First-tier Tribunal Decides Open Market Rent for Converted Commercial Property

OUTCOME: Dismissed

MR22 First-tier Tribunal – [NAME] Chamber File Ref No. MAN/00BN/MNR/2020/0016

Notice of the Tribunal Decision and Register of Rents under Assured Periodic Tenancies (Section 14 Determination)

Housing Act 1988 Section 14

Address of Premises The Tribunal members were 790 [ADDRESS] [POSTCODE]

[NAME] Ms [RESPONDENT]

Landlord [RESPONDENT] 64 [ADDRESS], [POSTCODE]

Tenant Mr [APPELLANT]

1. The rent is: £ 585.00 Per Calendar Month (excluding water rates and council tax but including any amounts in paras 3)

2. The date the decision takes effect is: 08 March 2020

3. The amount included for services is Not applicable Per

4. Date assured tenancy commenced 8 March 2018 8

5. Length of the term or rental period Monthly

6. Allocation of liability for repairs As per Landlord & Tenant Act 1985

7. Furniture provided by landlord or superior landlord None

8. Description of premises Mid-terrace [NAME] in row of commercial premises; conversion of shop premises. 2 reception rooms, kitchen and bathroom. Yard to rear.

[NAME] of Decision 14 October 2020

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FIRST - TIER TRIBUNAL [NAME] CHAMBER ([NAME])

Case Reference :

MAN/00BN/MNR/2020/0016

[NAME] : 790, [ADDRESS] [POSTCODE]

Tenant : [APPELLANT]

Landlord : [APPELLANT] of Application :

s13 Housing Act 1988

Tribunal Members :

Judge C [NAME]

Ms S Latham

Date of Decision :

14 October 2020

Date of Reasons :

17 February 2021

_______________________________________________

REASONS FOR DECISION

© CROWN COPYRIGHT 2021

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Decision 1. By a decision dated 14 October 2020, the Tribunal determined, in accordance with section 14 of the Housing Act 1988, that the open market rent for the [NAME] is £585.00 per month. Background 2. By a notice dated 30 January 2020, (“the Notice”), the Landlord proposed a new rent of £625.00 per month to take effect from 8 March 2020.

3. By an application dated 3 March 2020, the Tenant referred the Notice to the Tribunal. Inspection 4. Due to covid-19 restrictions, the Tribunal made an external inspection only of the [NAME].

5. The [NAME], a conversion from shop premises, is a mid-terrace [NAME] in a row of commercial premises, which fronts the pavement/road. Based on the information contained in the Tenant’s application, the accommodation comprises on the ground floor, 2 reception rooms, (one of which is described as a “shop front room”) and a small kitchen, and on the 1st floor, 2 bedrooms and a bathroom. There is a large yard to the rear of the [NAME].

6. The Tenant states that no furniture is provided by the Landlord and that the Tenant provided the following white goods: refrigerator, washing machine, dryer.

7. The Tenant also stated that he had cleaned, painted and papered walls at the [NAME].

8. From its external inspection, the Tribunal noted that the front exterior of the [NAME] appears in fair condition. Evidence 9. Both parties made written representations to the Tribunal. Much of their submissions concerned past events between the parties which were of no relevance to the Tribunal’s determination.

10. The Applicant’s submissions included references to 2 properties in Gorton where the asking rent was £550 per calendar month in each case.

11. In his submissions, the Landlord described the references to these properties as “misleading” because the [NAME] is “…a commercial [NAME] with shop floor as well as living area, kitchen, bathroom and 2 bedrooms on the first floor”, whereas the “Sample properties…are for 2 bed domestic properties…”. Further, the Landlord states that it was made clear that the [NAME] was unfurnished and therefore the

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provision by the Tenant of “…white goods, sofa, beds…cannot be considered as home improvement done by tenant”. The Law 12.1 The Tribunal must first determine that the Landlord’s notice under section 13(2) satisfied the requirements of that section and was validly served. 12.2 The Housing Act 1988, section 14 requires the Tribunal to determine the rent at which it considered that the subject [NAME] might reasonably be expected to be let on the open market by a willing landlord under an assured tenancy. 12.3 In so doing the Tribunal, is required by section 14(1), to ignore the effect on the rental value of the [NAME] of any relevant tenant's improvements as defined in section 14(2) of that Act. 12.4 Section 14(4) provides that for the purposes of section 14 “rent” includes amongst other things any sums payable to the landlord by the tenant in respect of council tax. 12.5 Section 14(4) provides that for the purposes of section 14 “rent” does not include a “service charge” within the meaning of section 18 Landlord and Tenant Act 1985 (i.e. where in accordance with the terms of the tenancy or other agreement a service charge payable by the tenant is variable from time to time according to changes in the relevant costs). However it does include a “fixed” service charge. Tribunal’s Deliberations 13.1 The Tribunal determined the Notice to be valid. 13.2 The Tribunal therefore had to decide only whether or not the rent proposed by the Landlord was fair and reasonable. In doing so it must comply with section 14 (1) of the Housing Act 1988 as referred to above.

13.3 The Tribunal considered that the evidence of open market rents provided by the Applicant was of limited value in determining the rent for the [NAME]. Whilst the evidence could be regarded as indicative of the rental value of 2-bedroomed properties, there were significant differences between the subject [NAME] and these properties. Further, the information was obtained 3 months prior to the Tribunal’s determination. 13.4 The Tribunal did not regard the Applicant’s evidence regarding work done to the interior of the [NAME] as constituting improvements. 13.5 The Tribunal accepted that the tenancy agreement provided by the Landlord did not relate to the Applicant. However, it noted that it was of a type commonly used for such tenancies and includes an obligation on the tenant “[T]o keep the interior of the [NAME], the internal decorations….in good repair and condition…” The Tribunal thinks it is

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reasonable to assume that the Applicant’s tenancy agreement is substantially in the same form and content and that the works undertaken are therefore a proper discharge of the Applicant’s obligations as tenant “to keep the internal decorations in good order”.

13.6 Based on its own knowledge and experience of market rent levels in the relevant area, the Tribunal concluded that the rent at which the [NAME] might reasonably be expected to be let on the open market if the same were in good condition would be £600 per month.

13.7 The Tribunal then determined whether any deductions should be made to account for the condition and characteristics of the [NAME]. Accordingly: (1) the Tribunal considered that the provision of white goods etc in a letting of this kind would be unusual and made no deduction for them accordingly; (2) the Tribunal considered that it was appropriate to make a deduction for the non-standard residential frontage and its assumption of the non- standard internal residential layout, the [NAME]’s location within a row of commercial properties, and its location immediately fronting onto a busy main road; (3) the Tribunal also took into account the large yard to the rear of the [NAME].

13.8 The Tribunal therefore determined that the open market rent for the [NAME] is £585 per month.

13.9 This rent will take effect from 8 March 2020 being the date stipulated in the Notice.

Judge C [NAME] 17 February 2021