First-tier Tribunal Determines Fair Market Rent for Tenant's Accommodation

OUTCOME: Allowed

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : CAM/34UF/MNR/2022/0042 HMCTS code : P: PAPERREMOTE Property : [ADDRESS], [POSTCODE] Applicant: [redacted] Respondent: [redacted] : Section 14 of the Housing Act 1988 Determination of market rent payable.

Tribunal member(s)

:

[NAME](Hons) [NAME] [NAME](Hons)

Date of decision : 13 October 2022

DECISION

Covid-19 pandemic: description of hearing A. This has been a remote hearing on the papers which the parties are taken to have consented to, as explained below. The form of remote hearing was P:PAPERREMOTE. A face-to-face hearing was not held because all issues could be determined on paper.

Decision: 1. The Tribunal determined a rent of £425 per calendar month to take effect from 24 April 2022.

Reasons Background 2. The Landlord by a notice in the prescribed form dated 21 March 2022 proposed a new ‘rent’ of £450 per calendar month to be effective from 24 April 2022. On 21 April 2022 the tenant referred the Notice to the Tribunal. This was in lieu of the previous rent of £400 per month.

3. Parties were requested to complete a pro forma supplying details of the accommodation on a room by room basis, the features of the property (central heating, white goods, double glazing, carpets and curtains) and other property attributes and any further comments that they may wish the tribunal to take into consideration. This could include any repairs and improvements that had been made, any comments on the condition of the property and rentals of similar properties – should they wish to rely on these.

4. The determination would take place based on the submissions from both parties unless either party requested a hearing. Evidence was submitted by the landlord and the tenant. There was no request for a hearing. The Property 5. The property is a room in a traditionally built House in Multiple Occupation (HMO), located in a mainly residential area.

6. The accommodation comprises a single room.

The Tenancy 7. The Tenancy commenced as a contractual Assured Shorthold Tenancy for a fixed term of 6 months from 24 June 2021. A copy of the agreement dated 24 June 2021 was provided. From 24 December 2021 a statutory tenancy on the terms of the written agreement appears to have arisen. Section 11 of the Landlord and Tenant Act 1985 applies in respect of Landlord’s repairing obligations The Law

8. By virtue of section 14 (1) Housing Act 1988 the Tribunal is to determine a rent at which the dwelling concerned might reasonably be

expected to be let in the open market by a willing landlord under an assured periodic tenancy- (a) having the same periods as those of the tenancy to which the notice relates; (b) which begins at the beginning of the new period specified in the notice; (c) the terms of which (other than relating to the amount of rent) are the same as those of the subject tenancy

9. By virtue of section 14 (2) Housing Act 1988 in [NAME] a determination the Tribunal shall disregard – (a) any effect on the rent attributable to the granting of a tenancy to a sitting tenant; (b) any increase in the value of the dwelling attributable to a relevant improvement (as defined by section 14(3) Housing Act 1988) carried out by a tenant otherwise than as an obligation; and (c) any reduction in the value of the dwelling due to the failure of the tenant to comply with any terms of the subject tenancy.

Representation – Landlord

10. No representations were received from the Landlord or their agents.

Representations – Tenant

11. The tenant set out three grounds to the validity of the notice, which are:

Section 9 states – do not use this notice if the tenancy agreement contains a term allowing rent increase. This is surely satisfied by clause 3.6 in the tenancy agreement attached.

Section 3 of the notice has been completed as February 2003. Contrary to Section 11.

Section 5 should be completed as an amount or nil – yet all charges have been left blank.

12. The tenant said that the carpet and furniture were in poor condition from the start of the tenancy and that no renovation work had taken place to this room.

13. The tenant also noted a number of other items including an issue with putting the bins out and concerns about the possible presence of asbestos in an outbuilding.

14. The tenant also commented that, in their view, significant improvement would be required to justify a 12.5% increase in the rent.

Determination

15. The tenant claims that the section 13 notice is invalid. The tribunal would not have the power to determine the market rent if this was the case.

16. The tribunal does not accept that the tenancy agreement contains a term allowing rent increase as envisaged under this section. This explanatory note in section 9 is a reference to section 13(1) (b) Of the Housing Act 1988 and only applies to tenancies which contain a rent review mechanism – effectively setting out the formula whereby the rent for a particular period will, or may, be greater than the rent for a previous period. In this case 3.6 only refers to the ability of the landlord to increase the rent and how he must go about this.

