First-tier Tribunal Determines Fair Rent for NW1 Property

OUTCOME: Allowed

First-tier Tribunal – Property Chamber File Ref No. LON/00BK/F77/2021/0050

Notice of the Tribunal [NAME] 1977 Schedule 11

Address of Premises The Tribunal members were Flat 133 [NAME], [ADDRESS], [POSTCODE]

Judge [NAME]

Landlord [APPELLANT]

Tenant Mr [APPELLANT]

1. The fair [NAME] is £500 Per month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 9 September 2021

3. The amount for services is - Per

negligible/not applicable

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

- Per

negligible/not applicable

5. The [NAME] is not to be registered as variable.

6. The capping provisions of the [NAME] ([NAME]) Order 1999 apply do not apply because it is a 1st registration.

7. Details (other than [NAME]) where different from [NAME] entry

N/A

8. For information only:

The fair [NAME] to be registered is not limited by the [NAME] ([NAME]) Order 1999.

Chairman Robert Latham Date of decision 19 September 2021

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : LON/00BF/F77/2021/0050 HMCTS code : V: CVPREMOTE Property : Flat 133 [NAME], [ADDRESS], [POSTCODE] Landlord : [COMPANY] Tenant : Mr [APPELLANT] of [NAME] : Assessment of [NAME] Tribunal Members : Judge [NAME] and venue of Determination : 10 [ADDRESS] [POSTCODE] 9 September 2021 Date of Reasoned Decision : 9 September 2021

EXTENDED REASONS

Covid-19 pandemic: description of hearing

This has been a remote video hearing which has not been objected by the parties. The form of remote hearing was V: SKYPEREMOTEOURT. A face-to- face hearing was not held because it was not practicable and all issues could be determined in a remote hearing. The tribunal has had regard to the documents to which reference is made in this decision. The [NAME]

1. On 2 June 2020, the landlord applied to the [NAME] for the registration of a fair [NAME] of £816 per month for Flat 133 [NAME], [ADDRESS], [POSTCODE] (“the Flat”) pursuant to Part IV of the [NAME] 1977 (“the

Act”). The existing [NAME] was £510 per month. The tenancy had been granted on 15 October 1987.

2. On 14 October 2020, the [NAME] held a consultation by telephone. Ms [RESPONDENT] represented the landlord. Mr [RESPONDENT] also attended. The Tribunal has been provided with the Notes from the consultation.

3. On 15 October 2020, the [NAME] registered a [NAME] of £730 per month. She first assessed the market [NAME] to be £1,625 pm. She then made adjustments of £815 (50%), having regard to a number of factors: tenants repair/decoration liability; no furniture; no white goods; and no floor coverings/curtains. She finally made a deduction of £80 (9%) for scarcity.

4. As this was a first registration, the [NAME] ([NAME]) Order 1999 (SI 1999 No.6) had no [NAME].

5. On 11 November 2020, the tenant requested the [NAME] to refer the matter to the First-tier Tribunal (Property Chamber) (the “Tribunal”).

6. On 17 June 2021, the Tribunal issued Directions. Ms [RESPONDENT], on behalf of the landlord, completed a questionnaire describing the lay out of the Flat. She did not challenge the findings made by the [NAME]. Mr [NAME] made fuller representations.

7. Today, the Tribunal held a hearing. Mr [RESPONDENT] attended and gave evidence. The landlord did not attend. The Tribunal is not currently inspecting properties due to Covid-19.

The Background

8. [NAME] was constructed by the Improved Industrial Dwellings Company in 1885. This was an attempt to improve the housing conditions in the squalor of Victorian Marylebone. But whilst over the subsequent century, Marylebone has become one of the most desirable localities in London, little seems to have changed at [NAME]. Some reports describe it as some of the worst housing in Westminster.

9. On 15 October 1987, the tenancy was granted to Mr [NAME]. The Flat consists of a bedroom, living room, kitchen and bathroom. Mr [NAME] described how at the commencement of the tenancy, there was only the most basic kitchen with no hot water. Over the subsequent years, he has installed a functioning kitchen, providing a new sink and taps, a worktop and cupboards, cooker, fridge, washing machine and an immersion heater to provide hot water. He has also installed a new bath, wash hand basin, toilet and extract fan in the bathroom. He has provided the carpets, curtains and furniture.

10. The tenant pays council tax. The landlord does not provide any services. There are no doors to the kitchen, living room and bathroom. There is no central heating. Although this is a tenancy to which section 11 of the Landlord and Tenant Act 1985, the tenant has paid for the annual gas inspections.

11. Mr [APPELLANT] complained of disrepair. Leaks from the flat above have damaged and cracked the bedroom ceiling and decorations. For a number of years, the main manhole for the building has flooded. Sewage has entered his flat. There are rats. Furniture and building debris have been dumped outside his flat. These were raised at the consultation in October 2020. The problems continue. Mr [NAME] denied the suggestion that he had refused to afford his landlord access to his flat.

