First-tier Tribunal Adjusts Fair Rent Based on Property Condition and Tenant Improvements

OUTCOME: Allowed

© CROWN COPYRIGHT

Case Reference

: BIR/00CT/F77/2024/0621

Property : 10 [ADDRESS] [POSTCODE]

Tenant

: [NAME]

Landlord : [NAME] of Objection : 3 October 2024

Type of Application : Section 70, Rent Act 1977

Tribunal Members : [NAME] [NAME] B.Sc.(Est.Man.) FRICS

N Wint FRICS

Date of Summary Reasons

: 20/01/2025

_______________________________________________

DECISION

The sum of £746 per month will be registered as the fair rent with effect from 6 January 2025 being the date the Tribunal made the Decision. ____________________________________

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

2

REASONS FOR THE DECISION

Background

1. Following an objection from the Tenant to the determination of a fair rent by the

Rent Officer, the Tribunal has made a determination under the provisions of the

Rent Act 1977.

Inspection

2. The Tribunal did not inspect the property but considered this case on the basis of

the papers provided by the parties and having regard to its own knowledge,

expertise and online research.

Evidence

3. The Tribunal has considered the written submissions provided by the Tenant and

the Landlord. From the information provided it appears that the subject property

is a semi-detached house with 3 bedrooms and off-road car parking which

benefits from central heating and double glazing. White goods and carpets and

curtains were provided by the Tenant.

4. The Landlord confirmed that the Tenant installed the kitchen. The Landlord

upgraded the bathroom but the Tenant tiled the bathroom and put shower over

bath and new panel on side of bath.

5. The Landlord provided extracts from the Rightmove Property Portal which

adduced evidence of similar properties in close proximity to the subject let at rents

of between £1,300.00 and £1,400.00 per calendar month (pcm). Also provided

were evidence of (fair) rentals in respect of nearby properties let on Rent Act 1977

tenancies which ranged from £777.00 to £864.00 (presumably pcm).

6. The Tenant confirmed the improvements they had made to the Property as above

which also included converting two living rooms into a through room and a new

fireplace. The Tenant also noted issues regarding the noise of the central heating

boiler, the condition of the driveway and the lack of maintenance by the Landlord

generally.

Determination and Valuation

7. On consideration of the comparable evidence proved by the parties, that

forwarded by the Rent Officer and the Tribunal’s own expert knowledge of rental

values in the area, the Tribunal considers that the open market rent for the

property in a satisfactory condition would be in the region of £1,250.00 pcm.

3

From this level of rent, the Tribunal has made adjustments in relation to the

following:

a) General state of repair of the property including driveway. b) Improvements made by the Tenant including to the kitchen and bathroom fittings, c) Curtains, carpets and white goods fitted by the Tenant. d) The Tenant’s liability to redecorate.

8. The Tribunal has also made an adjustment for scarcity using their own general

knowledge and experience. The Tribunal considers that in the wider geographical

area there is an imbalance of supply and demand impacting on rental values and

has, therefore, made a reduction of 15% for scarcity.

9. The full valuation is shown below: Per month

Market Rent

£1250.00

Less a) Items given under a) above

£100.00

b) Items given under b) above

£130.00 c) Items given under c) above

£80.00

d) Tenant’s internal decoration liability @ 5% £62.50

Less Scarcity @ 15%

£131.63

£504.13 £745.87

Say

£746.00

10. The Tribunal determines an uncapped rent of £746.00 per calendar month.

Decision

11. The uncapped fair rent determined by the Tribunal, for the purposes of section

70, is therefore £746.00 per calendar month from 6 January 2025. The maximum

fair rent permitted by the Rent Acts (Maximum Fair Rent) Order 1999 is £775.50

per calendar month. This therefore has no impact on the rent determined by the

Tribunal. The calculation of the capped rent is shown on the decision form.

[NAME]: [NAME]: 6 January 2025

4

APPEAL PROVISIONS

If either party is dissatisfied with this decision, they may apply for permission to appeal to the Upper Tribunal (Lands Chamber) on any point of law arising from this Decision. Prior to making such an appeal, an application must be made, in writing, to this Tribunal for permission to appeal. Any such application must be made within 28 days of the issue of this statement of reasons (regulation 52 (2) of The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013) stating the grounds upon which it is intended to rely in the appeal.

5 First-tier Tribunal – Property Chamber File Ref No.

BIR/00CT/F77/2024/0621

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

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

[NAME] [NAME] B.Sc.(Est.Man.) FRICS N Wint FRICS

Landlord [NAME]

Tenant [NAME]

1. The fair rent is £746.00 Per Calendar month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 6 January 2025

3. The amount for services is - Per -

not applicable

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

- Per -

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 do not apply (please see calculation overleaf).

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

None

8. For information only:

The fair rent to be registered is not limited by the Rent Acts (Maximum Fair Rent) Order 1999, because it is below the maximum fair rent of £775.50 permitted by the Order.

[NAME] of decision 6 January 2025

6 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 390.9

PREVIOUS RPI FIGURE Y 347.6

X 390.9 Minus Y 347.6 = (A) 43.3

(A) 43.3 Divided by Y 347.6 = (B) 0.12456847

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) 1.17456847

Last registered rent* £660.00 Multiplied by (C) = £775.22 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £775.50

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £775.50 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.