First-tier Tribunal Adjusts Pitch Fee Increase to 9%

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : CAM/00MF/PHI/2023/0079

[NAME] home : 23 [NAME], [ADDRESS], [NAME], Reading, Berkshire [POSTCODE] Applicant

Respondent: [redacted]

[NAME] of application(s) : Applications under the Mobile Homes Act 1983 to determine pitch fees Tribunal member(s) : [NAME](Hons) [NAME] Date : 4 June 2024

DECISION

Decisions of the tribunal The tribunal considers it reasonable for the relevant pitch fees to be changed and orders that the amounts of the new monthly pitch fees payable by the Respondent from 1 January 2023 is £1945.13 per annum. Reasons Procedural history 1. The Applicant applied to the tribunal under paragraph 16 of the terms implied into the relevant pitch agreements by Chapter 2 of Part I of Schedule 1 to the Mobile Homes Act 1983 (the “Implied Terms”) to determine the pitch fees payable for 23 [NAME] with effect from the review date of 1 January 2023.

2. On 4 September 2023, the procedural Chair gave case management directions in relation to the Respondent’s property. These required the Applicant to send the relevant application documents to the occupier, with a statement of case including any submissions and evidence relied upon in contending that the Retail Prices Index (“RPI”) was a better measure of relevant inflation than the Consumer Prices Index (“CPI”)

2 over the relevant period or that there were other considerations in favour of the increase sought, and any witness statement and other documents relied upon. The occupier was directed to complete and return a reply form and send to the Applicant case documents they wished to rely upon.

3. The Respondent requested a hearing. The tribunal inspected the [NAME] on 29 May 2024 prior to the hearing. The tribunal were accompanied by [NAME] from [RESPONDENT], [NAME], solicitor for the Applicant and [NAME], the Respondent. Pitch fees - law 4. Under paragraph 22 of the Implied Terms, the owner shall (amongst other things) maintain in a clean and tidy condition those parts of the [NAME], including access ways, which are not the responsibility of any occupier of a mobile home stationed on the [NAME]. Similarly, the express terms of the relevant pitch agreements require the owner to maintain such parts of the [NAME] in a good state of repair and condition.

5. Under paragraph 29 of the Implied Terms, “pitch fee” means (with emphasis added): “the amount which the occupier is required by the agreement to pay to the owner for the right to station the mobile home on the pitch and for use of the common areas of the protected [NAME] and their maintenance, but does not include amounts due in respect of gas, electricity, water and sewerage or other services, unless the agreement expressly provides that the pitch fee includes such amounts…”.

6. When determining the amount of a new pitch fee, particular regard shall be had to the matters set out in paragraph 18(1) of the Implied Terms These include sums spent on particular types of improvement (a), any relevant deterioration in the condition, and any relevant decrease in the amenity, of the [NAME] (aa), any relevant reduction in the services that the owner supplies to the [NAME], pitch or mobile home, and any relevant deterioration in the quality of those services (ab).

7. In [COMPANY] v [NAME] & Ors [2017] UKUT 28 (LC), the Deputy President reviewed earlier decisions and observed at [47] that the effect of the implied terms for pitch fee review can be “summarised in the following propositions”: “(1) The direction in paragraph 16(b) that in the absence of agreement the pitch fee may be changed only “if the appropriate judicial body … considers it reasonable” for there to be a change is more than just a pre-condition; it imports a standard of reasonableness, to be applied in the context of the other statutory provisions, which should guide the tribunal when it is asked to determine the amount of a new pitch fee. (2) In every case “particular regard” must be had to the factors in paragraph 18(1), but these are not the only

3 factors which may influence the amount by which it is reasonable for a pitch fee to change. (3) No weight may be given in any case to the factors identified in paragraphs 18(1A) and 19. (4) With those mandatory consideration well in mind the starting point is then the presumption in paragraph 20(A1) of an annual increase or reduction by no more than the change in RPI. This is a strong presumption, but it is neither an entitlement nor a maximum. (5) The effect of the presumption is that an increase (or decrease) “no more than” the change in RPI will be justified, unless one of the factors mentioned in paragraph 18(1) makes that limit unreasonable, in which case the presumption will not apply. (6) Even if none of the factors in paragraph 18(1) applies, some other important factor may nevertheless rebut the presumption and make it reasonable that a pitch fee should increase by a greater amount than the change in RPI.” 8. For pitch fee review notices given from 2 July 2023, the relevant provisions were amended by the Mobile Homes (Pitch Fees) Act 2023. This changes the presumption to refer to CPI instead of RPI, but does not apply to the review we are considering. Inspection 9. [NAME] is a [NAME] in three parts. The subject property is situated on the older part of the [NAME] and is located on a cul de sac off the main [NAME] ‘ring road’. That part of the [NAME] consists of some 62 pitches with the entire [NAME] comprising some 117 pitches.

