ABSTRACT

Section 70(2) states the matters that shall be disregarded, the most important of which is scarcity, as this is what creates the market rent. The section states that ‘…it shall be assumed that the number of persons seeking to become tenants of similar dwelling houses in the locality on the terms (other than those relating to rent) of the regulated tenancy is not substantially greater than the number of such dwelling houses in the locality which are available for letting on such terms’. In other words, supply equals demand. The fair rent, therefore, tends to be artificial, since it is the interplay between supply and demand that creates the market rent. This artificiality tends to depress rents, is the main criticism of the fair rent system, and has led to the introduction of the market rent system in relation to the Housing Act 1988.