Battle stations for rent war

The private housing sector is becoming a major legal battleground. Confrontations between private landlords who want to increase the rents of long-standing statutory tenants and the tenants themselves have already taken place.

And all the signs are that this will be a growth area of activity, with many more such confrontations in the pipeline.

At the centre of the fray is Saimo Chahal, a partner in the high-profile London Firm of Bindman & Partners and head of its housing litigation department. She has been involved in the early skirmishing and is in no doubt that we have seen only the tip of the iceberg.

The latest flurry of activity by landlords seeking rent increases of several hundred per cent was sparked off by a Court of Appeal decision in July 1995 in the case of Spath Holme v the Chairman of Greater Manchester and Lancashire Rent Assessment Committee & ors.

That decision said that fair rent in respect of statutory tenants could be equated to market rent, with a discount to take into account scarcity of such accommodation. This ruling has spurred many landlords to head for rent assessment committees seeking swingeing increases in rents and putting forward high market rents as comparisons to back their cases.

But in one of the main actions so far, the landlords' hopes have not lived up to the expectations they may have harboured as a result of the Spath Holme decision.

The case, in which Chahal represented 21 tenants of 6 Hall Road, St John's Wood, was taken to a rent assessment committee by Plustrade Residential, which sought to have rents of about £5,800 a year increased to between £13,000 and £18,000 a year.

But the committee increased them by about 12 per cent only, following argument from Chahal on behalf of her clients – many of whom are elderly and unable to meet increases of the size sought – that the market rent comparables put forward by the landlords are not true comparables, as they relate to improved and superior accommodation let on different terms to the tenancies in question.

Chahal's next case, to be heard in October this year, involves a different league of property – substantial Victorian properties on the Eyre Estate, again in St John's Wood.

This time fair rents of £11,000 to £12,000 have been registered, but it is anticipated that the landlords will ask for increases on the basis of market rents of around £50,000.

Chahal says the St John's Wood cases mirror what is happening across the country.

"Following the Spath Holme decision many large and corporate landlords are seeking huge rent increases which, if achieved, would result in many tenants being unable to pay. The outcome would be a homelessness crisis of considerable dimensions."

But Chahal says the Spath Holme decision has not created a cut-and-dried route for landlords to obtain massive increases. "When scarcity of accommodation and other fair rent comparables are taken into account there are valid arguments against the level of increases being sought."