10. This part of the [NAME] is fairly tightly developed. Roads are generally concrete with a topdressing. The Respondent complains of poor drainage and flooding to parts of the [NAME] and provided some photographic evidence of this. On the day of inspection, which was dry but there had been recent rainfall, there was no standing water.

11. There is a [NAME] office at the rear of this part of the [NAME] and a notice board but there was no information on when the [NAME] manager/[NAME] executive would be visiting.

12. Not all pitches, including Mrs [NAME] had on-pitch parking but there appeared to be adequate provision on the [NAME] nearby and vehicles could pull up outside the property. There was also some green open space within this part of the [NAME]. The hearing

4 13. The Applicant [NAME] owner was represented by Mr [COUNSEL], Solicitor and Mrs [COUNSEL] represented herself. Submissions 14. A range of submissions and arguments were made by the parties. The Tribunal does not attempt to capture them all, it being unnecessary to do so. It should not be assumed that the Tribunal has ignored any submissions not referenced in this decision or that it has left them out of account. This Decision seeks to focus on the key issues. Physical state of the [NAME]

15. In respect of the alleged physical state of the [NAME] Mrs [NAME] raised several issues: i) Poor condition of the roads ii) Sewerage problems iii) Lack of Maintenance iv) Reduction in Service/[NAME] Manager Poor Condition of the Roads 16. The Respondent said that following the utility upgrade programme in 2017 the roads were left in a poor condition and parts were in a poor state of repair. In 2018, works on the roads adjacent to her pitch were complete and 40mm grey scalpings, or similar, had been placed on top of the existing road. This was prone to movement and made it difficult for people with mobility aids to navigate. Following a more recent excavation of the road in 2022 half of the road had been resurfaced with something resembling tarmac but not as durable. The surface was soft and gritty and was easily walked into the home. There were a number of potholes which had appeared, and it seemed unlikely the claimed lifetime of 15-20 years would be achieved. There was also a manhole cover which was lower than the road surface and water pooled around it when it rained.

17. The Applicant said that there had been no deterioration in the roads since they had taken over the [NAME] in 2014. In the seven years after acquisition the company had re gravelled several of the compacted stone roads, concreting the majority of entrance/exit roadway aprons especially where there were gradients. He believed the road outside her home was originally not in good condition comprising large sections of tarmac which were crazed or undulating. The remaining sections of the cul de sac consisted of loose stones of either tarmac scalpings, gravel or crushed stone.

18. Following the work , the cul de sac comprises a 40mm to 60mm granite topping which if maintained – which it would be – should have a lifetime of 15-20 years. The same topping had been applied to the remaining road

5 up to and beyond her home in October 2023. This was not done initially because the contractor did not believe it was needed but he had taken the view it should be done. The potholes were attended to on a three-month cycle and the next occasion would be June.

19. From the Tribunal’s own observations, the roads appeared to be in reasonable condition overall. Mrs [NAME] agreed in her second statement that the road was not in good condition when [RESPONDENT] took over the [NAME] in 2014. Repairs had been undertaken although Mrs [NAME] would have preferred that the roads were tarmacked.

20. The question for the tribunal is not the absolute condition of the roads but whether there has been a deterioration in their condition since the previous review or since the provision came into force (in 2014), and which has not previously been taken into account in a pitch fee review. The Tribunal is not persuaded that there has such a deterioration.

Sewerage problems 21. The Respondent said there had been historic issues over the last eight years with the sewerage system due to the age of the pipes which had resulted in frequent backflow of sewerage into homes. In 2022 and again in 2023 effluent had poured into her garden. She had called the Environmental Health Officer for the council in 2022 and felt [RESPONDENT] had been tardy in dealing with it.

22. The pipe was replaced by [RESPONDENT] in June 2022. It happened again in 2023 and [RESPONDENT] installed new pipes and pump in April 2023 followed by further works in June 2023. There had been no further problems with backflow or leaking of sewerage since although at the hearing the Respondent said that there was a smell of sewerage in the home around once a month.

23. The Applicant said that they accepted that a serious issue with the sewerage system affected Mrs [NAME] home in the spring of 2022 but did not accept the criticism of the way in which the company handled it. The company had, from January 2014, been maintaining the sewerage system and carrying out essential repairs but recognised that the section of the system serving no.23 and other homes on the older part of the [NAME] required modernisation. They had commissioned the [COMPANY] to undertake a survey. The company then arranged for the upgrading of the system and the installation of a new pumping station on the [NAME]. The upgrading works were carried out in the spring and early summer of 2023.

24. They believed there was an argument that this was an improvement not simply maintenance, but the Company bore the whole cost of the work.

25. As with the roads it would appear that the issues with the sewerage system were longstanding. Clearly this is far from ideal and incidents such as those detailed above are very unpleasant for an occupier. However, the Tribunal is not persuaded that, at the review date of 1

6 January 2023, there had been a deterioration in the condition of the sewerage system since the previous review or since the provision came into force (in 2014), and which has not previously been taken into account in a pitch fee review.

