First-tier Tribunal Determines Fair Rent for Property

OUTCOME: Allowed

First-tier Tribunal – Property Chamber File Ref No. LON/00BG/F77/2022/0142

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 95 [ADDRESS], [POSTCODE]

[NAME]

Landlord [APPELLANT] [COMPANY]

Tenant Mrs F. [RESPONDENT]

1. The fair rent is £396.00 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 20 October 2022

3. The amount for services is n/a Per

negligible/not applicable

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

n/a Per

negligible/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 (please see calculation overleaf).

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 below the maximum fair rent of £410 per week.

[NAME] [NAME] of decision 20 October 2022

MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 1341.30

PREVIOUS RPI FIGURE Y 1160.60

X 1341.30 Minus Y 1160.60 = (A) 180.70

(A) 180.70 Divided by Y 1160.60 = (B) 15569533

First [NAME] for re-registration since 1 February 1999 YES/NO

If yes (B) plus 1.075 = (C) No

If no (B) plus 1.05 = (C) 1.2056953

Last registered rent* £339.00PW Multiplied by (C) = 1.2056953 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £410.00

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £410 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 [NAME] was the first since 1 February 1999) or 5% (if it is a second or subsequent [NAME] 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 [NAME] 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/00BG/F77/2022/0142

Hearing Type : [ADDRESS] of Written Representations

Property : 95 [ADDRESS], [POSTCODE]

Applicant: [redacted]

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

Tribunal Member : [NAME], [NAME] of Reasons : 3 February 2023

REASONS

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REASONS

Background

1. On 5 May 2022 the landlord sent an RR1 [NAME] for rent registration to the rent officer. The landlord sought a rent of £393.24 per week.

2. On 16 June 2022 the rent officer registered a fair rent of £340 per week with effect from 29 July 2022.

3. By a letter dated 6 July 2022, the landlord objected to that rent. No specific reasons for the objection were given.

4. On 26 August 2022, the Tribunal issued Directions to the parties requiring them to produce any evidence on which they wished to rely in support of their respective cases, including by use of a reply form. The matter was set down for a Determination on the papers unless either party requested a hearing, but neither party made such a request. The landlord was directed to return the reply form with any other documents upon which it wished to rely by 9 September 2022. The tenant was directed to do likewise by 23 September 2022. Neither party complied with the Directions. However, as this is an Appeal by the landlord, it is for them to provide evidence to support their case.

5. On 20 October 2022, on the basis of papers and without a hearing, the Tribunal determined the fair rent of the above property at £396 per week.

6. Subsequently, the landlord has requested reasons.

The Law

7. 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.

8. In [COMPANY] -v- [NAME], etc. Tribunal (1995) 28 HLR 107 and Curtis -v- London Rent Assessment Tribunal (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 –

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other than as to rent – to that of the regulated tenancy) and that for the purpose 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).

The Property

9. From Google Maps and information included on the Rent Register, the Tribunal found as follows:

The property comprises a two storey mid-terraced Victorian house built of brick with pitched, tiled roofs.

The property is well placed for access to local transport and shopping facilities.

10. From the Rent Register, the accommodation comprises:

Ground Floor: Two rooms, kitchen.

First Floor: Two rooms, bathroom/WC

Externally: Rear garden.

The property benefits from central heating and double glazing

11. The landlord is understood to undertake external repairs and decoration and the tenant internal repairs and decoration .

Valuation

12. From [COMPANY] -v- [NAME], etc. Tribunal, other registered rents are not relevant as a starting point because they are not market rents.

13. The Tribunal must first determine the market rent for a 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 rent of £650.00 per week. Using its own general knowledge of the [NAME] property market, the Tribunal disagrees with the rent

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officer and considers that the market rent for a 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 £670.00 per week.

14. However, all white goods, carpets and curtains are presumed to be the property of the tenant. In addition, a tenant of a Rent Act property has more onerous repairing obligations than those under an assured shorthold tenancy.

15. The Tribunal therefore made the following deductions from the market rent of £670.00 per week to reflect those differences:

Market Rent: £670.00 per week

Less 5% for more onerous tenancy terms compared to that of an assured shorthold tenancy.

Less 7% for lack of white goods, carpets and curtains.

Less 14% for condition of kitchen and bathroom

16. This aggregated to 26% or £174.00 per week leaving a net rent of £496.00 per week.

17. The Tribunal found that there was substantial scarcity in the locality of [NAME], having taken judicial notice of long Housing Association and Local Authority waiting lists in [NAME]. It therefore made deduction in respect of scarcity of 20% (£100.00 per week) from the adjusted market rent to reflect this element. This left an adjusted rent of £396.00per week.

18. 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 £410.00 per week.

19. 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 £396 per week for this property, with effect from 20th October 2022 being the date of the Tribunal Decision.

Name: Mr [NAME]: 3rd February 2023

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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 [NAME] for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case

The [NAME] for permission to appeal must arrive at the regional office 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.

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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…F1

(b) if any furniture is provided for use under the tenancy, the quantity, quality and condition of the furniture (F2 and)

(c) (F2(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 [NAME] 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 tenant 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 tenant under the regulated tenancy or any predecessor in title of his;

(c) (d)………………………………………………………………………F3

(d) If any furniture is provided for use under the regulated tenancy, any improvement to the furniture by the tenant under the regulated tenancy

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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 tenant, any person residing or lodging with them, or any [NAME] of theirs.

(e) F4 [(3a) in any case where under Part 1 of the Local Government Finance Act 1992 the landlord or a superior landlord 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 [NAME] to the rent officer was made, was set by the billing authority –

(a) for the financial year in which that [NAME] 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.

(3b) In subsection (3a) above –

“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.]

(4) In this section “improvement” includes the replacement of any fixture or fitting.

[F5 (4a) in this section “premium” has the same meaning as in part IX of this Act and “sum in the nature of a premium” means –

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

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

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(c) Any such advance payment or rent as is mentioned in Section 126 of this Act.]

(5) …………………………………………………………………………………