First-tier Tribunal Determines Fair Market Rent for Brighton Bedsit

OUTCOME: Allowed

MR22 First-tier Tribunal – Property Chamber File Ref No. CHI/00ML/MNR/2022/0118

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 [NAME] 32, 27/28 [ADDRESS], [POSTCODE]

[NAME] Ms [RESPONDENT] [NAME] Mr [RESPONDENT] [NAME]

Landlord [COMPANY] 10 [ADDRESS], [POSTCODE]

Tenant Ms [APPELLANT] [NAME]

1. The rent is: £ 150.00 Per Week (excluding water rates and council tax but including any amounts in paras 3)

2. The date the decision takes effect is: 17 October 2022

3. The amount included for services is £20.00 Per Week

4. Service charges are fixed and are included

5. Date assured tenancy commenced April 2004

6. Length of the term or rental period Periodic

7. Allocation of liability for repairs As per section 11 of the Landlord & Tenant Act 1985

8. Furniture provided by landlord or superior landlord None

9. Description of premises Bedsit comprising living [NAME]/kitchen/bedroom in one [NAME]. Shared bathroom facilities. Electricity excluded from rent.

[NAME] of Decision 15 December 2022

1

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case reference : CHI/00ML/MNR/2022/0118

Property : [NAME] 32, 27/28 [ADDRESS], [POSTCODE]

Applicant Tenant : Ms [COUNSEL] :

Respondent Landlord : [RESPONDENT] :

Type of application : Determination of a Market Rent

Sections 13 & 14 of the Housing Act 1988

Tribunal member(s) : [NAME] (Chairman)

[NAME] [NAME]

[NAME] of decision : 15 December 2022

DECISION

© CROWN COPYRIGHT

2

Decision of the Tribunal

On 15 December 2022, the Tribunal determined a Market Rent of £150.00 per week, inclusive of £20.00 per week services, to take effect from 17 October 2022.

Background

1. By way of an application received by the Tribunal on 3 October 2022, the Applicant tenant of [NAME] 32, 27/28 [ADDRESS], [POSTCODE] (“the property”), referred a Notice of Increase in Rent (“the Notice”) by the Respondent landlord of the property under Section 13 of the Housing Act 1988 (“the Act”) to the Tribunal.

2. The Notice, dated 16 September 2022, proposed a new rent of £165.00 per week, inclusive of £52.00 per week services, in lieu of the passing rent of £140.00 per week, to take effect from 17 October 2022.

3. The tenant’s application stated that her tenancy commenced in April 2004 but that there is no written Tenancy Agreement.

4. On 21 October 2022, the Tribunal issued Directions advising the parties that it considered the matter suitable for determination on papers unless either party objected, in writing, within 7 days. The parties were also advised that no inspection would be undertaken. No objections were received.

5. The Directions required the landlord and tenant to submit their completed statements by 4 November 2022 and 18 November 2022 respectively, with copies also to be sent to the other party. Both parties complied.

6. Having reviewed the papers the Tribunal concluded that the application could be determined fairly, justly and efficiently on the material available without an inspection, consistent with the overriding objective of the Tribunal. The Tribunal viewed the property and locality online via publicly available platforms.

7. The Tribunal had sight of a previous Tribunal decision handed down in October 2020. The Tribunal found the description of the building and the bedsit within said decision, which itself was based on the Tribunal’s knowledge of the building, the [NAME] and previous determinations in 2017 and 2019, a useful aide.

8. These reasons address in summary form the key issues raised by the parties. They do not recite each and every point identified or disputed. The Tribunal concentrates on those issues which, in its view, go to the heart of the application.

Law

9. In accordance with the terms of Section 14 of the Act, the Tribunal is required to determine the rent at which it considers the subject property

3

might reasonably be expected to let on the open market, by a willing landlord, under an assured tenancy, on the same terms as the actual tenancy.

10. In so doing, and in accordance with the Act, the Tribunal ignores any increase in value attributable to tenants’ improvements and any decrease in value due to the tenants’ failure to comply with any terms of the tenancy.

The property

11. The property is a third floor bedsit comprising bedroom/living/kitchen area within one [NAME]. The tenant has use of shower and WC facilities on the same floor, facilities which are shared with other tenants and occupiers. The aforementioned Tribunal determination of 2020 referred to the accommodation as presenting in a “cramped appearance”.

12. The building forms an intercommunicating terrace and end terrace design occupying a central position in Brighton and is within a short stroll of the seafront, shopping facilities and is close to public transport links.

