How can we help you?

This week we report on efforts by Kensington & Chelsea RBC to tackle tenancy fraud and a 1954 Act lease renewal where the Court determined the level of rent that should be payable under the new lease. All of this together with our usual positive news, quiz questions and insights from around the firm.

Council joins forces with Airbnb to tackle social housing tenancy fraud

In Kensington & Chelsea RBC v AirBnB Payments Ltd [2022] Kensington & Chelsea RBC (KCRBC) applied for a "Norwich Pharmacal" order for pre action disclosure against the payments arm of Airbnb to facilitate the identification of social housing tenants in the Borough who were unlawfully sub-letting their properties. The application was targeted at two large residential blocks in prime locations with a high proportion of social housing tenants and with what inspections had revealed to be high numbers of key safes. AirBnB Payments did not object to the order being sought but was not prepared to provide the information without a Court order.

An applicant for a Norwich Pharmacal order must satisfy four conditions:

  1. The case must be more than barely capable of serious argument but need not necessarily reach the threshold of 50% likelihood to succeed.

    The judge had no doubt that the unlawful subletting of KCRBC's properties is a wrong committed against it, giving the claimant the right to bring civil or criminal proceedings under the Prevention of Social Housing Fraud Act 2013, or the Fraud Act 2006, or to take steps to evict the tenant and recover the property so that it can be used for social housing purposes.
  2. The respondent to the application must be mixed up in so as to have facilitated the wrongdoing.

    AirBnB Payments' involvement in enabling payments to hosts of Airbnb properties was conduct that undoubtedly facilitated the wrongdoing that was believed to have been committed by some of the tenants of the blocks.
  3. The respondent must be able or likely to be able to provide the information or documents necessary to enable the ultimate wrongdoer to be pursued.

    This was not in dispute, and AirBnB Payments had already started preparing the relevant information in anticipation of an order being made.
  4. Whether it is just in all circumstances to make the order.

    This was satisfied as the strength of KCRBC's case was as high as it could be without the order, there was significant public interest in local authorities being able to put a stop to the abuse of social housing and it would act as a deterrent to future unlawful sub-letting. Whilst the judge acknowledged that the information sought was confidential, there were clear factors which justified its disclosure as being in the public interest.

The order was granted and allowed KCRBC to require AirBnB Payments to provide the name of the host account holder and address of each associated property and the payment and transaction history for all of the properties within the two blocks which are let to social housing tenants. The judge considered that it was a "limited and proportionate attempt to achieve focussed disclosure of necessary information".

The order is a major victory in the fight against social housing fraud and will allow KCRBC to take enforcement action against the perpetrators.

Determination of rent under the Landlord & Tenant Act 1954

In Old Street Retail Trustee (Jersey) 1 Ltd v GB Healthcare [2022] the Court was asked to determine the level of rent under the renewal lease of a shop unit at 199 Old Street, London pursuant to section 34 of the Landlord & Tenant Act 1954 (the LTA 1954).

The rent under the existing lease was £40,250 per annum following a rent review in March 2015. The landlord suggested that the new rent should be £148,000 per annum. The tenant disagreed and proposed that the new rent should be £45,000 per annum. The parties were therefore a long way apart and it fell to the Court to determine what the new rent should be.

The judge ultimately determined the rent to be £112,000 per annum. In reaching this figure, he decided that:

  • The starting point should be £192 per square foot, based on the pre-Covid-19 market rent for lettings of other units in the parade;
  • A 25% reduction should then be applied to take into account the post Covid-19 market;
  • All of the comparables involved rent-free periods and as the occupation of the tenant was to be disregarded in determining the new rent, the new rent must be adjusted to take into account the absence of a rent-free period in the new lease;
  • Section 34 of the LTA 1954 required the Court to consider the question of rent based on a hypothetical tenant. A hypothetical tenant would not pay an additional sum for an exclusivity clause preventing other tenants in parade from trading as a pharmacy so the covenant to this effect in the new lease should be disregarded when assessing the rent; and
  • The tenant could not rely on an arbitration award in 2020 which determined the rent that was payable in respect of a lease to Argos of a nearby unit.

This case shows that parties who cannot agree on the level of rent on renewal may well think that it is occasionally worth the cost of pursuing the matter to trial. It also provides clarification on how the Court will carry out the section 34 valuation exercise.

Positive news

  • Malta to end its blanket ban on abortion

    After a US tourist was forced to fly to Spain to terminate a pregnancy that risked causing her a deadly infection, the Maltese government pledged to change the law to allow doctors to terminate a pregnancy if a mother's life or health is at risk. If the changes go through, there will be no countries in the EU that enforce a total ban on abortion, with Malta currently being the only EU nation that does so.
  • Germany hatched a plan to boost culture

    Germany has announced it will be kicking off a new initiative this week. Its 200 Euro 'KulturPass' will be offered to all those turning 18 next year. This aims to boost the arts as it will give birthday vouchers for people to spend on gigs and theatre tickets. France, Spain and Italy have also recently started offering similar vouchers to citizens when they turn 18.
  • The Swiss dug deep to boost frog numbers

    Over the last 20 years, hundreds of ponds have been dug in the Aargau canton in northern Switzerland. Frogs and newts are responding well to these efforts who are returning to the region in large numbers. Of eight endangered species identified, 52% increased their regional populations and 32% were stabilised. The study concluded that such efforts have therefore halted, or even reversed declining trends for the majority of amphibian species.

Insights from around the firm