First-tier Tribunal Determines Fair Rent for Property

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. BIR/00CN/F77/2023/0026

Notice of the Tribunal [NAME] 1977 Schedule 11

Address of Premises The Tribunal members were 9 Park Edge Harborne [POSTCODE]

Mr G [NAME] Mrs [APPELLANT]

Landlord [NAME] [APPELLANT]

Tenant [APPELLANT]

1. The fair [NAME] is £155.00 Per week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 8th January 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 [NAME] allowance is

Per

not applicable

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

6. The capping provisions of the [NAME] ([NAME]) Order 1999 apply (please see calculation overleaf).

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

8. For information only:

The fair [NAME] to be registered is not limited by the [NAME] ([NAME]) Order 1999, because it is below the maximum fair [NAME] of £185 per week prescribed by the Order.

Chairman [NAME] of decision 08/01/2024

FR24 [NAME] FIGURE X 377.3

PREVIOUS RPI FIGURE Y 304.00

X 377.3 Minus Y 304.00 = (A) 73.3 (A) 73.3 Divided by Y 304.00 = (B) 0.2411

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.2911

Last registered [NAME]* 143.00 Multiplied by (C) = 184.62 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 185.00

Variable service charge NO If YES add amount for services N/A

[NAME] = £185.00 Per week

Explanatory Note

1. The calculation of the maximum fair [NAME], in accordance with the formula contained in the Order, is set out above.

2. In summary, the formula provides for the maximum fair [NAME] to be calculated by:

(a) increasing the previous registered [NAME] 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 [NAME] determination was made.

4. The process differs where the tenancy agreement contains a variable service charge and the [NAME] is to be registered as variable under section 71(4) of the [NAME] 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 [NAME].

1

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : BIR/OOCN/F77/2023/0026 Property : 9 Park Edge Harborne Birmingham [POSTCODE] Applicant : [redacted] Representative : [RESPONDENT] Respondent : [redacted] : None Type of application : Application under Section 70 of the [NAME] 1977 by the Applicant against the [NAME] assessed for the property by the [NAME] Tribunal members : [NAME] (Chairman) [NAME]/Hearing : Neither party requested an inspection or hearing Date of original decision : 8th January 2024

DETAILED REASONS

2 BACKGROUND

1. On 14th April 2023, the Applicant Landlord applied to the [NAME] for registration of a fair [NAME] of £171.60 per week for the property 9 Park Edge, Harborne, Birmingham, [POSTCODE]. The [NAME] payable at the time of the application was stated as being £143.00 per week.

2. The [NAME] was previously registered at a rental of £143.00 per week with effect from 3rd July 2021 following a registration by the [NAME].

3. The [NAME] registered a rental of £153.00 per week with effect from 3rd July 2023.

4. By letter dated 17th November 2023, the Applicant objected to the [NAME] determined by the [NAME] and the matter was referred to the Tribunal.

5. The Tribunal made a determination of the [NAME] payable on 8th January 2024 and these Detailed Reasons are given in response to a request for same by the Applicant.

INSPECTION

6. Neither party requested the Tribunal to carry out an inspection of the property and the determination was therefore made based upon the submissions received by the Tribunal.

7. Based on the submissions provided, the Tribunal understands that the property comprises of an end terraced house with hallway, two reception rooms, kitchen, conservatory, store and porch on the ground floor. On the first floor the landing leads to three bedrooms and bathroom with three-piece sanitary suite.

8. Based on the [NAME] the Tribunal understands that outside there is a garden, store, W.C. and garage/parking space.

9. The Tribunal understands that some modernisation and updating is required although the property does have central heating. There is no double glazing.

EVIDENCE

10. The Tribunal received written representations from the Applicant which was copied to the other party.

11. Neither party requested a hearing and the matter was therefore dealt with by a paper determination.

THE APPLICANT’S SUBMISSIONS

12. The Applicant submitted that the property was in fair condition given its age and type although it acknowledged that it was not equivalent to modern standards and

3 in making its application for a fair [NAME] had taken account of the fact that it required a modernised bathroom, double glazing and a modernised kitchen.