17. The tribunal does not find that the insertion of February 2003 in section 3 is incorrect and the absence of ‘nil’ in section 5 does not lead to any confusion in understanding the notice and does not render it invalid

18. Therefore the tribunal finds the notice to be valid and has proceeded to determine the market rent.

19. 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 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 existing rent.

20. In addition, the legislation makes it clear that the tribunal cannot take into account the personal circumstances of either the landlord or the tenant.

21. The tribunal assesses a rent for the Property as it is on the day of the hearing disregarding any improvements made by the tenant but taking into account the impact on rental value of any disrepair which is not due to a failure of the tenant to comply with the terms of the tenancy.

22. The tribunal considered the photographs provided by the tenant in support of his assertion that the carpet and furniture were in poor condition from the start of the tenancy and that no renovation work had taken place to this room.

23. The tenant also noted a number of other items including an issue with putting the bins out and concerns about the possible presence of asbestos in an outbuilding.

24. These assertions do not appear to be disputed by the landlord.

25. Given that the neither party has provided any comparables or any other evidence in respect of the rental value of the property the tribunal has had to rely upon its own knowledge and experience in arriving at its determination. It is assisted by details of rooms that have been listed for letting at the property, which are available on the internet.

26. The tribunal using its experience and expertise believes that the rental value of this property in good condition would be around £450 per month. Taking into consideration the issues detailed by the tenant, the tribunal determines that the rental value of the property should be adjusted by a deduction of £25 per month.

27. On this basis the tribunal believes that the rental value for the property would be in the region of £425 per month and makes its determination on this basis.

[NAME](Hons) MRICS Valuer Chair

Rights of appeal

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written [NAME] for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The [NAME] for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28-day time limit, such [NAME] 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 [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] 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 [NAME] the [NAME] is seeking. If the tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).

First-tier Tribunal – Property Chamber File Ref No. CAM/34UF/MNR/2022/0042

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 [ADDRESS], [POSTCODE]

[NAME] (Hons) MRICS Mrs [RESPONDENT] [NAME] (Hons)

Landlord A J & [RESPONDENT] c/o [RESPONDENT], 138 [ADDRESS], [POSTCODE]

Tenant Mr [APPELLANT]

1. The rent is: £ 425 Per month (excluding water rates and council tax but including any amounts in paras 3)

2. The date the decision takes effect is: 24 April 2022

*3. The amount included for services is not applicable

Per

*4. Service charges are variable and are not included

5. Date assured tenancy commenced 24 June 2021

6. Length of the term or rental period Month

7. Allocation of liability for repairs See full decision

8. Furniture provided by landlord or superior landlord See full decision

9. Description of premises See full decision

[NAME] of Decision 13 October 2022

1

Case Reference

: CAM/34UF/MNR/2022/0042

Property : [ADDRESS] , [POSTCODE]

Tenant

: [APPELLANT]

Landlord : [NAME] [RESPONDENT] of Referral : 21 April 2022

Type of [NAME] : Determination of a market rent under section 13 and 14 Housing Act 1988

Tribunal

: [NAME] [NAME](Hons)

Date of Determination : 22 November 2022

_______________________________________________

DECISION IN RESPECT OF AN [NAME] TO SET ASIDE

The Tribunal will set aside its decision of 13 October 2022 and provides its reasons below.

____________________________________

© CROWN COPYRIGHT 2020

S E C FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

2

DECISION

Background: 1. The Landlord by a notice in the prescribed form dated 21 March 2022 proposed a new ‘rent’ of £450 per month to be effective from 24 April 2022. On 21 April 2022 the tenant referred the Notice to the Tribunal. This was in lieu of the previous rent of £400 per month.

2. Parties were requested to complete a pro forma supplying details of the accommodation on a room-by-room basis, the features of the property (central heating, white goods, double glazing, carpets and curtains) and other property attributes and any further comments that they may wish the tribunal to take into consideration. This could include any repairs and improvements that had been made, any comments on the condition of the property and rentals of similar properties – should they wish to rely on these.

3. Correspondence for the landlord was sent to Cotters Estate Agents who were named as the agent on the [NAME] and in the s13 notice.

