Meeting of the Parliament 17 March 2016
The bill provides that when a landlord’s proposed rent increase is referred by a tenant, a rent officer can set the tenant’s rent at what he or she judges to be the open-market value. Amendment 12 allows a rent officer to correct an error in an order that he or she has issued, which means that time and resources need not be spent on an appeal against the order to deal with a simple mistake that can easily be fixed by the rent officer issuing a corrected order.
Amendments 13, 14, 16 and 17 rephrase the open-market rent calculation, which is carried out when a tenant disputes the landlord’s proposed rent increase. That does not alter the effect of the provision, but simply makes it clearer—that is in response to feedback that was received from stakeholders.
It continues to be the case that the calculation is based on a hypothetical new letting of the property by a willing landlord to a willing tenant. The current tenant is relevant to the calculation only if his or her actions would, for better or worse, change the open-market rent that could be achieved on a hypothetical new letting.
It also continues to be the case that the landlord is not to benefit from a higher rent due to the tenant having carried out any improvements voluntarily, and the tenant is not to benefit from his or her failure to comply with tenancy terms where that has a direct impact on the open-market rent, for example, because the furnishings have been ruined. However, those are now the only two exceptions which need to be stated.
In addition, the scope of the exception has been extended to cover all work that is voluntarily paid for or carried out by the tenant for maintenance as well as improvements, and work that is paid for by the tenant but carried out by someone else.
In calculating the open-market rent rate, one of the criteria is the start date of the new hypothetical open-market let. The underlying principle is that that ought to be the date on which the rent increase would have taken effect had it not been contested. At stage 2, the mechanism by which a rent increase notice takes effect was amended. Amendment 15 updates the open-market rent calculation in order to reflect the amended rule, so that it is always tied to the date on which the increase should have taken effect.
Where a landlord’s proposed rent increase is disputed, the rent officer to whom the dispute is referred must issue a provisional order before issuing a final order setting the new rent. That gives the parties a chance to contest the rent officer’s proposal before it is finalised.
Section 28 deals with the case where the parties have settled the dispute themselves before the rent officer has made a decision. It requires the rent officer to make an order simply giving effect to whatever agreement the parties have reached. Amendment 18 removes the requirement for a rent officer to issue a provisional order in those circumstances. That is in recognition of the fact that the order reflects the parties’ agreement, so there is no need to give them an opportunity to contest it.
I move amendment 12.
Amendment 12 agreed to.
Section 27—Determination of open market rent
Amendments 13 to 17 moved—[Margaret Burgess]—and agreed to.
Section 28—Withdrawal of referral or appeal
Amendment 18 moved—[Margaret Burgess]—and agreed to.
Before section 30