First-tier Tribunal Determines Fair Rent for Central London Property

OUTCOME: Allowed

FR27 First-tier Tribunal – Property Chamber File Ref No. GB/LON/00AG/F77/2024/0238

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

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

[NAME]

Landlord Northumberland and Durham [RESPONDENT] [NAME]

1. The fair rent is £4,867.20 Per Quarter (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 30th September 2024

3. The amount for services is £206.25 Per quarter

4. The amount for fuel charges (excluding heating and lighting of common parts) not counting for rent allowance is

NIL Per

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)/ do not apply because 1st registration/15% exemption.

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

8. For information only:

The fair rent to be registered is not limited by the Rent Acts (Maximum Fair Rent) Order 1999, because it is below the maximum fair rent of £ 5,251.00 per quater including £ 206.25 per quarter for services.

[NAME] of decision 30th September 2024

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 387.50

PREVIOUS RPI FIGURE Y 343.20

X 387.50 Minus Y 343.20 = (A) 44.30

(A) 44.30 Divided by Y 343.20 = (B) .12907925

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) 1.17907925

Last registered rent* £4278.46 ex services Multiplied by (C) = 1.17907925 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £5044.64

Variable service charge YES If YES add amount for services £206.25

MAXIMUM FAIR RENT = £5,251.00 Per Quarter

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.

FIRST-TIER TRIBUNAL

PROPERTY CHAMBER

(RESIDENTIAL PROPERTY)

Case Reference : LON/00AG/F77/2024/0238

Hearing Type : [ADDRESS] of Written Representations

Property

: [ADDRESS], [POSTCODE]

Applicant : [redacted] (Landlord)

Respondent: [redacted] : Referral of a Registration of Fair Rent under the Rent Act 1977

Tribunal Member : [NAME], FIRPM

Valuer Chairman

Date of Decision : 30 September 2024

FULL REASONS

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REASONS

Background

1. On 12 April 2023 the landlord sent an RR1 application for rent registration of a fair rent to the Rent Officer. The previous rent was determined by the Rent Officer on 5 July 2022 at £4,480.00 per quarter.

2. On 21st May 2024 the Rent Officer registered a fair rent of £4,035.00 per quarter effective from 5 July 2024.

3. The landlord objected to the Valuation Officer’s registration.

4. By a letter dated 20 June 2024, the Valuation Office referred the matter to the Tribunal referring the registered rent for determination.

5. On 6 August 2024, the Tribunal issued directions to the parties requiring them to produce any evidence on which they wish to rely in support of their respective cases including by use of a reply form. The matter was set down for determination on the papers unless either party requested a hearing which neither did. The landlord was directed to return the reply form with any documents upon which it wished to rely by 20 August 2024. The [RESPONDENT] was directed to do likewise by 3 September 2024 with the landlord given further opportunity to respond by 10 September 2024.

6. Neither party took the opportunity to make submissions.

7. In consideration of the fair rental value of the subject property, the Tribunal has taken into consideration all documentation before it, including various letters and the reply forms returned by the parties.

8. On 30 September 2024, on the basis of paper submissions and without a Hearing, the Tribunal determined the fair rent of the above property at £4,867.20 including £206.25 for services per quarter.

The Law

9. When determining a fair rent the Tribunal in accordance with the Rent Act 1977 Section 70, had regard to all the circumstances (other than personal circumstances) including the age, location and state of repair of the property. Section 70 is set out in the Appendix below.

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10. In [COMPANY] vs Chairman of the Greater Manchester, etc. Tribunal (1995) 24HLR 107 and [NAME] vs London Rent Assessment Tribunal (1999) QB92 the Court of Appeal emphasised that ordinarily a fair rent is the market rent for the property discounted for “scarcity” (i.e. that element of any of the market rent that is attributable to there being a significant shortage of similar properties in the wider locality available for letting on similar terms – other than as to rent – to that of the regulated tenancy) and that for the purpose of determining market rent, assured tenancy (market) rents are usually appropriate comparables (these rents may have to be adjusted where necessary to reflect any relevant differences between those comparables and the subject property).

The Property

From Google Maps and information included on the rent register as well as information provided by the parties, the Tribunal were able to determine the following:

The property comprises a purpose built flat in a mansion block in a road among properties of similar age, character and design.

From the rent register the flat is understood to comprise:

A lounge, three bedrooms (note: third bedroom is a study), kitchen and bathroom/WC with central heating.

The flat is in a busy and popular location within central London well placed for transport and shopping facilities.

Valuation

11. From [COMPANY] vs Chairman of the Greater Manchester etc. Tribunal, other registered rents are not relevant as a starting point because they are not market rents.

