The Upper Tribunal has allowed an appeal in Atesheva v Halifax Management Ltd [2024] enabling an assured shorthold tenant’s application to challenge a proposed rent increase to proceed even though they had not used the prescribed form or a form substantially to the same effect.
The decision indicates how judges might apply recent Supreme Court guidance about the correct approach where there has been a failure to comply with a statutory requirement, and sheds light on a statutory procedure that will take on renewed significance if and when the Renters’ Rights Bill becomes law.
WolfBite - the key takeaways
• The Housing Act 1988 contains a statutory procedure enabling a landlord of a periodic assured tenancy to serve a notice proposing a rent increase.• The proposed new rent will take effect unless the tenant refers the matter to tribunal by applying for a determination of the open market rent or the parties reach agreement.
• The tenant’s application must be made by a specified time and in a prescribed form.
• The tenant in Atesheva attempted to refer the matter to the tribunal in time, but did not use the prescribed application form.
• The Upper Tribunal held that the tribunal still had jurisdiction to determine the application because, whilst not in the right form, the tenant had referred the matter in time and in a way that still complied sufficiently with the statutory requirements.
• The statutory rent determination procedure will take on renewed significance if and when the Renters’ Rights Bill becomes law because it will be one of the only ways that landlords will be able to increase the rent.
What is a section 13 rent increase?
An assured tenancy (including an assured shorthold tenancy) can be granted for a fixed length of time or it can run on a periodic basis (for example from week to week or month to month).When a fixed term tenancy ends, the tenancy agreement might provide that it will continue as a contractual periodic tenancy or else the default position under the Housing Act 1988 (HA 1988) is that a statutory periodic tenancy will arise.
The HA 1988 contains a process whereby landlords can seek to increase the rent under a periodic tenancy, whether statutory or contractual (unless the contract contains a rent review clause).
The process is contained in sections 13 and 14 of the HA 1988.
The landlord can serve a section 13 notice on the tenant stating the amount of the new rent the landlord proposes, the date from which the new rent is to take effect and what the tenant can do if it does not agree to the new rent.
If the tenant agrees the rent increase, the new rent will be payable from the date set out in the section 13 notice.
If the tenant does not accept the proposed increase, it can ask the tribunal to determine the rent under section 14, being the rent at which the premises might reasonably be expected to be let in the open market by a willing landlord.
If the tenant wishes to seek such a determination, section 13 provides that it must make its application to the tribunal before the date on which the new rent would otherwise take effect and it must use a prescribed application form.
Atesheva v Halifax Management Ltd.
The tenant, Ms Atesheva, had occupied the rental premises in London under several successive fixed term assured shorthold tenancies. The last of these expired in 2020 at which point a statutory periodic tenancy arose.The landlord, Halifax, served a section 13 notice in December 2023 proposing to increase the rent from £1,900 to £2,400 a month, starting on 1 February 2024.
On 31 December 2023, the tenant sent an e-mail to the First-tier Tribunal referring to the landlord’s notice and “…appealing to the [tribunal] to conduct a fair review of the rent increase…”.
She did not, however, use the prescribed application form.
An automated reply was sent by the tribunal noting that it aimed to respond to e-mails within 10 working days, and asking for cooperation in refraining from contacting it further during that period.
In light of that request, the tenant waited until 22 January 2024 before writing to the tribunal again. She expressed concern that she had not received a response and asked whether she should re-send the e-mail or what she should do otherwise. She received a further automated response, this time informing her that the tribunal was running a five-week backlog.
A case officer subsequently contacted the tenant on 7 February 2024 directing her to the correct prescribed application form. She submitted a duly completed application form later the same day.
Following a preliminary consideration, the tribunal notified the parties that the application had not been made in time. The application form had been received after 1 February 2024, being the date on which the landlord’s section 13 notice stated the proposed new rent would take effect.
The First-tier Tribunal considered that it therefore did not have jurisdiction to hear the application.
The tenant appealed to the Upper Tribunal (UT).
The Upper Tribunal’s decision
There were two main questions for the UT:1). Whether the information contained in the tenant’s e-mail of 31 December 2023 was substantially to the same effect as the information required by the prescribed application form?
2). If not, was this fatal or did the tribunal still have jurisdiction to hear the application?
Was the e-mail substantially to the same effect as the prescribed form?
There are some statutory provisions that stipulate that a prescribed form must be used, and only that form will do.
There are others, such as in this case, where the relevant legislation says that a prescribed form, or one that is substantially to the same effect, can be used meaning that there is a little more flexibility.
