Fair Rent Determination for a Property Under the Rent Act 1977

OUTCOME: Allowed

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Case Reference : HS/LON/OOAN/F77/2025/0062

Property : 10B [ADDRESS], [POSTCODE]

Tenant : Mr [APPELLANT]

Landlord : [NAME] of Application : Determination of a [NAME] under section 70 of the [NAME] 1977

Tribunal

: Mr [NAME] (Hons) MA LLM

FRICS

HMCTS Code

: Determination on paper

Date of Decision : 22 April 2025

_______________________________________________ Full Reasons

____________________________________

© CROWN COPYRIGHT 2025 Decision FIRST - TIER TRIBUNAL [NAME] (RESIDENTIAL PROPERTY)

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1. The decision of the Tribunal is that a fair [NAME] of £198.00 per week is determined with an effective date of 22 April 2025. Background 2. An application was made to re-register a fair [NAME], received 1 October 2024 by the landlord of the property [NAME]. Prior to the application to re- register a fair [NAME], the [NAME] had registered a [NAME] of £136.00 per week with effect from 16 May 2018.

3. Subsequently the [NAME] registered a fair [NAME] of £195.50 per week with effect from 18 November 2024.

4. In a letter dated 11 December 2024 the tenant objected to the [NAME] registered and the matter was referred to the First–tier Tribunal ([NAME]) (Residential Property).

5. Directions were issued by the Tribunal on 25 February 2025. Thereafter, the Directions made provision for the filing with the Tribunal of the parties’ respective written submissions and, in particular, for the completion of a reply form giving details of the Property and including any further comments the parties wished the Tribunal to take into account in making its determination. The tenancy is a statutory (protected) periodic tenancy. The tenancy (not being for a fixed tenancy of 7 years or more) is subject to section 11 of the Landlord and Tenant Act 1985 which sets out the landlord’s statutory repairing obligations; the tenant is responsible for internal decorations.

The Property 6. The property is as described by the [NAME] is a self-contained converted flat, with central heating, comprising two rooms, one kitchen, one bathroom with WC. The Inspection 7. The tribunal did not inspect the property, neither party requested an inspection, and the determination was carried out on the papers.

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Relevant Law 8. Provisions in respect of the jurisdiction of the Tribunal and the determination of a fair [NAME] are found in Schedule 11, Part 1, paragraph 9(1) to the [NAME] 1977, as amended by paragraph 34 of the Transfer of Tribunal Functions Order 2013, and section 70 of the [NAME] 1977. [NAME] 1977 Schedule 11, Part 1, paragraph 9 (as amended) “Outcome of determination of fair [NAME] by appropriate tribunal 9. (1) The appropriate tribunal shall- (a) if it appears to them that the [NAME] registered or confirmed by the [NAME] officer is a fair [NAME], confirm that [NAME]; (b) if it does not appear to them that that [NAME] is a fair [NAME], determine a fair [NAME] for the dwelling house.” Section 70: Determination of fair [NAME] (as amended) “(1) In determining, for the purposes of the Part of this Act, what [NAME] is or would be a fair [NAME] under a [NAME] of a dwelling house, regard shall be had to all the circumstances (other than personal circumstances) and in particular to- (a) the age, character, locality and state of repair of the dwelling-house, … (b) if any furniture is provided for the use under the tenancy, the quantity, quality and condition of the furniture [, and (c) any premium, or sum in the nature of a premium, which has been or may be lawfully required or received on the grant, renewal, continuance or assignment of the tenancy.] (2) For the purposes of the determination 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 [NAME]) of the [NAME] is not substantially greater than the number of such dwelling-houses in the locality which are available for letting on such terms. (3) There shall be disregarded-

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(a) any disrepair or other defect attributable to a failure by the tenant under the [NAME] or any [NAME] to comply with any terms thereof; (b) any improvement carried out, otherwise than in pursuance of the terms of the tenancy, by the tenant under the [NAME] or any [NAME]; (c), (d) …[repealed] (e) if any furniture is provided for use under the [NAME], any improvement to the furniture by the tenant under the [NAME] or any [NAME] of his or, as the case may be, any deterioration in the condition of the furniture due to any ill-treatment by the tenant, any person residing or lodging with him, or any sub-tenant of his.”