13. The weekly rent is inclusive of council tax, water charges and fixed service charges.

14. The tenant is responsible for the cost of the electricity supply to [NAME] 32, which she pays directly to the utility company.

Submissions – Tenant (summarised)

15. The tenant described the property as a third floor bedsit [NAME] with double glazing but no central heating. Bathroom facilities are shared with occupiers of other rooms.

16. Carpets and curtains are provided by the landlord, whilst the majority of furniture has been replaced over time by the tenant, with only a few pieces remaining from the previous landlord. The only white goods provided by the landlord is a fridge, all other white goods being supplied by the tenant.

17. The tenant described the condition of the bedsit as ‘good’ and, likewise, the communal bathrooms and toilets.

18. No comparable letting evidence was submitted.

19. In her submissions the tenant advised the Tribunal that, in contrast to similar accommodation locally, many of the rooms within the building are occupied on an emergency or temporary basis facilitated through the local authority. The tenant suggested that such occupation lowers the rental value of the building.

4

20. In regard to the services included within the rent the tenant stated that the charges listed as inclusive in the passing rent do not correspond to those listed as inclusive in the 2021 rental notice. The amount of the proposed charges was also challenged.

21. The tenant disputed the landlord’s submissions that a communal garden is available for the benefit of tenants. The tenant referred to this area, accessed via a self-closing door with no external access, as a concreted space beyond which is a steep drop to a wooded area. The tenant refuted that such space could be accurately described as a garden or that the tenants have been advised that it is available for their use. Photographs of the area were provided.

Submissions – Landlord (summarised)

22. The landlord described the property as centrally located, close to all amenities and situated within a listed building. The landlord referred to an outside space to the rear of the building as a communal garden.

23. Included within the landlord’s submissions was a building layout plan which showed accommodation laid out over five levels from lower ground floor to third floor, with the highest [NAME] number noted as Bedsit No.34.

24. The landlord is responsible for the cleaning of communal bathrooms, WC’s, hallways and windows, and is liable for the payment of council tax, water, communal lighting, fire alarm testing, the cost of employing a caretaker and all repairs.

25. The landlord stated that the communal hallways were newly redecorated, that communal carpets had been recently laid, that two bathrooms had been retiled and that the property had the benefit of a new roof.

26. Photographs showing the communal corridors and bathroom facilities to be in good order and well presented were provided.

27. A number of invoices in relation to cleaning, water, council tax, electric and fire testing were provided in support of the landlord’s proposed inclusive charges of £17.00 council tax, £15.00 water and £20.00 fixed service charges.

28. A schedule of rents achieved within the building for a variety of different sized rooms, some exclusive of management fees, was submitted.

29. A schedule of expenditure between April 2021 and March 2022 was provided.

Determination

30. The Tribunal determines a market rent for a property by reference to rental values generally and to the rental values for comparable properties in the locality in particular. It does not take into account the present rent

5

and the period of time which that rent has been charged, nor does it take into account the percentage increase which the proposed rent represents to the passing rent. In addition, the legislation makes it clear that the Tribunal cannot take into account the personal circumstances of either the landlord or the tenant.

31. The Tribunal assesses the rent for the property as at the date of the landlord’s Notice and on the terms of the extant tenancy. The Tribunal disregards any improvements made by the tenant, but takes into account the impact on rental value of disrepair which is not due to a failure of the tenant to comply with the terms of the tenancy.

32. In determining the rent, the Tribunal has regard to any evidence supplied by the parties and the Tribunal’s own general knowledge of market rental levels in the wider area.

33. Neither party submitted any comparable rental evidence outside of the building. The landlord relied on a schedule of achieved rents within the building for various types of accommodation and tenancies. However, such accommodation varies in size and is let to both private and local authority tenants. Without the tenancy information of each letting and any services provided therein, the Tribunal was unable to usefully analyse such evidence.

Accordingly, the Tribunal was unable to attribute any weight to rental evidence within the building.

34. In the absence of market evidence from the parties the Tribunal relied on its expert knowledge and experience of market values locally. The Tribunal finds that the property is positioned in a sought after location which is close to the seafront and popular with tenants of varying budgets, including a high demand from students seeking affordable accommodation.

35. The Tribunal agrees with the tenant that the transient nature of some short term tenancies within the building may adversely affect the desirability, and hence rental value, of the accommodation in the open market.

