First-tier Tribunal Determines Fair Rent for Property

OUTCOME: Allowed

FR27 First-tier Tribunal – [NAME] Chamber File Ref No. LON/OOAW/F77/2021/0246

Notice of the Tribunal [NAME] 1977 Schedule 11

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

Mr [RESPONDENT] MA LLM FRICS

Landlord [APPELLANT].

Tenant [APPELLANT]

1. The fair [NAME] is £1377.00 Per month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 28th September 2021

3. The amount for services is n/a Per month

negligible/not applicable

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

n/a Per month

negligible/not applicable

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

6. The capping provisions of the [NAME] ([NAME]) Order 1999 apply (please see calculation overleaf)/ do not apply because 1st registration/15% exemption.

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 the same as/below the maximum fair [NAME] of £ 1401.50 per annum prescribed by the Order.

[NAME] MA LLM FRICS Date of decision 28th September 2021

FR27 [NAME] FIGURE X 307.40

PREVIOUS RPI FIGURE Y 265.50

X 307.40 Minus Y 265.50 = (A) 41.90

(A) 41.90 Divided by Y 265.50 = (B) 0.157815

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) 1.207815

Last registered [NAME]* £1160 per month Multiplied by (C) = £1401.06 per month *(exclusive of any variable service charge)

Rounded up to nearest 50p = £1401.50 per month

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

[NAME] = £1401.50 Per month

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].

FR27

Case Reference

: LON/OOAW/F77/2021/0246

[NAME] : 36 C [ADDRESS], [POSTCODE]

Tenant

: [APPELLANT]

Landlord : [APPELLANT] of Application : Determination of a [NAME] under section 70 of the [NAME] 1977

Tribunal

: Mr [NAME] : P-Paper (paper, video, audio)

Date of Decision : 28th September 2021

Date of Statement of Reasons : 28th September 2021

_______________________________________________

Statement of Reasons

____________________________________

© CROWN COPYRIGHT 2021

Background S E C FIRST - TIER TRIBUNAL [NAME] CHAMBER ([NAME])

FR27 By Application received 14th May 2021 the [NAME] applied to the [NAME] for re registration of a fair [NAME] of £3500.00 per month, the [NAME] having been previously registered on the 24th January 2017 at £1160 per month , noting £69.71 per month being attributed to services. On the 9th July 2021 , the [NAME] registered a fair [NAME] of £1210 per month with effect from the same date noting £200.48 per month being attributed to services. In a letter dated 28th July 2021 the Landlord objected to the [NAME] determined by the [NAME] and the matter was referred to the First –tier Tribunal ([NAME] Chamber) ([NAME]). Directions were issued by the Tribunal on the 10th August 2021. In those Directions, the parties were informed that in accordance with Public Health England’s advice to avoid unnecessary travel and social interaction for the time being, the Tribunal would not hold an oral hearing, unless so requested by either or both the parties, or would it inspect the [NAME]. Neither party has requested a hearing. Thereafter, the Directions made provision for the filing with the Tribunal of the parties’ respective written submissions and, in particular, for the completion of a reply form giving details of the [NAME] and including any further comments the parties wished the Tribunal to take into account in making its determination. The Landlord to submit representation to the Tribunal copied to the Tenant by 25th August 2021. Similarly the Tenant to submit representations to the Tribunal by 8th September 2021 with copy to Landlord. Finally the Landlord to submit any reply to the Tribunal in relation to the Tenants submissions, by 15th September 2021.

The Tenancy The tenancy was dated 14th November 1988 , between the then landlord Mr [RESPONDENT] and [RESPONDENT]. For 6 months from the 21st November 1988 at £ 750.00 per month. At paragraph 5 in the tenancy the Landlord agrees “To pay and keep the Tenant indemnified against all rates taxes and water rate assessment impositions , and outgoings payable in respect of the [NAME] during the tenancy but not any charges for the supply of gas or electric current or the use of telephones if any , to or on the [NAME] during the tenancy …” At the expiration of the contractual term the tenancy become a statutory (protected) periodic tenancy. The tenancy (not being for a fixed tenancy of 7 years or more) is subject to section 11 of the Landlord and Tenant Act 1985 which sets out the landlords statutory repairing obligations; the tenant is responsible for internal decorations.