4. Nothing was received from the landlord or the tenant. The tribunal then made their determination based on the information it held and issued the decision to both parties on 13 October 2022 5. [NAME] wrote on 25 October 2022 informing the tribunal that they had not received any communication in respect of the case prior to receipt of the decision.

6. The tribunal received an [NAME] from the tenant for permission to appeal on 26 October 2022.

7. The tribunal considered that the most appropriate way of proceeding, given the circumstances, was to set aside the previous decision in accordance with Rule 51 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 (the Rules.). The tribunal will reissue directions shortly and the market rent for the property will be determined after allowing both parties to make representations. Decision:

The Tribunal considers that Rule 51 (1) (a) and (b) are satisfied in that there may have been a procedural irregularity in the proceedings and that it is in the interests of justice to set aside the decision.

3 Chairman: [NAME] [NAME](Hons)

Date: 22 November 2022

Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 Rule 51 - Setting aside a decision which disposes of proceedings (1) The Tribunal may set aside a decision which disposes of proceedings, or part of such a decision, and re-make the decision or the relevant part of it, if— (a) the Tribunal considers that it is in the interests of justice to do so; and (b) one or more of the conditions in paragraph (2) are satisfied. (2) The conditions are— (a) a document relating to the proceedings was not sent to, or was not received at an appropriate time by, a party or a party's representative. (b) a document relating to the proceedings was not sent to or was not received by the Tribunal at an appropriate time; (c) a party, or a party's representative, was not present at a hearing related to the proceedings; or (d) there has been some other procedural irregularity in the proceedings. (3) A party applying for a decision, or part of a decision, to be set aside under paragraph (1) must make a written [NAME] to the Tribunal so that it is received— (a) within 28 days after the date on which the Tribunal sent notice of the decision to the party; or (b) if later, within 28 days after the date on which the Tribunal sent notice of the reasons for the decision to the party.

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : CAM/34UF/MNR/2022/0042 HMCTS code : P: PAPERREMOTE Property : [ADDRESS], [POSTCODE] Applicant: [redacted] Respondent: [redacted] : Section 13 and 14 of the Housing Act 1988 Determination of market rent payable.

Tribunal member(s)

:

[NAME](Hons) [NAME] [NAME](Hons)

Date of decision : 13 February 2023

DECISION

Decision: 1. The Tribunal determined a rent of £425 per calendar month to take effect from 13 February 2023.

4. The determination would take place based on the submissions from both parties unless either party requested a hearing. Evidence was submitted by the landlord and the tenant. There was no request for a hearing. On 13 October 2022 the Tribunal determined a rent of £425 per calendar month to take effect from 24 April 2022.

5. The tenant wrote on 19 October 2022 requesting permission to appeal the Tribunal’s determination and submitting additional evidence.

6. No representations were received from the landlord and the Tribunal could not be certain that the landlord had received the initial Directions dated 30 June 2022.

7. The Tribunal considered that the most appropriate way of proceeding, given the circumstances, was to set aside the previous decision in accordance with Rule 51 of the Tribunal Procedure (First-Tier Tribunal) Property Chamber Rules 2013 (the Rules). It then invited submissions from the landlord and gave the tenant the opportunity to respond. No further evidence was submitted by either the landlord or the tenant.

The Property 8. The property is a room in a traditionally built House in Multiple Occupation (HMO), located in a mainly residential area.

9. The accommodation comprises a single room.

The Tenancy 10. The Tenancy commenced as a contractual Assured Shorthold Tenancy for a fixed term of 6 months from 24 June 2021. A copy of the agreement dated 24 June 2021 was provided. From 24 December 2021 a statutory tenancy on the terms of the written agreement appears to have arisen. Section 11 of the Landlord and Tenant Act 1985 applies in respect of Landlord’s repairing obligations The Law

11. By virtue of section 14 (1) Housing Act 1988 the Tribunal is to determine a rent at which the dwelling concerned might reasonably be expected to be let in the open market by a willing landlord under an assured periodic tenancy- (a) having the same periods as those of the tenancy to which the notice relates; (b) which begins at the beginning of the new period specified in the notice; (c) the terms of which (other than relating to the amount of rent) are the same as those of the subject tenancy

12. By virtue of section 14 (2) Housing Act 1988 in [NAME] a determination the Tribunal shall disregard – (a) any effect on the rent attributable to the granting of a tenancy to a sitting tenant; (b) any increase in the value of the dwelling attributable to a relevant improvement (as defined by section 14(3) Housing Act 1988) carried out by a tenant otherwise than as an obligation; and (c) any reduction in the value of the dwelling due to the failure of the tenant to comply with any terms of the subject tenancy.

