First-tier Tribunal Determines Fair Rent for Property

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : CAM/OOME/F77/2025/0006 HMCTS code : P:PAPERREMOTE Property : [ADDRESS], [POSTCODE] Applicant (Landlord) : [APPELLANT] and [APPELLANT] Respondent (Tenant) : [APPELLANT] of application : Determination of a fair rent under section 70 of the Rent Act 1977 Tribunal members : [NAME] of Determination : 17 May 2025

DECISION

Description of hearing This has been a remote determination on the papers which the parties are taken to have consented to, as explained below. The form of determination was a paper determination described above as P:PAPERREMOTE The documents that the Tribunal was referred to are in bundles from the Applicant and the Respondent. The Tribunal has noted the contents and the decision is below.

2 Decision The Tribunal determined a Fair Rent of £800 per month effective from 17 May 2025.

Reasons Background 1. The Landlord made an application dated 21 November 2024 to register the rent of the Property at £890 per week. This was stated to be exclusive of any variable Service Charge.

2. The Rent Officer registered a Fair Rent of £720 per month on 14 January 2025 effective from 9 December 2024. This was in lieu of the previous rent of £693.50 per month which was registered on 28 November 2022 and effective from the same date.

3. The Landlord submitted an objection dated 18 January 2025.

4. The Tribunal issued Directions on 31 January 2025, inviting the parties to submit any further representations (including any photographs and details of rentals for similar properties) they wished the Tribunal to consider.

The Property 5. The Tribunal inspected the Property on 7 March 2025.

6. The Property comprises a lower ground floor apartment in a converted period house and provides a kitchen, lounge, single bedroom, double bedroom and bathroom.

7. There is central heating but no double glazing. Similarly, the Property benefits from a private garden but does not have any private car parking facilities.

8. The Tribunal understands that the Property was derelict when first occupied by the Tenant since when they have fitted the kitchen units and white goods, installed flooring/carpets and separated the original bedroom to create two bedrooms. The Landlord installed the bathroom fittings and the boiler as noted below.

9. The Property would benefit from modernisation and refurbishment. The Law

10. The relevant law is set out in section 70 of the Rent Act 1977 (the Act) and The Rent Acts (Maximum Fair Rent) Order 1999 (the Order). 11. Section 70 (1) of The Act provides that in assessing the rent:

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“regard shall be had to all the circumstances (other than personal circumstances) and in particular to— i. the age, character, locality and state of repair of the dwelling-house, ii. if any furniture is provided for use under the tenancy, the quantity, quality and condition of the furniture and iii. 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.” 12. Section 70 (3) of the Act provides that:

“…there shall be disregarded. i. any disrepair or other defect attributable to a failure by the tenant under the regulated tenancy or any [NAME] to comply with any terms thereof. ii. any improvement carried out, otherwise than in pursuance of the terms of the tenancy, by the tenant under the regulated tenancy or any [NAME] iii. if any furniture is provided for use under the regulated tenancy, any improvement to the furniture by the tenant under the regulated tenancy or any [NAME] or, as the case may be, any deterioration in the condition of the furniture due to any ill-treatment by the tenant, any person residing or lodging with him, or any sub- tenant of his.” 13. In addition, section 70 (2) of The Act requires the Tribunal to assume:

“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.” 14. This latter provision requires the Tribunal to assume that the demand for similar rented properties in the locality does not significantly exceed the supply of such properties for rent; in effect, if such scarcity exists, the Tribunal is to adjust the rental figure so that the fair rent is not affected by it.

15. 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: (a) “that ordinarily a fair rent is the market rent for the property discounted for ‘scarcity’ (i.e. that element, if 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

4 (b) that for the purposes of determining the 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).” 16. In considering scarcity under section 70 (2) the Tribunal recognised that: (a) “there are considerable variations in the level of scarcity in different parts of the country and that there is no general guidance or “rule of thumb” to indicate what adjustment should be made; the Tribunal therefore considers the case on its merits. (b) terms relating to rent are to be excluded. A lack of demand at a particular rent is not necessarily evidence of no scarcity; it may be evidence that the prospective tenants are not prepared to pay that particular rent.” 17. Section 71 (1) of the Act provides that the registration of the rent takes effect from the date that the Tribunal makes its decision.

18. Fair rents are subject to a capping procedure under the Rent Acts (Maximum Fair Rent) Order 1999 which limits increases by a formula based on the increase in the Retail Price Index since the previous registration.

19. Section 72 (1) (b) of the Act provides that the registration of a rent takes effect: “…if the rent is determined by the appropriate tribunal, from the date when the tribunal make their decision” Representations – Tenant 20. The Tenant has not taken any part in these proceedings. Representations –Landlord

21. The Landlord submitted a letter dated 19 February 2025 together with floor plans and photographs. The main points can be summarised as follows:

22. The Landlord advised, in respect of heating, that “The central heating was originally installed about 15-20 years ago and was paid for by a Warm Front government grant. However, a replacement boiler was installed about three years ago, which was paid for by the landlord.” However, the Tribunal noted that heating is not available to all rooms.

23. [NAME] advised on 27 January 2025 that: “Following my visit to the property on Friday 24th January 2024, I can confirm that should the apartment come to market the current rental value would be £1400-£1500 pcm. This is due to the properties (sic) location, private entrance, foot print & private garden, Despite the property being dated in areas I would expect a high level of interest.”

