Fair Rent Determination for Tenancy Agreement

OUTCOME: Allowed

FR27 First-tier Tribunal – Property Chamber File Ref No. HS/LON/00AG/F77/2024/0227

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were Flat 60 Sheringham, St. [ADDRESS], London, [POSTCODE]

Tribunal [NAME]

Landlord [APPELLANT]

Tenant Mrs [APPELLANT]

1. The fair rent is 9690.00 Per quarter (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 18 October 2024

3. The amount for services is 93.89 Per quarter

negligible/not applicable

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

N/a Per

negligible/not applicable

5. The rent is not 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

As per the rent register.

8. For information only:

The fair rent to be registered is not subject to the maximum fair rent order as prescribed because it is below, the maximum fair rent (see overleaf).

[NAME]- [NAME] of decision 18 October 2024.

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 388.6

PREVIOUS RPI FIGURE Y 291.7

X 388.6 Minus Y 291.7 = (A) 96.9

(A) 96.9 Divided by Y 291.7 = (B) 0.3321

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

If yes (B) plus 1.075 = (C) 1.3821

If no (B) plus 1.05 = (C)

Last registered rent* 9122.50 Multiplied by (C) = 12,609.03 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 12,609.50

Variable service charge NO If YES add amount for services -

MAXIMUM FAIR RENT = £12,609.50 Per quarter

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.

1

Case Reference

: LON/00AG/F77/2024/0227.

Property : [ADDRESS], St. [ADDRESS], London [POSTCODE].

Tenant

: Mrs. [APPELLANT]. [APPELLANT].

Landlord : [RESPONDENT] by [NAME] : 9 May 2024.

Type of Application : Section 70, Rent Act 1977

Tribunal

: [NAME] of Reasons

: 18 October 2024.

_______________________________________________

DECISION

The sum of £9,690.00 per quarter will be registered as the fair rent with effect from 18 October 2024 being the date the Tribunal made the Decision. ____________________________________

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

2 © CROWN COPYRIGHT 2023

REASONS FOR THE DECISION

Background 1. The Rent Officer Service registered a rent for the subject property of £8,640.00 per quarter inclusive of service charge of £93.89 per quarter, effective from 10 April 2024. In an RR1 dated 5 March 2024 the landlord sought to increase the rent from £9,122.50 per quarter to £10,947.00 per quarter, both sums inclusive of service charge. Having received the new registered rent, the landlord objected to the rent and the matter was referred to this tribunal.

2. The tribunal issued directions on 18 July 2024, these requested that the parties provided details of comparables on which they wished to rely in support of their case, and to say whether they wished the tribunal to have a hearing and inspect the property. Neither party requested a hearing or inspection, and neither party produced comparables on which they wished to rely. The landlord’s representatives did make written (undated) representations to say that rents for assured shorthold tenancies had seen an increase of 7.5% and that in their view the rents under the Rent Act 1977 were out of step with actual rents. They also said that there was no scarcity, there being a large number of properties available to rent in their view.

3. On the basis that neither a hearing nor an inspection was requested, the tribunal determined that it would consider the rent on the papers provided. These included the initial RR1, the previous rent register, the current rent register, the Valuation Office calculations and comparables, as well as the correspondence from the landlord’s agent.

Evidence

6. Neither party supplied any comparable evidence. As mentioned above the landlord’s agents supplied a written submission. The tribunal must therefore use it own knowledge and experience of lettings in the Greater London area as a starting point.

Determination and Valuation

7. The tribunal considers that a market rent for a similar sized property in the locality would be £5,000 per quarter. In the tribunal’s view this would be for a fully refurbished and modernised property with parking, 24 hour porter and modern communal areas. Neither party has suggested that the subject property has been refurbished to this level, or have these amenities, and therefore the tribunal considers that adjustments should be made from the market rent to reflect these differences.

• A deduction of 5% to reflect the difference in terms between a protected tenancy and an assured shorthold.

3 • A deduction of 15% to reflect the lack of white goods, carpets, curtains (or modern floor finishes), lack of parking, porter, and general lack of modernisation. • A deduction of 20% to reflect the element of ‘scarcity’ as defined in the Rent Act 1977.

8. The full valuation is shown below:

Market Rent per quarter:

£15,000.00

Less 5% for different tenancy terms:

£ 750.00

£14,250.00 Less 15% to reflect lack of modernisation, Parking, porterage and white goods/carpets Or curtains.

£ 2,137.50

£ 12,112.50

Less scarcity @ 20%

£ 2,422.50 Gross rent:

£ 9,690.00

The tribunal determines that the adjusted market rent for the subject property is £9,690.00 per quarter.. This is inclusive of the service charge of £93.89 per quarter.

9. Having carried out the above calculation, the tribunal is then required to calculate the Maximum Fair Rent using the statutory formula. A copy of the calculation is appended to the decision and produced a MFR of £12,609.50.

10. The rent payable by the tenant is the lower of either the MFR (£12,609.50) or the adjusted market rent (£9,690.00), and therefore the Tribunal determines that the fair rent for the property is £9,690.00 per quarter, inclusive of service charge, with effect from 18 October 2024.

Chairman: [NAME]: 18 October 2024.