Representation – Landlord

13. No representations were received from the Landlord or their agents.

Representations – Tenant

14. The tenant set out three grounds to the validity of the notice, which are:

15. The tenant said that the carpet and furniture were in poor condition from the start of the tenancy and that no renovation work had taken place to this room.

16. The tenant also noted a number of other items including an issue with putting the bins out and concerns about the possible presence of asbestos in an outbuilding.

17. The tenant also commented that, in their view, significant improvement would be required to justify a 12.5% increase in the rent.

18. In their submission of 19 October 2022, the tenant provided letting agents’ rental details on 3 properties currently available in the NN2, NN3 and NN1 postcode areas.

19. The tenant also stated that they believed the Tribunal’s consideration of rooms letting at the same property amounted to a conflict in the determination process and an absolute bias toward the landlord.

20. The tenant said that they did not understand why the Tribunal did not consider other properties in the locality and suggested that rooms were available at the subject property due to high asking rents.

Determination

21. The tenant claims that the section 13 notice is invalid. The tribunal would not have the power to determine the market rent if this was the case.

22. The tenancy agreement does not contain a term disallowing a rent increase as envisaged under this section. This explanatory note in section 9 is a reference to section 13(1) (b) Of the Housing Act 1988 and only applies to tenancies which contain a rent review mechanism – effectively setting out the formula whereby the rent for a particular period will, or may, be greater than the rent for a previous period. In this case 3.6 only refers to the ability of the landlord to increase the rent and how he must go about this.

23. The insertion of February 2003 in section 3 is correct and the absence of ‘nil’ in section 5 does not lead to any confusion in understanding the notice and would not render it invalid

24. The Tribunal therefore proceeded, on the basis that the notice was valid, to determine the market rent.

25. 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 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 existing rent.

26. In addition, the legislation makes it clear that the tribunal cannot take into account the personal circumstances of either the landlord or the tenant.

27. The tribunal assesses a rent for the Property as it is on the day of the hearing disregarding any improvements made by the tenant but taking into account the impact on rental value of any disrepair which is not due to a failure of the tenant to comply with the terms of the tenancy.

28. The Tribunal considered the photographs provided by the tenant in support of his assertion that the carpet and furniture were in poor condition from the start of the tenancy and that no renovation work had taken place to this room.

29. The tenant also noted a number of other items including an issue with putting the bins out and concerns about the possible presence of asbestos in an outbuilding.

30. These assertions do not appear to be disputed by the landlord.

31. The Tribunal has noted the letting estimates provided on 19 October 2022, which did not form part of the previous evidence, however as these post-date the relevant date (24 April 2022) and there is no evidence of the actual rents achieved, it places limited weight on these.

32. In both its initial determination, and this subsequent one, the Tribunal has relied upon its own knowledge and experience in arriving at its decision and has been assisted by details of rooms that have been listed for letting / let at the property.

33. The Tribunal using its experience and expertise believes that the rental value of this property in good condition would be around £450 per month. Taking into consideration the issues detailed by the tenant, the Tribunal determines that the rental value of the property should be adjusted by a deduction of £25 per month.

34. On this basis the Tribunal determines the rent for the subject property at £425 per month.

35. Section 14(7) of the Housing Act 1988 gives the tribunal discretion to determine the date the rent where backdating the rent to the beginning

of the new period specified in the notice would cause undue hardship to the tenant. The Tribunal is satisfied that this would be the case and the rent of £425 per month takes effect from 13th February 2023, the date of this decision.

[NAME] (Hons) MRICS Valuer Chair

Rights of appeal

Housing Act 1988 Section 14

[NAME] (Hons) MRICS Mrs [RESPONDENT] [NAME] (Hons)

Tenant Mr [APPELLANT]

2. The date the decision takes effect is: 13 February 2023

*3. The amount included for services is not applicable

Per

*4. Service charges are variable and are not included

5. Date assured tenancy commenced 24 June 2021

6. Length of the term or rental period Month

7. Allocation of liability for repairs See full decision

9. Description of premises See full decision

[NAME] of Decision 13 February 2023