The [NAME] The inventory for the [NAME] within the tenancy notes the [NAME] comprising, one bedroom, one living room, a kitchen and a bathroom. It notes further that, the [NAME] is carpeted and curtained, let with a cooker and a fridge.

The Condition of the [NAME] of a meeting between the [NAME] officer, the landlord and the tenant for hearing dated 5th June 2014, submitted by the Landlord with their Application for Registration of the [NAME] , indicate that the Tenant has rewired the [NAME]. The [NAME] has no central heating. The notes indicate the Tenant has replaced or updated the units in the kitchen and bathrooms. There is evidence of rot in the sash windows and signs of damp in the living room.

Services and repairs Attached to the Application for registration of the [NAME] is an invoice from Thames Water for £412.75 dated 4th May 2021. The Landlord has also submitted evidence of the service charge from the freeholder of the building for the leasehold interest of 36 C [ADDRESS]. This in the form of an e mail

FR27 dated 6th May 2021 from Savills to the Landlord. The service charge for the [NAME] 36 C [ADDRESS] is £4059.12 plus a balancing charge of £282.56 making £4341.68 for the year 24th June 2019 to 23rd June 2020. Additionally, the Landlord has submitted evidence of “carrying out essential repairs” to 36 C [ADDRESS]. These are outlined in a letter from [RESPONDENT] to the Landlord dated 16th July 2020. The works comprised; Removal of fungal decay, damp remedial works, removal of asbestos - £ 60,749.65 Replacement of timber sash windows - £7800.00 Chasing for electrical works for tanking contractor - £ 4182.00 Temporary rehousing of [NAME] - £8,000.00

Relevant Law Provisions in respect of the jurisdiction of the Tribunal and the determination of a fair [NAME] are found in Schedule 11, Part 1, paragraph 9(1) to the [NAME] 1977, as amended by paragraph 34 of the Transfer of Tribunal Functions Order 2013, and section 70 of the [NAME] 1977. [NAME] 1977 Schedule 11, Part 1, paragraph 9 (as amended) “Outcome of determination of fair [NAME] by appropriate tribunal 9.-(1) The appropriate tribunal shall- (a) if it appears to them that the [NAME] registered or confirmed by the [NAME] officer is a fair [NAME], confirm that [NAME]; (b) if it does not appear to them that that [NAME] is a fair [NAME], determine a fair [NAME] for the dwelling house.” Section 70: Determination of fair [NAME] (as amended) “(1) In determining, for the purposes of the Part of this Act, what [NAME] is or would be a fair [NAME] under a [NAME] tenancy of a dwelling house, 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 dwelling-house, … (b) if any furniture is provided for the use under the tenancy, the quantity, quality and condition of the furniture [, and (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 purposes of the determination it shall be assumed that the number of persons seeking to become tenants of similar dwelling-houses in locality on the terms (other than those relating to [NAME]) of the [NAME] tenancy is not substantially greater 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 [NAME] tenancy or any [NAME] 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 [NAME] tenancy or any [NAME]; (c), (d) …[repealed] (e) if any furniture is provided for use under the [NAME] tenancy, any improvement to the furniture by the tenant under the [NAME] tenancy or any [NAME] 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 him, or any sub-tenant of his.”

FR27 Consequently, when determining a fair [NAME] the Tribunal, in accordance with the [NAME] 1977, section 70, has regard to all the circumstances including the age, location and state of repair of the [NAME]. It also disregards the effect of (a) any relevant Tenant’s improvements and (b) the effect of any disrepair or defect attributed to the Tenant of any [NAME] in [NAME] under the [NAME] tenancy, on the rental value of the [NAME]. 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 [NAME] is the market [NAME] for the [NAME] 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 terms- other than as to [NAME]- to that of the [NAME] tenancy) and (b) that for the purposes of determining the market [NAME], assured tenancy (market rents) are usually appropriate comparables. (The rents may have to be adjusted where necessary to reflect any differences between the comparables and the subject [NAME]).

In considering scarcity under section 70 (2), the Tribunal recognises that: (a) there are considerable variations in the level of a scarcity in different parts of the country and that there is no general guidance or “rule of thumb” to indicate what adjustments should be made; the Tribunal, therefore, considers the case on its merits; (b) terms relating to rents are to be excluded. A lack of demand at a particular [NAME] is not necessarily evidence of scarcity; it may be evidence that the prospective tenants are not prepared to pay that particular [NAME].

