First-tier Tribunal Determines Fair Rent for Property

OUTCOME: Allowed

First-tier Tribunal – Property Chamber File Ref No. LON/00AW/F77/2022/0008

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 2 [ADDRESS], [POSTCODE]

[NAME] [NAME]

Landlord [APPELLANT]

Tenant Mr [APPELLANT]

1. The fair rent is £8150.50 Per quarter (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 22 March 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 £ 10,400 ......................................................................................................................................................... per quarter 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 the same as/below the maximum fair rent of £ ......... per ................... including £ ......................................... per ................................ for services (variable) prescribed by the Order.

Chairman A [NAME] of decision 22 March 2022

MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 317.7

PREVIOUS RPI FIGURE Y 275.8

X 317.7 Minus Y 275.8 = (A) 41.9

(A) 41.9 Divided by Y 275.8 = (B) 0.15192

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

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.20192

Last registered rent* 6781.00 Multiplied by (C) = 8150.23 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 8150.50

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

MAXIMUM FAIR RENT = £8150.00 Per quarter

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/00AW/F77/2022/0009

HMCTS code :

P: PAPERREMOTE

Property : 2 [ADDRESS], [POSTCODE] Landlord : [COMPANY] : [APPELLANT] Tenant : Mr [COUNSEL] : In Person Type of [NAME] : Determination of a fair rent under section 70 of the Rent Act 1977 Tribunal Members :

Mr [NAME] [NAME] of Decision :

22 March 2022

Date of Reasons : 22 March 2022

REASONS

Covid-19 pandemic: description of hearing

This has been a remote hearing on the papers. The form of remote hearing was P:PAPERREMOTE. The Directions dated 30 April 2021 set out that the tribunal was not able to hold face to face hearings or carry out internal inspections. The decision made is described at the end of these reasons.

Background

1. On 6 September 2021, the Landlord applied for registration of a fair rent of £38,480 per annum.

2. The Rent Officer registered a rent of £7926.50 per quarter. The rent was registered on 1 November 2021 and is effective from the same date. The rent was the capped rent which was below the s70 rent of rent of £9050.00 per quarter.

3. Accommodation is a Terraced house on basement to second floors with central heating and comprising Basement: 2 rooms, kitchen, patio, utility room Ground: 2 rooms, WC First: 2 rooms, 2 bathroom/WC Second: 2 rooms, bathroom/WC, roof terrace.

4. The previous registered rent was £6781.00 per quarter and was registered on 30 November 2017 and effective from the same date. The rent was the capped rent which was below the s70 rent of £9700 per quarter.

5. The Tenant objected to the registered rent by letter dated 13 November 2021 and the matter was referred to the tribunal.

6. On 19 January 2022, the tribunal issued Directions for proceeding by written representations.

Evidence

The Landlord’s Case

7. The Landlord submitted evidence of the most recent lettings in [ADDRESS] which was not disputed. No works have been carried out at [ADDRESS] since the 2020 letting.

Property No. of beds Furnished / unfurnished Date Rent (pw) Rent (pa) [ADDRESS] 4 Unfurnished January 2022 £2,550 £132,600 [ADDRESS] 3 Unfurnished April 2021 £1,995 £103,740 [ADDRESS] 3 Unfurnished January 2021 £1,895 £98,540 [ADDRESS] 3 Unfurnished Novembe r 2020 £1,900 £98,800 [ADDRESS] 3 Unfurnished January 2020 £1,950 £101,400 [ADDRESS] 4 Unfurnished January 2020 £2,050 £106,600 [ADDRESS] 4 Unfurnished Novembe r 2019 £2,100 £109,200

The Tenant’s case

8. No rental evidence was submitted by the Tenant. The objection letter made reference to the state of the street but no details have been provided.

Inspection

9. In accordance with the directions the tribunal did not inspect the property. The tribunal took into account photographs on [ADDRESS] which show limited detail.

The Law

10. When determining a fair rent in accordance with section 70 of the Rent Act 1977, the tribunal has regard to all the circumstances (other than personal circumstances) including the age, location and state of repair of the property.

11. 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 emphasized 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 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.

12. The rent has been previously registered, and the Rent Acts (Maximum Fair Rent) Order 1999 therefore applies unless there are significant improvements

made by the Landlord which increase the rent which would be registered by more than 15%. There are no such improvements in this case

Discussion and Valuation

13. In addition to the evidence provided by the Landlord the tribunal has relied on its knowledge and experience.

14. The tribunal firstly has to consider the rent in accordance with section 70 of the Rent Act as a market rent less scarcity. The tribunal has considered the rental evidence and places weight on the letting of [ADDRESS] as the most recent 4 bedroom house letting in the street. It has also applied its knowledge and experience and considers that the rent for the subject property, in this location, and in the condition and with the amenities which the market would expect, would be £2500.00 per week (£32,500 per quarter). The tribunal has adjusted for the condition of the property, lack of white goods and for the repairing terms of the tenancy as compared with a standard assured shorthold tenancy and makes a deduction of 60% for these factors.

15. The Tribunal found that there was substantial scarcity of letting property in the locality of Greater London and using its knowledge and experience made a deduction of 20% from the adjusted market rent. The calculation of the s70 rent is set out below.

S70 Rent per w PQ Market rent 2,500.00 £ 32,500.00 £ less condition & terms 60% 1,500.00 -£ 19,500.00 -£ adjusted rent 1,000.00 £ 13,000.00 £ less scarcity off adj rent 20% 200.00 -£ 2,600.00 -£ Fair rent 800.00 £ 10,400.00 £

Capped rent

16. In accordance with the Rent Acts (Maximum Fair Rent) Order 1999 the maximum rent is the previous registered rent increased in accordance with the Order which provides for the previous rent to be increased by the percentage increase in the retail prices index plus 5% if the [NAME] is a second or later [NAME] since 1 February 1999.

17. The previous registered rent was £6781.00 per quarter. The retail prices index figure to be used is the figure published in the month before the decision. The decision was made in March, and the latest figure published was 317.7 and which is the upper figure to be used. The index at the date of the last registration

was 275.8. Applying the formula produces a maximum fair rent of £8150.23.00 per quarter which is below the s70 rent of £10,400 per quarter.

18. The rent to be registered is the lower of the two figures and is the capped rent of £8150.00 per quarter.

19. The effective date is the date of the decision which is 22 March 2022.

[NAME] [NAME] - RIGHTS OF APPEAL

• The Tribunal is required to set out rights of appeal against its decisions 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.