The Law

12. When determining a fair [NAME] in accordance with section 70 of the Act, the Tribunal:

(1) has regard to all the circumstances (other than personal circumstances) including the age, location and state of repair of the property;

(2) disregards the effect on the rental value of the property of (a) any relevant tenant improvements and (b) any disrepair or other defect attributable to the tenant or any predecessor in title under the regulated tenancy;

(3) assumes (as required by s.70(2)) that, whatever might be the case, the demand for similar rented properties in the locality does not significantly exceed the supply of such properties for [NAME]. In other words that the effect of any such ‘scarcity’ on rental values is not reflected in the fair [NAME] of the subject property.

13. In [COMPANY] v Chairman of the Greater Manchester etc. Committee (1995) 28 HLR 107 and [NAME] v [NAME] [1999] QB 92 the Court of Appeal emphasised that section 70 means that:

(a) ordinarily a fair [NAME] is the market [NAME] for the subject property discounted for ‘scarcity’ and

(b) for the purposes of determining the market [NAME], 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).

14. Thus, once the market [NAME] for the property has been determined by the exercise in (2) above that [NAME] must be adjusted, where necessary, for any scarcity.

15. The [NAME] ([NAME]) Order 1999 does not apply as this is the first registration. There is no evidence that a fair [NAME] has been registered in respect of the current tenancy of the whole house.

16. In reaching our determination, the Tribunal has taken into account the documents provided by the [NAME], the representations provided by the parties and the evidence given by Mr [NAME].

Our Assessment of the [NAME]

(i) The [NAME]

17. The Tribunal first determines the fair [NAME] in accordance with section 70 of the Act. Our starting point is to determine the [NAME] which the landlord could reasonably expect to obtain for the premises in the open market if it were let today in the condition that is considered usual for such an open market letting in this locality.

18. The [NAME] assessed a market [NAME] of £1,625 per month. This was based on a schedule of [NAME] obtained for one bedroom flats in NW1 and ranged from £239 to £650 per week.

19. We consider this to be too high and assess the market [NAME] at £1,400 per month. We have had regard to a number of comparables relating to flats at [NAME]:

(i) In April 2021, a two bedroom flat was let for £1,375 pm (see rentberry.com).

(ii) In August 2021, a two bedroom flat with central heating was let for £1,500 pm (see openrent.co.uk).

(iii) In August 2021, a two bedroom flat was advertised unfurnished, but with central heating and parking, for £1,650 pm.

(iv) A flat, described as having one bedroom, is currently being advertised for £1,650 (see housesforsaletorent.co.uk). This has been refurbished and the photos seem to suggest a second bedroom. Indeed, it seems to be the same flat as in (iii) above.

20. A one bedroom flat in [ADDRESS], NW1 is advertised for £1,560 per month (see blackkatz.com). This has been refurbished to a high standard and is a much more desirable location. This seems to be the top end of the market. We are therefore satisfied that one bedroom flat at [NAME] let to a modern standard (with central heating) would attract a [NAME] of £1,400 pm.

(ii) The [NAME]

21. Secondly, this property is not let under the terms or in the condition considered usual for a modern letting at a market [NAME] in this location. Substantial adjustments must be made for this. The landlord has not made any representations on the deductions that should be made.

22. We have decided to make a deduction of 55% in respect of the following and determine an adjusted [NAME] of £630 pm having regard to:

(i) Tenant’s Improvements;

(ii) No Central Heating;

(iii) Terms and Conditions;

(iv) No modern kitchen/white goods;

(v) No modern bathroom;

(vi) No carpets or curtains;

(vii) Disrepair and condition.

23. We considered these factors separately and then considered whether the overall reduction is justified. We are satisfied that it is.

(iii) Scarcity

24. Finally, we must consider the issue of scarcity. The [NAME] made a reduction of 9% in respect of this.

25. In [COMPANY] v [NAME] [2002] All ER (D) 148 (Apr), Ousley J held that scarcity must be considered over a wider area than a particular locality. Greater London is now considered to be an appropriate area to use as a yardstick for measuring scarcity.

26. Applying our own general knowledge, and having regard to the collective knowledge of our expert members on Tribunals in London, we conclude that 20% is the appropriate reduction to make for scarcity in Greater London.

27. We therefore reduce the adjusted [NAME] by £126 per month (20%). This results in a figure of £504 pm. We therefore assess a fair [NAME] of £500 per month.

Decision

28. The Tribunal determines a fair [NAME] of £500 per month. Our calculation is annexed to our decision.

29. We note that this fair [NAME] is significantly lower than that assessed by the [NAME]. However, we are satisfied that (i) better evidence of comparables is available to us; (ii) a slightly larger deduction should be made for the condition of the Flat; and (iii) 20% is the appropriate deduction for scarcity. The [NAME] has provided no rational explanation for departing from the figure of 20% which is generally applied by tribunals in London.

Judge Robert Latham 9 September 2019

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 [NAME] which has been dealing with the case. The [NAME] for permission to appeal must arrive at [NAME] 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). Appendix: Calculation of [NAME]

1. [NAME] in good condition with modern amenities £1,400 pm

2. Less adjustments for the following (55%): £770 pm

(i) Tenant’s Improvements; (ii) No Central Heating; (iii) Terms and Conditions; (iv) No modern kitchen/white goods; (v) No modern bathroom; (vi) No carpets or curtains; (vii) Disrepair and condition.

[NAME]: £630 pm

3. Less scarcity in locality (Greater London) (20%): £126 pm

£504 pm

[NAME]: £500 pm