First-tier Tribunal Determines Fair Rent for Property

OUTCOME: Allowed

First-tier Tribunal – Property Chamber File Ref No. LON/00AF/F77/2024/0149

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 26 [ADDRESS], [POSTCODE]

[NAME]

Landlord [RESPONDENT] Association

Tenant Mr & Mrs [APPELLANT]

1. The fair rent is £240 Per week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 18 June 2024

3. The amount for services is

Per

not applicable

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

Per

not applicable

5. The rent is/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:

(a) The fair rent to be registered is not limited by the Rent Acts (Maximum Fair Rent) Order 1999, because it is the same as/below the maximum fair rent of £255.50 per week prescribed by the Order.

Chairman E [NAME] of decision 18 June 2024

MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 385

PREVIOUS RPI FIGURE Y 292.6

X 385 Minus Y 292.6 = (A) 92.4

(A) 92.4 Divided by Y 292.6 = (B) 0.31579

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) 1.36579

Last registered rent* £187 Multiplied by (C) = £255.40 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £255.50

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £255.50 Per week

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.

Case Reference : LON/00AF/F77/2024/0149

P:PAPERREMOTE

Property : 26 [ADDRESS] [POSTCODE]

Applicant: [redacted]

Respondent: [redacted] : 24 January 2024

Type of Application : Determination of the registered rent under Section 70 Rent Act 1977

Tribunal

: Mrs [NAME] and venue of : 18 June 2024 Hearing

remote on the papers

_______________________________________________

DECISION ____________________________________

This has been a hearing on the papers which has been consented to by the parties. A face to face hearing was not held because it was not practicable, no-one requested the same. The documents that I was referred to were in an electronic bundle the contents of which we have recorded. The registered rent with effect from 16 April 2024 is £240 per week.

© CROWN COPYRIGHT

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Background

1. On 15 November 2023 the landlord applied to the rent officer for registration of a fair rent of £162.83 per week for the above property.

2. The registered rent at the date of the application was £187 per week which had been registered by the rent officer on 13 March 2020 with effect from the same date.

3. On 12 January 2024, the rent officer registered a fair rent of £248 per week with effect from the same date.

4. The tenant objected to the registered rent on 24 January 2024.

5. The tribunal issued Directions on 25 April 2024. No written representations were received from or on behalf of either the landlord or the tenant.

6. I have viewed the locality on streetview.

The Evidence

7. The property is a terrace house built c1980 in a cul-de-sac of similar properties, local shops and bus stops are within walking distance, the house is about a mile and a half from the railway station. The accommodation comprises three rooms, kitchen and bathroom/wc.

The Law

8. When determining a fair rent the tribunal, in accordance with section 70 of the Rent Act 1977, must have regard to all the circumstances including the age, location and state of repair of the property. It also must disregard the effect of any relevant tenant’s improvements and the effect of any disrepair or any other defect attributable to the tenant or any predecessor in title under the regulated tenancy, on the rental value of the property. The Tribunal is unable to take into account the tenant’s personal circumstances when assessing the fair rent.

9. 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 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 to that of a regulated tenancy, and

That for the purposes of determining the market rent, assured tenancy market rents are usually appropriate comparables; adjusted as necessary to reflect any relevant differences between the comparables and the subject property.

Valuation 10. In the first instance I determined what rent the landlord could reasonably be expected to obtain for the property in the open market if it were let today in the condition and on the terms considered usual for such an open market letting. As no evidence had been provided by either party I relied on my own general knowledge of rental values in SE20 and concluded that the likely market rent for the property in fully refurbished condition would be £450 per week.

11. However, it was first necessary to adjust the hypothetical rent of £450 to allow for the differences between the terms and condition considered usual for such a letting and the condition of the actual property at the valuation date, ignoring any tenant’s improvements, (disregarding the effect of any disrepair or other defect attributable to the tenant or any predecessor in title). I determined that the hypothetical rent should be reduced by £150 to reflect the difference it terms and conditions and degree of modernisation of the subject property.

12. This leaves an adjusted market rent for the subject property of £300 per week. I am of the opinion that there is substantial scarcity for similar properties in Greater London and therefore made a deduction of 20% from the adjusted market rent to reflect this element. The uncapped fair rent is £240 per week inclusive of a nominal service charge for maintaining the communal areas of the estate.

Decision

13. The uncapped fair rent initially determined by me, for the purposes of section 70, is below the maximum fair rent of £255.50 per week calculated under the Rent Acts (Maximum Fair Rent) Order 1999. Therefore, the rent will not be capped under the provisions of the Order.

19. Accordingly, the sum of £240 per month will be registered as the fair rent with effect from 18 June 2024 being the date of my decision. The registered rent is the maximum which the landlord may charge: [RESPONDENT] associations do not always charge the maximum rent.

Chairman: [NAME]: 18 June 2024

ANNEX - 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 application for permission must be made to the First-tier Tribunal at the Regional Office which has been dealing with the case. The application should be made on Form RP PTA available at https://www.gov.uk/government/publications/form-rp-pta-application- for-permission-to-appeal-a-decision-to-the-upper-tribunal-lands-chamber 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. Please note that if you are seeking permission to appeal against a decision made by the Tribunal under the Rent Act 1977, the [RESPONDENT] 1988 or the Local Government and [RESPONDENT] 1989, this can only be on a point of law. If the First-tier Tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).