Fair rents are subject to a capping procedure under the [NAME] ([NAME]) Order 1999 which limits increases by a formula based on the proportional increase in the Retail Price Index since last registration. The only exception to this restriction on a fair [NAME] is provided under paragraph 7 of the Order where a landlord carries out repairs or improvements which increase the [NAME] by 15% or more of the previous registered [NAME].

Submissions Landlord The Landlord submits the [NAME] fair [NAME] should be determined at £3500pcm , on the basis of its locality and nature. Specifically with a disregard to its condition which the Landlord assets is caused by the Tenants refusal of access to carry out repairs. The Condition of the [NAME] of a meeting between the [NAME] , the landlord and the tenant for hearing dated 5th June 2014 , submitted by the Landlord with their Application for Registration of the [NAME] , indicate that the Tenant has rewired the [NAME]. The [NAME] has no central heating. The notes indicate the Tenant has replaced or updated the units in the kitchen and bathrooms. There is evidence of rot in the sash windows and signs of damp in the living room.

Services and repairs Attached to the Application for registration of the [NAME] is an invoice from Thames Water for £412.75 dated 4th May 2021. The Landlord has also submitted evidence of the service charge from the freeholder of the building for the leasehold interest of 36 C [ADDRESS]. This in the form of an e mail dated 6th May 2021 from Savills to the Landlord. The service charge for the [NAME] 36 C

FR27 [ADDRESS] is £4059.12 plus a balancing charge of £282.56 making £4341.68 for the year 24th June 2019 to 23rd June 2020. The annual charge of £4059.12 is detailed in e mail 23rd July from the [NAME] to the Landlord detailing how the registered [NAME] of £1210 dated 9th July 2020. The annual charge of £4059.12 comprises ;

Item £ Pest control 122.45 Water Risk assessment 862.80 Electricity 4400.00 Fire Protection Equipment 2862.49 CCTV and Access Systems 733.99 TV Arial 350.00 Special Cleaning 338.96 Lift Maintenance 1338.88 Porterage ( Less 15% landlord liability) 29697.67 Sub total 41840.24 Mgt and profit 15% 6276.04 Grand total 48,116.28 Flat share at 5% 2405.81 per year = £200.48 per month

Additionally the Landlord has submitted evidence of “carrying out essential repairs” to 36 C [ADDRESS]. These are outlined in a letter from Savills to the Landlord dated 16th July 2020. The works comprised; Removal of fungal decay, damp remedial works, removal of asbestos - £ 60,749.65 Replacement of timber sash windows - £7800.00 Chasing for electrical works for tanking contractor - £ 4182.00 Temporary rehousing of [NAME] - £8,000.00

Rental Level The Landlord seeks a rental level of £3500 pcm within the Application of Registration.

Tenant

Condition of [NAME] of a meeting dated 2nd July 2021 between the [NAME] officer , the landlord and the tenant record disputed issues regarding access to the [NAME]. The Landlord contended that access had been denied over the period of ownership, the Tenant expressed the view that issues of access had been resolved in 2016. Inspection dated 1st July 2021 carried out by [NAME] noted “Converted north facing basement flat consisting of: Living room – spacious, with sash windows suffering from damp and signs of dry rot beneath windows as per previous inspection. The evidence of dry rot seems to be spreading in the living room. Windows are draughty and rattle. Bare flooring. Room lacks natural sunlight Kitchenette – off living room and is quite small, the tenant has updated and replaced most of the cupboards, worktops and stainless-steel sink. Flooring also replaced by tenant, all appliances within the kitchen have been replaced by the tenant. The kitchen

FR27 has suffered leaks but there have been no further leaks for a while – this has caused the wall to swell a little at the point of leak. Bath/toilet – no natural light updated and replaced by tenant 5 years ago also via grant from the local authority home improvement grant. Tenant replaced all fixtures and tiling. The shower was installed via grant. The vent in the bathroom has not been working for over a year and there now seems to be signs of mould and damp. Cupboard off hallway – holds hot water cylinder, which has been replaced by the landlord. Bedroom - Lacks natural light (tenant has blocked both windows due to security as there have been break ins. Bedroom fits a reasonable double bed. Windows are quite poor. There is no central heating and the flat is quite cold. Heating is via portable electric heaters. Common parts in basement are in good decorative condition/refurbished and maintained to a good standard. Tenant did show some bulging of painting suggesting signs of damp. Externally – the works from previous inspection seems to be complete and seems to be in good repair. The drainage pipe outside the living room window is not directly fixed to the draining underground and is open – unlike the others outside the building and tenant thinks could be why there is damp in that area? This issue remains unresolved, (please see consultation notes). These inspection notes have been updated to reflect the changes to the condition of the flat from the last inspection by the [NAME] in 2016.” The Tenant submits as evidence, through correspondence dated 1st July 2021 with the [NAME] , the findings of a High Court Case. The case details are not provided to the Tribunal but the Tenant asserts , the Court found that the works of disrepair in 2016 were of limited nature. The Tenant asserts that refusal by the Landlord to rectify have caused them to considerably magnify. Rental level The Tenant has made several submissions relating to rental levels for [NAME] in the area in terms of general trends over the past couple of years.

