Fair Rent Determination for a Tenancy Agreement

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. MAN/00BN/F77/2019/0019

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 18 [ADDRESS], [POSTCODE]

[NAME] Mr [APPELLANT]

Landlord [COMPANY]

Tenant Mr [APPELLANT]

1. The fair rent is 432.29 Per Calendar Month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 26 April 2019

3. The amount for services is £ 27.29 Per

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

0.00 Per

not applicable

5. The rent is to be registered as variable.

6. The capping provisions of the Rent Acts (Maximum Fair Rent) Order 1999 apply (please see calculation overleaf).

7. Details (other than rent) where different from Rent Register entry

8. For information only:

(a) The fair rent to be registered is the maximum fair rent as prescribed by the Rent Acts (Maximum Fair Rent) Order 1999. The rent that would otherwise have been registered was £432.29 per calendar month including £27.29 per calendar month for services (variable).

[NAME] of decision 26 April 2019

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 285

PREVIOUS RPI FIGURE Y 269.3

X 285 Minus Y 269.3 = (A) 15.7

(A) 15.7 Divided by Y 269.3 = (B) 0.0583

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) 1.1083

Last registered rent* 365 Multiplied by (C) = 404.53 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 405

Variable service charge YES / NO If YES add amount for services 27.29

MAXIMUM FAIR RENT = £ 432.29 Per Calendar month

Explanatory Note

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

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

(a) increasing the previous registered rent 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 rent determination was made.

4. The process differs where the tenancy agreement contains a variable service charge and the rent is to be registered as variable under section 71(4) of the Rent Act 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 rent.

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case Reference :

MAN/00BN/F77/2019/0019 Property :

18, [ADDRESS]

[POSTCODE] Tenant :

Mr. [APPELLANT].[APPELLANT] Landlord :

[APPELLANT] :

[COMPANY] of Application :

Rent Act 1977 – Section 70 Tribunal Members : Tribunal Judge C.[NAME]

Mr.J.Rostron Date of Decision :

26 April 2019 Date of Reasons :

31 May 2019 _______________________________________________

DECISION ____________________________________

© CROWN COPYRIGHT 2019

1. Order

The Tribunal determines that the fair rent payable is £432.28 per month, (inclusive of £27.29 for services (variable)) .

2. Background 2.1 The Tenant holds under a monthly tenancy governed by Part VI of the Rent Act 1977 (“the Act”). By an application dated 6 December 2018, the Landlord applied to the Rent Officer for registration of a fair rent of £508.21 per month. The last registered rent on 7 March 2017 was £400.78 per month, (inclusive of £35.78 for services (variable)) . 2.2 On 22 January 2019, the Rent Officer registered a rent of £404.00 per month,

(inclusive of £27.29 for services (variable)). 2.3 By letter dated 15 February 2019, the Landlord objected to the rent as registered and requested the Rent Officer to refer the matter to the First Tier Tribunal (Property Chamber) (“the Tribunal”), and so the fair rent to be registered in respect of [NAME] fell to be determined by the Tribunal. 2.4 The application was scheduled for determination on Friday 26 April 2019, with an inspection of [NAME] on the same date at about 10:00.

3. Inspection 3.1 The Tenant and the Landlord’s representative, [COUNSEL].Hancock of [APPELLANT], were present at [NAME] during the inspection. 3.2 [NAME] is a second floor self-contained flat in a purpose-built block. The accommodation comprises open-plan living room/dining room, kitchen, 1 double bedroom and bathroom. There is double-glazing at [NAME] but no central heating. When originally built, [NAME] had under-floor heating but this had been removed subsequently; heating was provided by an electric fire in the living room

and water was heated by an immersion heater. [NAME] has the benefit of a garage. 3.3 The Tenant pointed out the following to the Tribunal: (1) the Tenant had installed additional wall cupboards and work surfaces in the kitchen; (2) the Tenant had installed wardrobes and bedside unit in the bedroom; (3) the Tenant had replaced the original 2-bar electric fire in the lounge with a new electric unit; (4) cracking in the ceiling caused, according to the Tenant, by the defective installation of the plaster boards to the joists; 3.4 The Tribunal noted that the bathroom fittings were dated. The white goods, carpets and curtains were provided by the Tenant.

4. The Law 4.1 When determining a fair rent the Tribunal, in accordance with the Rent Act 1977, section 70, has regard to all the circumstances, save for personal circumstances, including the age, location and state of repair of [NAME]. It also, as required by law, disregards the effect of (a) any relevant tenant's improvements and (b) the effect of any disrepair or other defect attributable to the tenant or any predecessor in title under the regulated tenancy, on the rental value of [NAME]. In this way a landlord does not benefit by way of increased rent from any tenant’s improvements and the tenant does not benefit from any defaults on his or her part that would otherwise have lowered the rental value of [NAME]. 4.2. 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 rent is the market rent for [NAME] discounted for 'scarcity' (i.e. that element, if any, of the market rent, that is attributable to there being a significant shortage of similar properties in the wider locality available for letting on similar terms - other than as to rent - to that of the regulated tenancy) and

(b) that for the purposes of determining the market rent, assured tenancy (market) rents are usually appropriate comparables. (These rents may have to be adjusted where necessary to reflect any relevant differences between those comparables and the subject property).

5. Reasons 5.1 In making its determination, the Tribunal determined what rent the landlord could reasonably be expected to obtain for [NAME] in the open market if it were let today in the condition that is considered usual for such an open market letting. It did this by having regard to its own general knowledge of market rent levels in the locality. 5.2 The Tribunal determined as follows: (i) that an open market rent for a comparable property would be £600.00 per month; (ii) this rent was then adjusted as follows: £ per month

Open market rent per month : 600.00

Less:

Lack of provision of white goods, carpets

and curtains

: 60.00

540.00

Less:

Landlord’s necessary improvements/neglect:

dated bathroom fittings:

35.00

lack of central heating:

35.00

70.00

470.00

Less:

Tenant’s improvements:

Installation of kitchen fittings:

35.00

£435.00

Fair Rent (inclusive of £27.29 for services (variable)): £432.29

5.3 The fair rent to be registered is the maximum fair rent as prescribed by the Rent Acts (Maximum Fair Rent) Order 1999. The rent that would otherwise have been registered was £435.00 per month (including £27.29 for services (variable)).

5.4 The Tribunal does not consider that in the present-day market, there is any

substantial scarcity element and accordingly no further deduction is made for scarcity.

Signed: Judge C [NAME]: 31 May 2019