Proposed rent increases under s.13 Housing Act 1998 - who has the jurisdiction?

Two cases, one in the Upper Tribunal and one in the Court of Appeal, have recently had judgments handed down in relation to the First-tier Tribunal’s jurisdiction over proposed rent increases in ‘assured’ and ‘assured shorthold’ tenancies. The question now is who has jurisdiction to decide whether a notice of proposed rent increase is valid?

Tribunal

The first of the cases, Salvation Army Housing Association v Kelleway (2024) UKUT 53 (LC), was heard on appeal in the Upper Tribunal. It concerned a ‘starter’ tenancy expressed to be a monthly assured shorthold tenancy, which would become an assured tenancy after the first 12 months if the initial period was not extended. Clause 1.1 allowed the Salvation Army (“the landlord”) to increase rent on 28 days written notice, and/or on the first Monday of April in each proceeding year.

In February 2023, the landlord served a s.13 notice under the Housing Act 1988 (“HA 1988”) proposing a rental increase from 1 April 2023. The tenant filed for review in the First-tier Tribunal (“FTT”) under s.14 HA 1988.

Initially, the notice was struck out as the new rent was not to take effect from the first day of a new tenancy period as required by s.13(2) HA 1988. The landlord argued the s.13 notice had been served in error as the tenancy agreement included a provision to allow for the rental increase on this basis, and thus the FTT did not have jurisdiction.

The FTT, sitting as a lone surveyor member, held that the s.13 notice was defective and that a new prescribed form of notice must be served on the tenant. Their decision was stated to be on the basis that the fixed term of the tenancy agreement had expired, and, therefore, so had clause 1.1 and the tenancy was therefore a statutory periodic tenancy.

The landlord appealed the reasoning for the decision in the FTT. It was held, by the Upper Tribunal, that the clause contained within the starter tenancy had created an assured periodic tenancy with provision for rental increase. Therefore, under s.13(1)(b) HA 1988, the FTT did not have jurisdiction but not for the reasons it had provided in its previous decision.

Court of Appeal

The second case, and arguably that with wider ramifications, was Mooney v Whiteland [2023] EWCA Civ 67, heard in the Court of Appeal. The case involved a weekly periodic tenancy commencing in 1991, rent being due Monday but routinely paid the preceding Friday. Mr Mooney (“the landlord”) served a s.13 notice on the tenant in 2018 increasing the rent to £100 per week. The tenant did not accept this increase but rather than refer the matter to the Welsh Rent Assessment Committee (equivalent to the FTT), she continued to pay the initial rental sum of £25. Possession proceedings were commenced by the landlord.

The tenant defended the proceedings on the basis that notice was not valid under s.13(2) HA 1988. On first instance the DDJ held that notice was valid as it was obvious to the reasonable recipient that it was meant so that the habitually paid rent was increased to accord with the increase in rent from the Monday.

On appeal by the tenant, the judge believed that there were three possible interpretations of the notice. In order to be valid, it must be obvious to the reasonable recipient that the dating was a mistake and the landlord had meant to insert the beginning of the new tenancy period. More importantly, the judge advised that only the county court has jurisdiction over the validity of a notice.

Ultimately, on appeal in the Court of Appeal, it was held that the rent assessment committee (and by extension the FTT) does not have the jurisdiction to determine the validity of a s.13 notice. Any questions arising under s.13 are dealt with by the county court by reference to s.40(1) HA 1988.

Further, s.14 confers the power on the FTT to determine appropriate rent, with regard to market conditions. This often falls within the expertise of the sitting members, as in Salvation Army v Kelleway the sitting member was a surveyor. By contrast, the courts do not have the same expertise. There is therefore, in short, no provision within HA 1988 that confers the ability of the FTT to determine the validity of a s.13 notice.

Take aways

The Court of Appeal judgment shows that the FTT holds no power other than those conferred upon it by statute. It shows that the only jurisdiction it holds is the determination of whether a rent increase is fair and equitable and not over whether a notice served is valid.

A Tribunal can defer to a county court should it believe there is cause to believe a s.13 notice is invalid. However, this may provide inadvertent notice to a landlord that the notice may be invalid and thus allow the landlord to serve a further, valid notice.