In this case, however, the UT, having compared the contents of the tenant’s e-mail with the information required by the prescribed form, concluded that it was not possible to say that the former was “substantially to the same effect” as the latter.
Whilst the tenant’s e-mail included some of the information required by the prescribed application form, a good deal more information (for example, to do with the type of accommodation, the date the tenancy began and whether a separate charge was made for any services the landlord provided) was missing.
Nor had she included a copy of the tenancy agreement or the section 13 notice with her e-mail, although she had referred to the contents of the notice.
The tenant had therefore not used the prescribed form or a form substantially to the same effect.
Did the tribunal have jurisdiction to hear the application anyway?
The second question involved a consideration of the consequences of failing to comply with the statutory requirements.Section 13 of the HA 1988 provides that the rent proposed by the landlord will take effect unless by the date set out in the section 13 notice the tenant by an application in the prescribed form refers the notice to the tribunal (or the landlord and tenant reach agreement about the new rent).
The UT considered that there was a distinction between the consequences of a failure to comply with requirement as to timing on the one hand, and the form of the application on the other.
As to timing, there was no doubt that an application made to the tribunal on or after the date on which the proposed rent increase was due to take place would be invalid, and the tribunal would not have jurisdiction to hear it. The HA 1988 made it clear that a failure to comply with this statutory requirement was fatal.
However, whilst the UT found it a difficult point, it ultimately decided that a failure to make the application using the right form, or a form substantially to the same effect, should not have the same consequences as a failure to make the application in time.
The judge did not see the requirement as to the form of the application as having equal significance to the requirement as to the time of the application, or that Parliament intended that any departure from the prescribed form should be fatal.
In coming to this conclusion, the UT referred to the Supreme Court’s decision in A1 Properties (Sunderland) Ltd v Tudor Studios RTM Company Ltd [2024]. We looked at that case in Supreme Court confirms approach to consequences of failing to comply with a statutory requirement (A1 Properties v Tudor Studios).
In A1 Properties, the Supreme Court decided that the correct approach where a statute does not expressly stipulate the consequences of non-compliance, was to ask whether it was a purpose of the legislature that an act done in breach of the provision in question should be invalid. This involves considering the statutory framework in which the requirement arises and asking what consequence best fits that structure.
Adopting that approach, whilst it was clear that the tenant had to refer the matter to the tribunal by the specified deadline failing which the tribunal had no jurisdiction, the tribunal would have jurisdiction if an application was made in time which, whilst not in the correct form or a form substantially to the same effect, nevertheless complies sufficiently with the requirements of the statutory scheme.
The judge cited a number of factors for concluding that a failure as to form would not necessarily be fatal:
• The substance of the statutory requirement was to refer the landlord’s section 13 notice to the tribunal. So long as the tenant identified the landlord’s notice sufficiently clearly (as this tenant had done) this requirement would be met; it was not necessary to include all of the other additional information required by the prescribed form.
• Parliament would not have intended to make it more difficult for tenants to avoid a unilateral increase in rent where they were already at risk if they failed to refer the matter to the tribunal in time.
• The consequences for the landlord of the tribunal accepting an application were not harsh (it would still receive an open market rent), whereas the consequences for the tenant if the application was rejected could be considerable (the rent increase would take effect without any scrutiny, whether at a market level or not).
• The contents of the prescribed form were in this case set out in secondary legislation (not in the HA 1988 itself) suggesting that they had lesser significance.
• The tribunal had other powers to call for further information indicating that Parliament did not envisage that the contents of the application form would be all that it would rely on.
The UT concluded that it would be unjust if, despite having sought to invoke the process before the deadline and done all that could reasonably be expected of a lay person to comply with the statutory procedure, the tenant in this case was left at risk of being required to pay more than the open market rent for her home.
The UT was therefore satisfied that the tenant’s e-mail was sufficient to refer the landlord’s section 13 notice to the tribunal and to give it jurisdiction to determine the open market rent.
The matter has been sent back to the First-tier Tribunal to determine the new rent.
As the UT acknowledged, some of the points on the interpretation of the statutory scheme in this case were “difficult”, requiring the UT to read-in different consequences for failures to comply with different elements of the same provision. These points were not fully argued because the landlord did not take part in the appeal.
More generally, the case suggests that we may see judges in other cases more ready to apply, and possible stretch the application of, A1 Sunderland where the consequences of a failure by one party to take some procedural step may otherwise strike them as unduly harsh.