9. Consequently, when determining a fair [NAME] the Tribunal, in accordance with the [NAME] 1977, section 70, has regard to all the circumstances including the age, location and state of repair of the Property. It also disregards the effect of (a) any relevant Tenant’s improvements and (b) the effect of any disrepair or defect attributed to the Tenant of any [NAME] in [NAME] under the [NAME], on the rental value of the Property. In [COMPANY] v Chairman of the Greater Manchester etc. Committee (1995) 28 HLR 107 and [NAME] v [NAME] [1999] QB 92 the Court of Appeal emphasised: (a) that ordinarily a fair [NAME] is the market [NAME] for the property discounted for “scarcity” (i.e. that element, if any, of the market [NAME], that is attributable to there being a significant shortage of similar properties in the wider locality available for letting on terms- other than as to [NAME]- to that of the [NAME]) and (b) that for the purposes of determining the market [NAME], assured tenancy (market rents) are usually appropriate comparables. (The rents may have to be adjusted where necessary to reflect any differences between the comparables and the subject property).

10. In considering scarcity under section 70 (2), the Tribunal recognises that:

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(a) there are considerable variations in the level of scarcity in different parts of the country and that there is no general guidance or “rule of thumb” to indicate what adjustments should be made; the Tribunal, therefore, considers the case on its merits; (b) terms relating to rents are to be excluded. A lack of demand at a particular [NAME] is not necessarily evidence of scarcity; it may be evidence that the prospective tenants are not prepared to pay that particular [NAME]. Fair rents are subject to a capping procedure under the [NAME] ([NAME]) Order 1999 which limits increases by a formula based on the proportional increase in the Retail Price Index since last registration. The only exception to this restriction on a fair [NAME] is provided under paragraph 7 of the Order where a landlord carries out repairs or improvements which increase the [NAME] by 15% or more of the previous registered [NAME].

Determination on Papers The issue was determined on the papers before the tribunal. The landlord's submissions The landlord submitted the application for a registration of a fair [NAME]. The tenant’s submissions The tenant submitted a letter dated 11 December 2024 objecting to the [NAME] registered expressing concern over the level of increase. Reasons for Decision 13. The [NAME] to be determined must reflect the condition found on the date of the hearing disregarding all tenants' improvements.

14. The process for determining a fair [NAME] is the application of [NAME] 1977 section 70 on the subject property and then comparison with the maximum [NAME] permitted under the [NAME] 1999. This means that comparison with other properties the subject of [NAME] is not material.

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15. Initially the Tribunal determined what [NAME] the Landlord could reasonably be expected to obtain for the Property in the open market if it were let today in the condition that is considered usual for such an open market letting. Considering evidence submitted and the Tribunal acting in its capacity as an expert tribunal and using its general knowledge of market levels in the area, concluded that the [NAME] was £ 1750 per month if let on a contemporary assured shorthold basis.

16. The Property is not in the condition considered usual for a modern letting at a market [NAME], therefore, it is necessary to adjust the above hypothetical [NAME], a deduction of 10% is made. In addition, the Tribunal determined that there should be a further deduction of 10% to reflect the fact the terms and conditions and goods supplied under the tenancy would differ from those of a contemporary assured shorthold tenancy, from which the rental comparables are derived. Thereafter the Tribunal considered the question of scarcity in section 70 (2) of the [NAME] 1977. A figure of 20% was adopted. The calculation 17. The [NAME] prior to adjustment for condition, terms and scarcity: £1750.00 per month

Less 10% condition £175.00 per month and 10% for terms white and goods and internal decoration responsibilities £175.00 per month --------------------------------------------------------------

£ 1400.00 per month -------------------------------------------------------------- Scarcity 20% deduction £280.00 per month -------------------------------------------------------------- Subtotal

£1120.00 per month

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[NAME] ([NAME]) Order 1999 18. The [NAME] to be registered is not limited by the [NAME] ([NAME]) 1999. The [NAME] calculated in accordance with the market with adjustments is £1120.00 per month, which is equivalent to £258.46 per week , which is higher than the figure calculated in accordance with the order.