26. Any argument on whether this was an improvement which could be reflected in the pitch fee would be for the subsequent pitch review, but the tribunal would be likely to need some very persuasive argument of this.

[NAME] maintenance 27. The Respondent said that the Applicant had failed and continued to fail in the [NAME]’ repairing and maintenance liabilities.

28. Examples were the car [NAME] which had been left covered in ice in the recent cold winter. Repairs were not carried out in a timely fashion.

29. The Applicant refuted this and said that the car [NAME] complained of did not form part of the [NAME] and the Respondent had not provided evidence of how long it was frozen over. The company had spent a significant amount of money on the [NAME] over recent years – over £300k on the water and electricity upgrade and the sewerage system.

30. The Tribunal inspected the [NAME] and having listened to the arguments of both parties does not find that there is a deterioration in condition or decrease in amenity in this respect Reduction in Service/[NAME] Manager 31. The Respondent said that there had always been a [NAME] warden/ manager/[NAME] executive at [NAME] that residents could go to if there was a problem. Since COVID 2019 [RESPONDENT] had gradually reduced the service to one man now classified as [NAME] executive who travelled in from Northamptonshire for normally one day a week for a few hours. Whilst he was a very pleasant man, he was not available in person or by phone during holidays or weekends. She felt that there should be someone on the [NAME] full time or at least available full time to deal with residents’ issues.

32. The Applicant said that their [NAME] executive visited the [NAME] at least once a week and was contactable by phone during normal office hours and in the event of emergencies. His phone number was available together with others on the [NAME] notice board.

33. The [NAME] had never offered a 24/7 service, it was not a warden- controlled [NAME], and the level of pitch fees did not reflect such a service.

34. The Tribunal accepts the argument of the Applicant that this is not a warden-controlled [NAME], and it is not a reasonable expectation that there is a 24/7 warden or similar service available to the residents. It also

7 accepts that the ‘Fit and Proper’ person test is not relevant in this regard.

35. It is however persuaded that there has been a reduction in availability of someone on [NAME] and that this has resulted in a reduction in the services that the owner supplied to the [NAME] to be taken into account under paragraph 18(ab).

RPI/CPI at a time of high inflation 36. The Applicant said the RPI increase that they had applied was the September 2022 RPI of 12.6%.

37. The tribunal’s directions had flagged up the change to CPI for pitch fee review notices from 2 July 2023 and asked for both parties to address any arguments about the appropriate measure in their statement of case, together with any other evidence in support of the amount claimed.

38. The Applicant argued that the company costs had increased considerably. Whilst they did not believe there were required to take a forensic approach to costs, nor was this supposed to be an accounting exercise, there had been substantial increases in the cost of living for all. Their wage costs had increased as well as items such as steel, energy, bank repayments and diesel.

39. There was nothing to rebut the presumption of RPI and it should not be deviated from. They had not looked to pass on the cost of improvements and this review pre-dated the change to CPI.

40. The Respondent was asked about the level she felt was reasonable but did not offer an alternative percentage.

41. The 2023 Act which replaced RPI with CPI does not have retrospective effect. For reviews that were proposed prior to 2nd July 2023 the statutory presumption is in favour of RPI. Nonetheless, the high rate of inflation is capable of being a ‘weighty matter’ to give sufficient reason to disapply the statutory presumption. Notably, the published figure for CPI for September 2022 was 10.1%. Given that the review coincided with close to the peak of inflation during the cost-of-living crisis and there was wide disparity between RPI and CPI, the Tribunal considers the high rate of RPI to be a factor of such importance to merit adjustment in the pitch fee.

42. The Tribunal is not required to decide whether the absolute level of pitch fee is reasonable but to consider whether it is reasonable for the pitch fee to be changed. And if so by how much. 43. In considering whether a change in the pitch fee is reasonable, the Tribunal has paid particular regard to the factors in paragraph 18(1).

8 44. Having considered all issues raised, the Tribunal finds that it is unreasonable to increase the pitch fee by RPI at 12.6% taking account of the reduction in amenity in respect of the [NAME] manager. In addition, there are other “weighty matters” which are sufficient to displace the statutory presumption, namely that RPI is not a reliable measure and/or is likely to have overstated inflation. A percentage increase in line with the rate of CPI at 10.1% is reasonable, adjusted to 9.0% to reflect the reduction in amenity in respect of the [NAME] manager.

45. The Tribunal concludes that it is reasonable for the pitch fee to be changed but the statutory presumption in paragraph 20(1A) is displaced. The Tribunal determines that the pitch fee increase for 2023 should be calculated at a percentage increase of 9%.

46. The new pitch fees are payable with effect from 1 January 2023, but an occupier shall not be treated as being in arrears until the 28th day after the date of this decision (paragraph 17 of the implied terms). [NAME](Hons)

4 June 2024

Rights of appeal

If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application. If the application is not made within the 28-day time limit, such application must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).

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