[2025] UKUT 179 (LC)

In normal circumstances these conclusions would result in the appeal being allowed and the reference being remitted to a differently constituted panel of the FTT for redetermination. But I have decided not to take that course.

The issue between the parties does not fall naturally within the scope of a reference under section 13. Where a tenant receives a notice of increase and refers it to the FTT under section 13(4)(a), the task of the FTT is laid down by the Act. It is required by section 14(1) to determine the rent at which the property could reasonably be expected to be let in the open market by a willing landlord to a willing tenant on the prescribed assumptions. The FTT has done that, and Mr Wallis does not have permission to challenge its valuation, only its “interpretation” of the oral agreement which created his tenancy.

The question which divides the parties is not a valuation question. If the terms of the tenancy do not permit the rent to be increased, then the FTT’s determination may be of no effect. I say that it “may” be of no effect, rather than it “will” be of no effect because it remains an open question whether an agreement that the rent for an assured periodic tenancy will be fixed is effective to oust a new rent determined by the FTT under section 14 of the 1988 Act.

By section 13(1)(b) section 13 applies to an assured periodic tenancy which does not include a contractual provision binding on the tenant “under which the rent for a particular period of the tenancy will or may be greater than the rent for an earlier period”. An agreement that the weekly rent for a tenancy will be “fixed” is not an agreement under which the rent “will or may be greater than the rent for an earlier period”. Section 13 therefore appears on its face to apply to a periodic tenancy which includes a term that the rent will not be increased. If section 13 applies, Parliament has laid down in section 13(2) that the landlord is entitled to obtain a new rent by giving a notice of increase which may then be referred to the FTT by the tenant and which will result in a determination.

But a determination under section 14(1) is not the end of the story. Section 14(7) of the 1988 Act provides that where a notice of increase has been referred to the FTT, the rent which it determines will become the rent payable under the tenancy “unless the landlord and tenant otherwise agree”. That raises a question of interpretation, namely, whether an agreement made before the FTT has determined a new rent under section 14(1), including an agreement made at the commencement of the tenancy, can be an agreement for the purpose of section 14(7).

If an agreement made before the FTT has determined a new rent can, in principle, be an agreement for the purpose of section 14(7), and if Mr Wallis and Mr Hutchby agreed in 1999 that the rent for the new tenancy would be “fixed” for as long as the tenancy continued, then the rent of £156 a week determined by the FTT will not have become the rent payable for the tenancy with effect from 25 November 2024. Both those issues will need to be resolved before a conclusion can be drawn as to the effect of the FTT’s determination. The FTT has so far failed to answer the first question and the parties have given no thought to the second question and have made no submissions on it.

The FTT has fully performed the task given to it by section 14, 1988 Act. The questions which remain to be determined are not questions which arise on a reference under sections 13 and 14. They are, whether the parties agree the rent would be “fixed”, and, if they did, whether that was an agreement for the purpose of section 14(7) which prevented the new rent from becoming payable? As the FTT has determined a rent, it is distinctly arguable that those questions are no longer within its jurisdiction. The better course in those circumstances is to set aside the FTT’s decision so far as it concerns the terms of the agreement reached in 1999, but to leave its determination of the rent under section 14(1) in place. If the parties are unable to reach an agreement, the question whether the new rent became payable on 24 November 2024 should be determined by a court (either in proceedings for a declaration as to the existence of an agreement and on the proper interpretation of section 14(7), 1988 Act, or in proceedings for recovery of the arrears of rent which will have accumulated if the FTT’s determination was effective).

For these reasons, I allow the appeal and set aside the FTT’s decision that the rent payable under the tenancy can be varied; there is no other challenge to the amount of the rent determined by the FTT, which is payable under the tenancy unless the rent cannot be varied; I decline to remit the reference to the FTT for it to determine that question.