HMRC’s Valuation Office is to take responsibility for determining challenges to rent increases in England – a move aimed at freeing up property tribunals.

The government says while it develops these reforms, renters who want to challenge a rent increase must still apply to the First-tier Tribunal, and if they do, they won’t have to pay the higher rent until the Tribunal has made its final decision.

However, there are fears that this could be the subtle first step towards controlling rents as tenant groups continue to call for ministers to intervene.

It follows the announcement that rents will be included in the new PRS database which starts its national roll out in the West Midlands in December.

Initial

Housing Minister Matthew Pennycook explains that by transferring responsibility for making initial rent determinations to HMRC’s Valuation Office, it will ensure that challenges to proposed rent increases are determined faster and pressure on the tribunal system is reduced.

It says this is an important step towards helping to deliver a modern, digital-first service that works for both tenants and landlords, creating a system that is transparent, accountable and fair. 

The Valuation Office already has a valuation role in relation to council tax and provides the Rent Officer function for fair rent assessment for the Rent Act 1977, according to property lawyer David Smith, who says the change will need new primary legislation, meaning that it is probably not going to happen for a couple of years at least.

Appeal

It’s not clear whether there will be an appeal structure and if that will be to the First-Tier Tribunal as it is now or the Valuation Tribunal which deals with appeals in relation to Council Tax, he adds.

“The FTT has done a lot of work in providing a structured and efficient mechanism to handle these appeals and it is a bit of a waste for all this work to be lost,” adds Smith (pictured left), partner at Bishop & Sewell. “Clearly though the government is looking to derive a central office which is a ‘source of truth’ for rent figures and this is something the FTT, as a judicial body, just cannot provide. On that basis using the VOA makes sense.

"A larger worry should also be that if there was a desire to introduce rent control, either as a direct control method, or as a more subtle mechanism by preventing rent spikes and exploitation of vulnerable tenants, this would be a necessary first step.”

NRLA

The NRLA welcomes the move as chief executive Ben Beadle says it has repeatedly called for the government to make use of the VO’s expertise on local market rents to help prevent the Tribunal system becoming overwhelmed.

“A quicker, specialist rent determination service should benefit both tenants and landlords while easing pressure on an already stretched Tribunal system,” adds Beadle.

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