Spath Holme Ltd v Greater Manchester and Lancashire Rent Assessment Committee: CA 9 Aug 1995

The rent assessment committee had rejected market rent comparables as an indicator of market rent for the subject premises, because, inter alia, they were not satisfied of the actual absence of scarcity, and thus found that the landlord had not demonstrated the unsoundness of registered fair rent comparables.
Held: The decision was upheld. A fair rent is a market rent ignoring personal circumstances and scarcity. Comparables were wrongly rejected where discounting for scarcity and security possible. Fair rents were based on market rents, less scarcity and other disregards, and were not reasonable rents in any other sense including their impact on tenants. The Court gave general guidance to rent assessment committees making it clear that they were expected to follow market rent comparables as the best evidence of the starting point for fair rents, to give clear reasons and to explain their determinations with arithmetic if necessary. A ‘fair rent’ under the 1977 Act is the same as a ‘market rent’ under the 1988 Act save for the assumption of no scarcity and allowing for the statutory’disregards’, and that, in assessing a fair rent, regard should be had to market rent comparables if any: ‘… the fair rent to be determined is a market rent less the disregards and discounted for scarcity. Thus, … if there is no scarcity and no disregards then the rents should be the same whether the tenancy is a regulated tenancy or an assured tenancy.’
A fair rent is an adjusted market rent and market rent comparables are relevant to the assessment of a fair rent: ‘In this case there are a number of flats in the same block let on assured tenancies at, by definition, open market rents which are virtually identical to those for which a fair rent is to be determined. In my judgment if, in those circumstances, a Rent Assessment Committee wishes to exercise its discretion to adopt some other comparable or method of assessment it will be failing in its duty to give reasons if it does not explain why.
In this case the third reason given by the Rent Assessment Committee as recorded by the judge was that the registered rent comparables had not been demonstrated to be unsound. That is not, of course, a reason for rejecting the assured tenancy comparables. It is not for the court to say in advance what would be a good reason for doing so but if such a reason involves ‘working through’ such comparables so be it: that consequence is no ground for rejecting the validity of its cause. But it should also be noted that the registered rent comparables are not in their nature any more or less sound than the open market rent with or without discount. Any registered rent has built into at least two variables namely the open market rent and the discount for scarcity. Each should have been considered at the time of the original determination. The assessment of the soundness of that registered rent for use as a comparable would require each of those variables to be reconsidered at the time of their possible use as a comparable.
In this connection it was also objected that if the Rent Assessment Committee were required to give detailed reasons that might necessitate giving detailed arithmetical workings or quantifying the degree of scarcity involved contrary to statements in Guppy’s Property v. Knott No 1 … and Metropolitan Properties v. Laufer … But those statements were made in relation to the facts of those cases. It does not follow that there will not be cases in which the duty to give reasons will require such workings or quantification to be afforded.’
Glidewell LJ. and Sir John May
Ind Summary 28-Aug-1995, Times 09-Aug-1995, (1995) 28 HLR 107, [1995] 2 EGLR 80
Rent Act 1977 70(1)
England and Wales
Citing:
Appeal fromSpath Home Ltd v Greater Manchester and Lancashire Rent Assessment Committee QBD 13-Jul-1994
The rent assessment committee had rejected proposed market rent comparables as an indicator of market rent for the premises, because they were not satisfied of the actual absence of scarcity. The landlord had not demonstrated the unsoundness of . .

Cited by:
Appealed toSpath Home Ltd v Greater Manchester and Lancashire Rent Assessment Committee QBD 13-Jul-1994
The rent assessment committee had rejected proposed market rent comparables as an indicator of market rent for the premises, because they were not satisfied of the actual absence of scarcity. The landlord had not demonstrated the unsoundness of . .
CitedSheppard-Capurro, Regina (on the Application of) v London Rent Assessment Panel Admn 27-Jul-2005
. .
CitedCurtis v Chairman of London Rent Assessment Committee; Huntingford and Packford CA 9-Oct-1997
The claimant sought to appeal the quashing of determinations of a fair rent for two properties. . .
See alsoSpath Holme Ltd v Chairman of the Greater Manchester and Lancashire Rent Assessment Committee (No2); Curtis v Similar QBD 2-Jan-1998
A Bill of costs could be presented even though counsel’s fee had not yet been agreed; an extension of time was properly granted. . .

These lists may be incomplete.
Updated: 03 June 2021; Ref: scu.89447