First-tier Tribunal Determines Fair Rent for Property

OUTCOME: Allowed

First-tier Tribunal – Property Chamber File Ref No. LON/00BJ/F77/2022/0023

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 4 [ADDRESS], [POSTCODE]

[NAME], Valuer Chair

Landlord [COMPANY]

Tenant Mrs [APPELLANT]

1. The fair rent is £232.50 Per week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 18 May 2022

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 rent allowance is

Per

negligible/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 the maximum fair rent as prescribed by the Rent Acts (Maximum Fair Rent) Order 1999. The rent that would otherwise have been registered was £ .................................................................................................................................................................... per .................................. including £ ...................... per ................................ for services (variable). (b)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 £256.00 per week prescribed by the Order.

[NAME] of decision

18 May 2022

MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 323.5

PREVIOUS RPI FIGURE Y 290.6

X 323.5 Minus Y 290.6 = (A) 32.9

(A) 32.9 Divided by Y 290.6 = (B) 0.113214

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) 1.163214

Last registered rent* £220.00 Multiplied by (C) = £255.91 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £256.00

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

MAXIMUM FAIR RENT = £256.00 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/00BJ/F77/2022/0023

Property : 4, [ADDRESS], [POSTCODE]

Tenant

: Mrs [APPELLANT]

Landlord : [NAME] ([COMPANY]) [RESPONDENT] of Objection : 26 January 2022

Type of Application : Section 70, Rent Act 1977

Tribunal

: Ms [NAME] of Reasons : 18 May 2022

_______________________________________________

DECISION

The sum of £232.50 per week will be registered as the fair rent with effect from 18 May 2022, being the date the Tribunal made the Decision.

___________________________________

© CROWN COPYRIGHT 2022

SUMMARY REASONS

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Background 1. On 24 November 2021 the Landlord applied to the Rent Officer for registration of a fair rent of £253.00 per week for the above property.

2. The rent was previously registered on 15 January 2020 at £220.00 per week with effect from 15 February 2020. On 5 January 2022 the Rent Officer registered a fair rent of £230.00 per week with effect from 15 February 2022.

3. By a letter dated 26 January 2022 the Landlord objected to the rent determined by the Rent Officer and the matter was referred to the First-tier Tribunal.

4. The Tribunal issued Directions on 23 February 2022 setting out the timetable and the steps the parties were required to take in preparation for the determination of this case.

The Law 5. When determining a fair rent the Tribunal, in accordance with section 70 of the Rent Act 1977 (the Act), 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.

6. 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

(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).

7. The Rent Acts (Maximum Fair Rent) Order 1999 (the 1999 Order) provides the framework that places a ceiling on the maximum rent that can be registered. The calculation is based upon a formula that applies an increase in the monthly United Kingdom Index of Retail Prices to the previously registered rent.

Inspection 8. The Tribunal has not carried out an inspection of the property. From the rent register the property is described as a ground floor, self-contained flat, dating from between 1800 to 1918. It has three rooms, a kitchen, a shower room with a WC outside. It is stated not to have central heating and has a garden.

Evidence

9. Neither party requested a hearing. Therefore, this matter was considered on the basis of the written submissions form the parties.

Tenant’s Submissions 10. In the submissions from the Tenant the property is described as a ground floor flat with two reception rooms, a bedroom a separate kitchen a shower room with a separate WC in the outhouse extension. There is no central heating, but the Landlord provided double glazing approximately ten years ago. The Tenant has provided the carpets, curtains and white goods. It is explained that there is no parking provided but permit parking is available. There is no garden or balcony but access to a communal garden. It is acknowledged that the property is in reasonable condition but that it is un-refurbished and has uneven floors and is in poorer condition that comparable properties. It is stated that it has taken the landlord an extraordinary amount of time to resolve the plumbing issues with the shower.

Landlords’ Submissions 11. There were no written submissions from the Landlord.

Determination and Valuation 12. The Tribunal initially needs to determine 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 that is considered usual for such an open market letting. In doing this, the Tribunal will consider the rental value of the property and will not the personal circumstances of the Tenant, as that is not a factor envisaged by the Act.

13. The parties have not provided any comparable evidence, therefore, in the Tribunal’s general knowledge and experience rather than any specific knowledge, the Tribunal is of the opinion that the subject flat would achieve a rent in the region of £1,800.00 per month. This reflects that this is equivalent to a two-bedroom flat but takes note that the bathroom arrangement is in a converted outhouse. However, at this level of rent the flat would be furnished with suitable floor coverings, curtains/window coverings and a range of kitchen appliances and be in a refurbished condition with a refurbished kitchen and bathroom and with full central heating. In the opinion of the Tribunal a prospective tenant would reduce their rental bid for a property with un-refurbished kitchen and bathroom, without central heating and without carpets, curtains and kitchen appliances and I consider such a reduction would be in the region of 30%.

14. Next aspect to be considered is the issue of scarcity. The Tribunal was not provided with any specific evidence on this issue. However, the issue of scarcity is considered on the basis of the number of properties available to let and also considering the demand for such properties and over a really large area. Neither party provided any specific evidence in respect of scarcity. Therefore, using our knowledge and experience we consider that in the wide geographical area of Greater London there is an imbalance between supply and demand and this impacts upon rental values.

Accordingly, I make a deduction for scarcity of approximately 20%. The full valuation is shown below.

£/month Market Rent

1,800.00

Less No central heating

) Un-refurbished kitchen and bathroom

) 30% No provision of carpets, curtains and white goods )

540.00

1,260.00 Les Scarcity

approx. 20%

252.00

1,008.00

15. The sum of £1,008.00 per month and equates to approximately £232.50 per week.

Decision 16. The uncapped fair rent initially determined by the Tribunal, for the purposes of section 70, was £232.50 per week. The capped rent for the property according to the provisions of the Rent Acts (Maximum Fair Rent) Order 1999 is calculated at £256.00 per week. The calculation of the capped rent is shown on the decision form. In this case the lower rent of £232.50 per week is to be registered as the fair rent or this property.

17. Accordingly, the sum of £232.50 per week will be registered as the fair rent with effect from 18 May 2022 being the date of the Tribunal's decision.

Chairman: [NAME]: 18 May 2022

APPEAL PROVISIONS

These summary reasons are provided to give the parties an indication as to how the Tribunal made its decision. If either party wishes to appeal this decision, they should first make a request for full reasons and the details of how to appeal will be set out in the full reasons.