24. The Landlord also stated:

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“Whilst I might agree to the £1400 starting rent – although I would perhaps assert that it should be £1450 (in the middle of the range suggested by Romans), I strongly disagree with the £600 deduction which the Rent Officer has made to reflect “the property’s age, condition, character and location” because these factors have been already been (sic) reflected in the starting rent of £1450.”

“I would agree to a deduction of something in the region of £300 to reflect the fact that the regulated tenant bears responsibility for internal decorations, carpeting and flooring and provision of appliances. I am in agreement with the £80 deduction for scarcity.”

“Please note that the tenant is 86 years old and I understand that she will not be making any representations in respect of this matter. Her rent is paid by Housing Benefit and I am aware that her only concern is that the registered rent remains less that the one bedroom Local Housing Allowance rate that she is entitled to. The LHA rate for the Thames Valley area is £207.12 per week, which equates to £897.52 per month, so £796.50 per calendar month is obviously within this.”

25. The Landlord calculated a capped Fair Rent of £796.50 by reference to the RPI index as at January 2024 and November 2022

Determination

26. In assessing the Fair Rent the Tribunal is unable to take into account the personal circumstances of the Parties. As such, the assessment of rent has no regard to the personal, financial or health circumstances of either party both of whom are considered to be hypothetical. The Tribunal has therefore had regard to hypothetical, willing parties in the open market. The ownership costs arising to the actual Landlord are therefore irrelevant to this exercise.

27. Having determined that the parties to the assumed transaction are hypothetical, the next step, as set out in the [NAME] case as referred to above, is to determine the rent which a landlord could reasonably expect to obtain for the Property in the open market if it were let today in the condition and on the terms now usual for open market lettings.

28. The rent currently paid and/or registered is not relevant to this exercise. As such, the Tribunal has not relied upon the previous rent in any way and has disregarded historic evidence/determinations.

29. It is also not relevant whether or not the Landlord considers that the rent paid is sufficient to fund its liabilities and/or repair obligations. The cost to the Landlord of putting the Property into a suitable state and complying with its obligations is not a matter for consideration in determining the rent payable.

30. In the absence of any evidence being made available, the Tribunal has relied upon its own knowledge/expertise and is of the opinion that the Property

6 would, if fully redecorated, modernised and refurbished , attract a rent in the region of £1,450 per week. However, this is before account is taken of the need to disregard the Tenant’s improvements.

31. In this context, the Tribunal has deducted 10% for the tenant’s fit out of the kitchen, 5% for the supply of White Goods, 5% for the provision of curtains and carpets, 10% for the splitting of the bedroom and 5% for decoration.

32. The Tribunal also notes that there is a scarcity of supply of similar properties in the general location at the present time and therefore considers that a scarcity allowance of 10% is appropriate on this occasion.

33. Having fully considered all matters relevant to this case, the Tribunal therefore considers the Fair Rent to be £905 per month.

34. The provisions of the Rent Acts (Maximum Fair Rent) Order 1999 require that the registered rent is either the capped Fair Rent, details of which are attached to this Decision, or the Fair Rent.

35. As set out above, the capped rent is determined by a formula that has regard to the increase in the Retail Price Index since the date of the last rent registration.

36. The Tribunal notes that the previous net rent detailed on the Rent Register was £693.50 per month effective from 17 November 2022. The calculated capped net rent as at the date of this Determination is therefore £800 per month.

37. The Fair Rent is above the Capped Net Rent. Therefore, the Capped Net Rent of £800 per month applies. The Tribunal also directs that the revised Rent takes effect from the date of this Determination.

Name: [NAME]: 17 May 2025

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 either party is dissatisfied with this decision, they may apply for permission to appeal to the Upper Tribunal (Lands Chamber) on any point of law arising from this Decision. Prior to making such an appeal, an application must be made, in writing, to this Tribunal for permission to appeal. Any such application must be made within 28 days of the issue of this decision to the person making the

7 application (regulation 52 (2) of The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rule 2013). 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. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber). If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).

FR27 First-tier Tribunal – Property Chamber File Ref No. CAM/OOME/F77/2025/0006

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

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

[NAME]

Landlord [NAME] and [NAME]

Tenant K Harrison

1. The fair rent is £908 per month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 17 May 2025

3. The amount for services included in the rent is 0 Per N/A

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

Nil Per N/A

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

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

8. The calculated Fair Rent is £820.45 per month. As this is higher than the Capped Rent the Capped Rent applies

[NAME] of decision 17 May 2025

FR27 MAXIMUM FAIR RENT CALCULATION

Address of premises [ADDRESS], [POSTCODE]

LATEST RPI FIGURE

x

PREVIOUS RPI FIGURE

y

x

minus y

= (A)

(A)

divided by y

= (B)

First application for re-registration since 1 February 1999

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C)

Last registered rent*

Multiplied by (C) = *(exclusive of any variable service charge)

Rounded up to the nearest 50 pence =

Variable service charge (Yes/No)

If YES add amount for services =

MAXIMUM FAIR RENT =

per

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 Committee’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.

£800 month 0 693.50 799.78 1.1532654 N/A 358.3 395.3 358.3 358.3 0.1032654 37 395.3 37 No 800 No