13. The Applicant also acknowledged that the tenant had provided carpets, curtains and floor coverings.

14. The Applicant further submitted that the proposed [NAME] of £171.60 was some £67.40 per week less than similar market tenancies.

15. To determine a Market Rental the Applicant referred in particular to:

1) West Pathway, [NAME], Harborne – a three-bedroom terraced house marketed at £358.00 per week.

2) [ADDRESS], Harborne – A three-bedroom terraced house let at £299.00 per week.

THE LAW

16. When determining a fair [NAME], the Tribunal, in accordance with the [NAME] 1977, Section 70, had regard to all the circumstances including the age, location and state of repair of the property. It also disregarded the effect of (a) any relevant Tenant’s improvements and (b) the effect of any disrepair or other defect attributable to the Tenant or any predecessor in title under the Regulated Tenancy on the rental value of the property.

17. In [COMPANY] v Chairman of the Greater Manchester, etc. Committee [1995] 28HLR107 and [NAME] v [NAME] [1999] QB92 the Court of Appeal emphasised (a) that ordinarily a fair [NAME] is the market [NAME] for the property discounted for ‘scarcity’ (i.e. that element, if any, of the market [NAME], 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 [NAME] – to that of the regulated tenancy) and (b) that for the purposes of determining the market [NAME] assured tenancy (market) rents were usually appropriate comparables. (These rents may have to be adjusted where necessary to reflect any relevant differences between those comparables and the subject property).

VALUATION

18. In the first instance, the Tribunal determined what [NAME] the Applicant could reasonably be expected to obtain for the property in the open market if it were let today in the condition that is considered usual for such open market lettings. It did this by having regard to the Tribunal’s own general knowledge of market [NAME] levels in the area of Birmingham.

19. Having taken the various matters into consideration it determined that the open market value of the property in good condition would be the sum of £225.00 per week.

20. However, the actual property is not in the condition considered usual for a modern letting at a market [NAME]. Therefore, it was first necessary to adjust the hypothetical [NAME] of £225.00 per week to allow for the differences between the condition considered usual for such a letting and the condition of the actual property as described by the parties and the [NAME] (disregarding the effect of any disrepair or other defects attributable to the tenant or any predecessor in title).

4 21. The Tribunal determined that the following weekly deductions were appropriate:

a) Double Glazing 18.00 b) Modernised kitchen 14.00 c) Modernised bathroom 10.00 d) Carpets and curtains 10.00 e) White goods 6.00 f) Decorating liability 12.00 Total £70.00

22. The Tribunal then considered the question of scarcity. This is done by considering whether the number of persons genuinely seeking to become tenants of similar properties in the wider area of the West Midlands on the same terms other than [NAME] is substantially greater than the availability of such dwellings as required by section 70(2) of the [NAME] 1977.

23. The Tribunal finds that many Landlords dispute that scarcity exists because they are of the opinion that the market is ‘in balance’. Although Tenants do not in all cases have difficulty in finding accommodation this ignores the fact that it is the price of such accommodation which creates a balance in the market. Section 70(2) specifically excludes the price of accommodation from consideration in determining whether there are more persons genuinely seeking to become Tenants of similar properties than there are properties available. Although the rental market for Assured Shorthold properties may be in balance many potential Tenants may be excluded from it for various reasons such as age, poor credit history or because they are on housing benefit.

24. In this case the Tribunal, having carried out appropriate research, is satisfied that it is not appropriate to make a deduction for scarcity. This leaves a fair [NAME] for the subject property of £155.00 per week (£225.00 – £70.00).

25. The Section 70 fair [NAME] determined by the Tribunal is below the level of the maximum fair [NAME] permitted by the [NAME] ([NAME]) Order 1999 and accordingly the [NAME] is therefore determined at £155.00 per week.

DECISION

26. The fair [NAME] determined by the Tribunal for the purposes of Section 70 was accordingly £155.00 per week.

APPEAL

27. If either of the parties is dissatisfied with this decision, they may apply to this Tribunal for permission to appeal to the upper Tribunal (Lands Chamber), on a point of law only. Any such application must be received within 28 days after these written reasons have been sent to them (Rule 52 of The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013).

[NAME] First-tier Tribunal Property Chamber (Residential Property)