36. In determining the market rent, the Tribunal has regard to whether the property meets the standard of accommodation, repair and amenity of a typical modern letting. In this instance the Tribunal determined that the subject property fell short of the standard required by the open market.

37. The [NAME] has no central heating, instead relying on an electric storage heater provided by the tenant. The accommodation is cramped and basic. Bathroom and toilet facilities are shared between multiple occupiers. It is the Tribunal’s experience that the rental market favours properties with central heating and private bathroom facilities, and will downwardly adjust values accordingly where these are absent.

38. The Tribunal finds that the [NAME] does not have the benefit of communal use of a garden or any useful outdoor space. Although the photographs provided by the tenant are relatively dark and, in part, grainy, the Tribunal found that they demonstrate the area in question to be little more than a concrete pad accessed via a fire door with no external access.

6

39. The Tribunal, acting as an expert Tribunal determines the rent which the property could be expected to achieve on the open market inclusive of utilities and service charges would be £165.00 per week. This rent reflects the fact that much of the building is used for emergency temporary housing and that the transient nature of such occupiers, coupled with an increase in noise and disturbance from the likely frequency of [NAME] turnover, will adversely affect rental values.

40. The tenant’s rent does not include any electricity used within [NAME] 32; such costs being billed separately to the tenant. Having regard to the recent escalation in energy prices the Tribunal determines that a deduction of £15.00 per week is appropriate. Such deduction represents the Tribunal’s opinion of the difference in rent that a hypothetical tenant would make for a [NAME] inclusive or exclusive of electricity.

41. Within the s.13(2) Notice the landlord proposed inclusive charges of £17.00 in respect of council tax, £15.00 in respect of water charges and £20.00 in respect of fixed service charges. The tenant stated that the existing inclusive charges as per the Notice were different to those the landlord proposed in the previous Notice.

42. In support of the proposed inclusive charges the landlord provided a number of utility and contractors invoices. However, no narrative explaining the breakdown of these costs per bedsit or flat was offered and, without such, the Tribunal was unable to decipher the apportionment applied to [NAME]

32. By way of example, a council tax invoice for the building in the sum of £3,530.52 and for the period 1 April 2022 to 31 March 2023 was presented. However, the landlord provided no explanation as to how they arrived at an apportionment of £17.00 per week in relation to [NAME] 32.

43. The landlord also submitted a list of costs incurred between April 2021 and March 2022 but afforded the Tribunal no explanation as to what such expenditure related to or whether these costs referred solely to the subject building or included other premises.

44. The Tribunal is mindful that the charges relating to council tax, water and fixed service charges are included in the weekly rent payable. As such, the breakdown of these costs is somewhat academic. The Tribunal must determine the weekly rent that a hypothetical tenant would be willing to pay for [NAME] 32 inclusive of these costs.

45. Applying their knowledge as an expert Tribunal, which on this occasion comprised three experienced Chartered Surveyors, the Tribunal determines the following costs are appropriate: £3.00 per week in respect of council tax, £7.00 per week in respect of water and £10.00 per week in respect of fixed service charges. Such sums are included within the determined rent.

46. The Tribunal therefore determines an adjusted Market Rent of £150.00 per week inclusive of council tax, water and fixed service charge.

7

Effective date

47. The revised rent would normally be payable from the date specified in the landlord’s notice, that being 17 October 2022. However, by virtue of section 14(7) of the Act the Tribunal has discretion in the case of causing undue hardship to amend the commencement date to the date of determination.

48. In this application the tenant made no submissions to the Tribunal in regard to delaying the effective date of the revised rent on grounds of hardship. Accordingly, there is no reason for the Tribunal to depart from the commencement date stipulated within the landlord’s notice. The rent of £150.00 per week will therefore take effect from 17 October 2022.

RIGHTS OF APPEAL

1. A person wishing to appeal this decision to the Upper Tribunal (Lands Chamber) must seek permission to do so by making written application by email to [EMAIL] to the First-tier Tribunal at the Regional office which has been dealing with the case.

2. The application must arrive at the Tribunal within 28 days after the Tribunal sends to the person making the application written reasons for the decision.

3. If the person wishing to appeal does not comply with the 28 day time limit, the person shall include with the application for permission to appeal a request for an extension of time and the reason for not complying with the 28 day time limit; the Tribunal will then decide whether to extend time or not to allow the application for permission to appeal to proceed.

4. The application for permission to appeal must identify the decision of the Tribunal to which it relates, state the grounds of appeal, and state the result the party making the application is seeking.