Limit on First Tier Tribunal’s jurisdiction to determine a rent under Sections 13 and 14 Housing Act 1988

On 11 December 2024 the Upper Tribunal (Lands Chamber) gave its judgment in three appeals against decisions of the First Tier Tribunal Property Chamber (“FTT”), in relation to the FTT’s determination of rent in three particular matters.

Though both landlords and tenants will want to take note, the decision looks set to be of limited duration due to the provisions of the Renters Rights Bill 2024.

Determination of rent under Sections 13 and 14 Housing Act 1988

Put simply, the above provisions allow for landlords of properties let under Assured tenancies to increase the rent, for the tenant to challenge by referring to the FTT, and for the FTT to determine what new rent should be payable, save to the extent that the tenancy provides for an alternative, contractual, method for rent increase.

Specifically, s13(1) provides that this procedure for increasing the rent applies to “(a) a statutory periodic tenancy …: and (b) any other periodic tenancy which is an assured tenancy, other than one (my emphasis) in relation to which there is a provision … under which the rent for a particular period of the tenancy will or may be greater than the rent for an earlier period”.

The procedure for the landlord to increase the rent pursuant to s13 is to serve on the tenant a note proposing a change of rent. The tenant then has a period of time within which to refer the matter to the FTT for a determination of the rent, if it does not agree to the proposal. The FTT will then determine the new rent in accordance with the valuation principles set out in s14.

Facts of the first case (Moat Homes v Carol)

The property in the first matter had originally been let under a weekly Assured tenancy, before subsequently being assigned. In respect of changes to the rent, the tenancy expressly provided that (a) the net rent payable … will be reviewed in April every year, regardless of when the tenancy started; and (b) we may increase or decrease the rent by giving you four weeks’ notice in writing.

The landlord sought to increase the rent by £13 per week in accordance with the Section 13 procedure. This included serving the s13 notice itself, as well as guidance notes advising the tenant that, if she did not agree to the rent increase, she could refer the matter to the FTT for a determination.

The tenant duly did so and, following non-engagement by the landlord, the FTT determined that the rent should rise by only £2 per week.

The landlord then sought permission to appeal on the basis that the tenancy was not one to which s13 applied, and so the FTT had no jurisdiction to determine the rent. Its argument was, firstly, that s13(1)(a) did not apply as this was not a statutory periodic tenancy.  Such tenancies arise on a tenant remaining in occupation following the expiry of a fixed term.  However, this tenancy had been periodic from the outset and so was not statutory periodic.  This point has long been settled law.

As to s13(1)(b), though the tenancy fell within the scope of “…any other periodic tenancy which is an assured tenancy..”  there was a contractual provision in the tenancy allowing for a possible increase or decrease in the rent. Accordingly, the exception in s13(1)(b) applied, rendering the s13 procedure inapplicable to this tenancy.

The facts of the other two matters (Longhurst -v- Gristwood and Longhurst -v- Fovargue) were similar

The Upper Tribunal’s Decision

The Upper Tribunal found that the exception in the s13(1)(b) did, indeed, apply, and so the FTT had no jurisdiction to determine the rent, as the tenancy contained a provision providing for a rent increase.

In doing so it followed the decision in Contour Homes Limited v Rowen (2007). The first instance judge in that case had held that because the landlord had (mistakenly) sought to use the s13 procedure, it could not later deny that the FTT had jurisdiction to determine the new rent. This was rejected by the Court of Appeal stating “it was not possible for the parties to agree to confer jurisdiction on [the Tribunal]”” where Parliament had not bestowed such jurisdiction.

Accordingly, the FTT determinations were all set aside, and it was found that the rents had increased to the amounts sought by the Landlord as at the date specified in (what purported to be but, in fact, were not) notices pursuant to s13 Housing Act 1988.

The outcome did not prevent the Upper Tribunal criticising the landlords for wasting their own, and the justice system’s resources, and highlighting the unfairness to the tenant in that the notices created the false impression, and false hope, that the FTT might be able to determine a different rent when, if fact, it could not.

The Birketts View

In following Contour (as it had to do) the Upper Tribunal was not creating new law.  Nonetheless, the decisions in these three matters serve as a reminder that care needs to be taken to establish whether s13 is applicable.

In these three matters the contractual provisions of the tenancies did, in fact, give the Landlord the right to increase the rent to a figure of its own choice, and so they did themselves a disservice by believing that s13 was applicable. 

The previous Upper Tribunal decision of Helena Partnership Ltd -v- Brown [2015] was also referenced.  In relation to the “provision…under which the rent for a…period…may be greater than the rent for an earlier period”.  In that case it was found that the provisions in the tenancy agreement merely provided “…information to the tenant about the landlord’s right to implement a statutory review, rather than having any contractual force in its own right.”  In other words, to bring the tenancy withing the s13(1)(b) exception, the rent-increase provision in the tenancy needs to be something other than an assertion that s13 applies.

As set out above this position, as clarified by the Upper Tribunal, is set to be swept away by the Renters Rights Bill, possibly as early as Easter 2025.  The current wording of Bill provides that s13 will be the only manner in which rent under an Assured tenancy can be increased – and that contractual provisions seeking to provide for an alternative method of increase will be of no effect.  In fact, the Bill goes further in proposing that the tenant can use the FTT process not just to challenge rent increases, but also to challenge the starting rental figure that they have expressly agreed.