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Lease renewals – agreeing the rent

It is rare for lease renewals under the Landlord and Tenancy Act 1954 to go to court because the landlord and tenant cannot agree the new rent but that is what happened in Flanders Community Centre Ltd v Newham London Borough Council [2016].

The original lease provided for a rent of only £1 but did require the tenant to carry out works to the property. On the renewal of the lease, the tenant argued that the rent should remain at £1 whereas the landlord wanted the rent to increase to £16,000 per year.  Both landlord and tenant put forward what they considered to be expert evidence to support their assertions.
The judge’s view of the “expert” nature of the evidence was different however. She decided that the evidence was unreliable and lacking detail.  As such, she discounted it and relied on the current rent.  Both parties had agreed that the current rent was a relevant factor in deciding the new rent.
The landlord appealed but the Court of Appeal’s view was that the judge was entitled to form her assessment of the “expert” nature of the evidence and she was entitled to take note of the current rent. The Court of Appeal noted that whilst the judge could have made her own assessment of the rent, she was not obliged to.
What can we learn from this case?
Judges do not have expert knowledge of valuation and so parties should ensure their experts do as good a job as possible. If you want to use proceedings where the assessor has specialist knowledge then you can consider using the PACT (Professional Arbitration on Court Terms) Scheme where lease renewal disputes would be settled by a chartered surveyor acting as expert or arbitrator.
For more information on pursuing a lease claim please contact David Farmer.