the higher the notional reduction).

As of 20 March 2019 (new tenancies) or 20 March 2020 (tenancies already in existence on 20 March 2019 – as was the position in this case) a landlord’s obligations increased by way of s9A Landlord & Tenant Act 1985, partly in response to the perceived injustice that a landlord could avoid liability for properties in poor condition by establishing that the condition complained of was an inherent defect in the design or construction, rather than a deterioration from a previous state of repair.

In short, the question was whether a finding that the property is unfit for human habitation, as a result of a breach of s9A LTA 1985, necessarily results in damages of equivalent to the entire rent (or, in other words, a notional reduction of 100% of the rent).

Relevant facts

As the briefest of summaries:

• Mr Hanson was the tenant of the property pursuant to an assured shorthold tenancy
• He was the defendant to possession proceedings on the basis of rent arrears, and brought a counterclaim based on breach, by the landlord, of its housing conditions obligations
• The property was found to be in a very poor condition indeed
• In particular, there was a lack of ventilation and poor insulation in the walls and ceiling which were inherent defects in the property, and not subject to an obligation to repair.

Court’s approach to calculating damages

For the period December 2019 to 20 March 2020 (i.e. before the provisions of s9A LTA 1985 took effect and so only in respect of disrepair and not inherent defect) the Court applied the standard rules in Wallace and judged there to be a notional reduction in rent of 60% (this constitutes particularly serious disrepair, though not so serious that the property was seen as being completely uninhabitable).

As of 20 March 2020, due to the change in the law, the property was technically unfit for human habitation as a result of breaches of s9A.  The tenant argued, pursuant to a decision of earlier in the year at District Judge level, that fitness for habitation is a “binary decision”.  In other words, if a property fell foul of s9A and so was not fit for human habitation, then “…it could not be said that the tenant had received any benefit from the tenancy for…”, the period during which the default persisted, and so the tenant should be awarded damages at the rate of 100%, even if they had continued to occupy during that time.

Significantly, the Court in Godagama rejected the submission “that there is a binary choice and that once the breach of s9A …is established no rent is due from the tenant”.  The Judge saw a “…danger of overcompensating the tenant” if this approach was to be taken and noted that “a property might fail to reach the requirement of fitness of habitation for many different reasons and that may affect the amount of any compensation which was due”.  In short, it was perfectly possible for a tenant still to obtain “…some benefit from continuing with the tenancy” notwithstanding a breach of s9A LTA 1985.

Decision in the case

The Court went on to decide what the notional reduction in rent should be from 20 March 2020 onwards using the same approach that had been applied for the period December 2019 to that date.  The condition of the property was, of course, exactly the same, on 20 March 2020 as it had been the day before.  However, the landlord’s obligations increased on that date to include the effects of the poor ventilation and insulation (inherent defects).

In this particular case the Judge decided “…I am of the view …that the failure to provide basic conditions fit for such occupation in a small flat was such as that 100% reduction in the rent would be appropriate to reflect the inconvenience and distress caused to Mr Hanson”.

The Birketts view

This is a welcome clarification. The fact that a property falls foul of one of the provisions of s9A LTA 1985 does not, in itself, result in the tenant deriving no benefit from continued occupation, even if this technically constitutes breach of a condition of fitness for human habitation.

Matters were kept simple by applying the usual approach taken following Wallace, though to include any inherent defects (this being the difference to the position prior to the coming into force of s9A LTA 1985).

The defects in condition in this particular case happened to be so serious as to warrant a notional rent reduction of 100% (to which the 10% uplift in Simmons v Castle was subsequently added), when the usual Wallace analysis is applied.  However, this will not be the case in every matter where a breach of s9A LTA 1985 is found.