First-tier Tribunal Determines Capped Fair Rent for Social Housing Property

OUTCOME: Allowed

FR27 First-tier Tribunal – Property Chamber File Ref No. LON/00BB/F77/2023/0387

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 1 [ADDRESS], [POSTCODE]

[NAME] Mr [APPELLANT] [COMPANY]

Tenant [NAME]

1. The fair rent is £254.50 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 15th February 2024

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 apply (please see calculation overleaf)

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

The property is an end of terrace Victorian house.

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 £318 per week.

Chairman D [NAME] of decision 15th February 2024

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 379

PREVIOUS RPI FIGURE Y 231.30

X 379 Minus Y 231.30 = (A) 147.7

(A) 147.7 Divided by Y 231.30 = (B) 0.64

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) 1.69

Last registered rent* 150.50 Multiplied by (C) = 254.35 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 254.50

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £254.50 Per Week

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/00BB/F77/2023/0387

Property : 1 [ADDRESS] [POSTCODE]

Tenant

: [NAME]

Landlord : London and Quadrant Group

Date of Tenant’s Objection : 23rd October 2023

Type of Application : Section 70, Rent Act 1977

Tribunal

: Mr [NAME] [NAME] of Summary Reasons

: 15th February 2024

_______________________________________________

DECISION

The sum of £254.50 per calendar week will be registered as the fair rent with effect from 15th February 2024 being the date the Tribunal made the Decision. ____________________________________

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

2 © CROWN COPYRIGHT 2023

SUMMARY REASONS

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.

Evidence

2. The Tribunal has consideration of the written submissions from both parties together with the Rent Officers calculations and Rent Registers.

Determination and Valuation

3. Having consideration of our own expert, general knowledge of rental values in the Forest Gate area, we consider that the open market rent for the property in its current condition would be in the region of £530 per calendar week. From this level of rent we have made adjustments in relation to:

Terms of tenancy, no white goods, no carpets or curtains, damp to walls and defective heating system which equates to approximately 25%

4. The Tribunal has also made an adjustment for scarcity at 20%

5. The full valuation is shown below:

Market Rent £530 pw

Less

approx. 25%

£132.50

Leaves

£397.50

Less Scarcity

approx. 20%

£79.50

3

Leaves

£318 pw

6. The Tribunal determines a rent of £254.50 per calendar week

Decision

7. The uncapped fair rent initially determined by the Tribunal, for the purposes of section 70, was £318 per calendar week. The capped rent for the property according to the provisions of the Rent Acts (Maximum Fair Rent) Order 1999 is calculated at £254.50 per calendar week. The calculation of the capped rent is shown on the decision form. In this case the lower rent of £254.50 per calendar week is to be registered as the fair rent for this property effective from 15th February 2024 being the date the Tribunal made the Decision.

8.It is often the case that market rents are in excess of those that maybe charged by social landlord’s as it is a significant part of their remit to provide affordable housing. As such depending on the type of tenancy agreement their calculation of rent is either at a percentage of market rent or by way of index. Comparison is made with the open market rather than limited to other properties which are offered by social housing providers. It is assumed that the landlord will by usual convention of social landlord’s not seek to increase the rent proposed in its original notice as a result of this determination.

Chairman: [NAME]: 15th February 2024

APPEAL PROVISIONS

These summary reasons are provided to give the parties an indication as to how the Tribunal made its decision. If either party wishes to appeal this decision, they should first make a request for full reasons and the details of how to appeal will be set out in the full reasons. Any subsequent application for permission to appeal should be made on Form RP PTA