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Accordingly, the sum of £198.00 per week is registered from 22 April 2025, being the date of the Tribunal’s decision.

Valuer Chair: [NAME]: 22 April 2025

Appeal to the Upper Tribunal A person wishing to appeal this decision to the Upper Tribunal ([NAME]) on a point of law must seek permission to do so by making a written application to the First-tier Tribunal at the Regional Office which has been dealing with the case which application must: a. be received by the said office within 28 days after the Tribunal sends to the person making the application written reasons for the decision. b. identify the decision of the Tribunal to which it relates, state the grounds of appeal, and state the result the party making the application is seeking. If the application is not received within the 28 –day time limit, it must include a request for an extension of time and the reason for it not complying with the 28- day time limit; the Tribunal will then decide whether to extend time or not to allow the application for permission to appeal to proceed.

FR27 First-tier Tribunal – [NAME] No. HS/LON/OOAN/F77/2025/0062

Notice of the Tribunal [NAME] 1977 Schedule 11

Address of Premises The Tribunal members were 10 B [ADDRESS], [POSTCODE]

[NAME]

Landlord [NAME]

Tenant Mr [APPELLANT]

1. The fair [NAME] is £198.00 Per week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 22 April 2025

3. The amount for services is n/a Per n/a

negligible/not applicable

4. The amount for fuel charges (excluding heating and lighting of common parts) not counting for [NAME] allowance is

n/a Per n/a

negligible/not applicable

5. The [NAME] is not to be registered as variable.

6. The capping provisions of the [NAME] ([NAME]) Order 1999 apply.

7. Details (other than [NAME]) where different from [NAME] entry

n/a

8. For information only:

(a) The fair [NAME] to be registered is the maximum fair [NAME] as prescribed by the [NAME] ([NAME]) Order 1999 because the [NAME] determined under the market approach is greater.

[NAME] of decision 22 April 2025

FR27 [NAME] FIGURE X 394.00

PREVIOUS RPI FIGURE Y 280.70

X 394.00 Minus Y 280.70 = (A) 113.30

(A) 113.30 Divided by Y 280.70 = (B) 0.4036

First application for re-registration since 1 February 1999 YES/NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.4536

Last registered [NAME]* £136.00 Multiplied by (C) = 1.4536 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £197.69

Variable service charge no If YES add amount for services no

[NAME] = £198.00 Per week

Explanatory Note

1. The calculation of the maximum fair [NAME], in accordance with the formula contained in the Order, is set out above.

2. In summary, the formula provides for the maximum fair [NAME] to be calculated by:

(a) increasing the previous registered [NAME] by the percentage change in the retail price index (the RPI) since the date of that earlier registration and

(b) adding a further 7.5% (if the present application was the first since 1 February 1999) or 5% (if it is a second or subsequent application since that date).

A 7.5% increase is represented, in the calculation set out above, by the addition of 1.075 to (B) and an increase of 5% is represented by the addition of 1.05 to (B).

The result is rounded up to the nearest 50 pence.

3. For the purposes of the calculation the latest RPI figure (x) is that published in the calendar month immediately before the month in which the Tribunal’s fair [NAME] determination was made.

4. The process differs where the tenancy agreement contains a variable service charge and the [NAME] is to be registered as variable under section 71(4) of the [NAME] 1977. In such a case the variable service charge is removed before applying the formula. When the amount determined by the application of the formula is ascertained the service charge is then added to that sum in order to produce the maximum fair [NAME].