12. The Tribunal must first determine the market rent for the property of this size, in this location and in its current condition. It must also disregard the personal circumstances of either party. The Tribunal notes that the Rent Officer adopted a starting point of £6,900.00 per quarter. Using its own general knowledge of the Greater London property market, the Tribunal disagrees with the Rent Officer and considers that the market rent for the property of this size and in this location, in good condition, with the usual white goods, carpets and decorated to a good condition would be £7,800.00 per quarter. However, all white goods, carpets and curtains are presumed to be the property of the [RESPONDENT]. In addition, a

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[RESPONDENT] of a Rent Act property has more onerous repairing obligations than those under an assured shorthold tenancy.

13. Lastly the Tribunal is mindful of the fact that there are differences in the condition of the subject property and property that is available to let on the market.

14. The Tribunal therefore made the following deductions from the market rent of £7,800.00 per quarter to reflect those differences:

Market rent (per quarter) £7,800.00

Less deductions for:

• [RESPONDENT]’s decorative and repairing liability • No white goods • No floor coverings • Antiquated kitchen • Dated bathroom.

Less 22% = £1,716.00

Adjusted rent £6,084.00

15. The Tribunal found that there was substantial scarcity in the locality of Greater London, having taken judicial notice of long housing association and local authority waiting lists in Greater London. It therefore made a deduction in respect of scarcity of 20% (£1,216.80 per quarter) from the adjusted market rent to reflect this element. This left a final rental figure of £4,867.20 per quarter.

16. The Tribunal is then required to apply the Rent Act (Maximum Fair Rent) Order 1999. The calculation was included on the decision sheet and produced a maximum fair rent of £5,251.00 per quarter.

17. The Tribunal must register the lower of the adjusted market rent or maximum fair rent as the fair rent for the property. In this instance the maximum fair rent produces a higher figure, and the Tribunal therefore registered the rent at £4,867.20 per quarter with effect from 30th September 2024 being the date of the Tribunal decision.

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Name: Mr [NAME], FIRPM

Date: 30 September 2024

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ANNEX – RIGHTS OF APPEAL

The Tribunal is required to set out rights of appeal against its Decision by virtue of the Rule 36(2)(c) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 and these are set out below:

If a party wishes to appeal against 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.

APPENDIX

Rent Act 1977

Section 70 Determination of Fair Rent

(1) In determining, for the purpose of this part of this Act, what rent is or would be a fair rent under a regulated tenancy of a dwellinghouse, regard shall be had to all the circumstances (other than personal circumstances) and, in particular, to –

(a) the age, character, locality and state of repair of the dwellinghouse…

(b) if any furniture is provided for use under the tenancy, the quantity, quality and condition of the furniture and…

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(c) any premium, or sum in the nature of a premium, which has been or may be lawfully required or received on the grant, renewal, continuance or assignment of the tenancy)

(2) For the purpose of the determination, it shall be assumed that the number of persons seeking to become tenants of similar dwelling-houses in the locality on the terms (other than those relating to rent) of the regulated tenancy is not substantially greater than the number of such dwelling-houses in the locality which are available for letting on such terms.

(3) There shall be disregarded:

(a) any disrepair or other defect attributable to a failure by the [RESPONDENT] under the regulated tenancy or any predecessor in title of his to comply with any terms thereof;

(b) any improvement carried out, otherwise than in pursuance of the terms of the tenancy; by the [RESPONDENT] under the regulated tenancy or any predecessor in title of his;

(c) If any furniture is provided for use under the regulated tenancy, any improvement to the furniture by the [RESPONDENT] under the regulated tenancy or any predecessor in title of theirs or, as the case may be, any deterioration in the condition of the furniture due to any ill-treatment by the [RESPONDENT], any person residing or lodging with them, or any sub-[RESPONDENT] of theirs.

(d) In any case where under Part 1 of the Local Government Finance Act 1992 the landlord or a [NAME] is liable to pay Council Tax in respect of a hereditament (“the relevant hereditament”) of which the dwelling- house forms part, regard shall also be had to the amount of Council Tax which, as at the date on which the application to the rent officer was made, was set by the billing authority –

(a) for the financial year in which that application was made, and

(b) for the category of dwelling within which the relevant hereditament fell on that date,

but any discount or other reduction affecting the amount of Council Tax payable shall be disregarded.

In subsection (3d) above –

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“hereditament” means a dwelling within the meaning of Part 1 of the Local Government Finance Act 1992.

“billing authority” has the same meaning as in that part of the Act, and

“category of dwellings” has the same meaning as in Section 30(1) and (2) of that Act.]

“improvement” includes the replacement of any fixture or fitting.

“premium” has the same meaning as in part IX of this Act and “sum in the nature of a premium” means –

(i) any such loan as is mentioned in Section 119 or 120 of this Act,

(ii) any such excess over the reasonable price of furniture as is mentioned in Section 123 of this Act, and

(iii) any such advance payment or rent as is mentioned in Section 126 of this Act.

(4) …………………………………………………………….