Reasons for Decision Condition of the [NAME] is made to section 70, the Tribunal in making the determination must have regard to the age, character, locality and state of repair of the dwelling-house, In doing so the Tribunal needs to take into consideration any disrepair or other defect attributable to a failure by the tenant under the [NAME] tenancy or any [NAME] to comply with any terms thereof. Additionally, any improvements carried out by the tenant should be disregarded. Failure of the Landlord to repair is taken into account within the condition of the [NAME].

FR27 The nature of the [NAME] The Tribunal has considered all the representations made in this respect and in particular found the inspection of the 1st of July 2021 by the [NAME] officer to be of considerable use. The Tribunal finds , under section 70 (1) the [NAME] comprising , one bedroom, lower ground floor , north facing, one living room, a kitchen , bathroom and that the [NAME] is carpeted and curtained, let with a cooker and a fridge. Disrepair and Landlords Improvements The Tribunal finds for section 70 (3)(a) that the Tenant there is disrepair that could have been avoided had the Tenant provided access to the Landlord. The letter 16th July 2020 from [RESPONDENT] to the Landlord identifies works needed which comprise “carrying out essential repairs”. The parties’ representations identify that relations have deteriorated to a point where the Tenant does not want to meet with the Landlord. Rectification of disrepair and installation of improvements are two different matters. The Landlords reply form to the tribunal dated 27th August , the Landlord notes at the section titled Improvements, “ Improvements have been organised for the Tenant such as central heating , double glazing , new kitchen , new bathroom, new boiler , new double bed, and replacement furniture. The Tenant refuses access to the [NAME] to allow the works to be carried out, or any of the furnishing updated” Refusal to allow improvements in itself does not constitute refusal for access to carry out repairs. Refusal to allow access for improvements, does not have any impact on the ascertainment of the [NAME] under section 70. The [NAME] needs to be considered as let , ignoring any tenants improvements , but considering its state of repair and nature. Evidence of refusal by the Tenant to allow the Landlord to carry out repairs , and that disrepair negatively impacting on the level of [NAME] reasonably ascertained under section 70 would be material to the question of rental level. The Tribunal finds that , the tenant has persistently refused the landlord access to the [NAME] to carry out repairs. This has led to a deterioration of the quality of the occupation. The Landlord does have right to enter in order to affect repairs , but the Tenant was in breach of their tenancy , at 3 (i) “to permit the landlord or superior landlord , or their respective agents , with or without workmen, and others at all reasonable times , during the tenancy to enter the [NAME], for the purposes of repairing or painting the outside of , or carrying out or completing any structural or other necessary or [NAME] repairs, to the building or examining the state and condition of the [NAME] “ The Tribunal therefore has disregarded any impact on rental value of the disrepair caused by the inability for the Landlord to access to carry out the required repairs. Tenants Improvements Section 70 (3)(b) , requires that tenants improvements should be disregarded. The Tenant in correspondence with the [NAME] on 1st July 2021 noted ; “The new bathroom, kitchen, rewiring and other works done in 2009 were grant-aided because I was in slum conditions. All improvements are by me and I have replaced furniture/white good with better as they have deteriorated so that all furniture, fixtures and fittings are by me, bar the immersion tank and bathroom ventilator (both freeholder) with very few minor exceptions.” The Tribunal also notes [NAME] note of 2nd July which states; “Over the years the tenant has replaced most of the furniture and the only furniture remaining is a sofa, a stool and a mirror. The tenant has installed shelving and cupboards in the kitchen. Most of the improvements were carried out between 2008 -2009, where part was paid by the tenant and part by the Royal Borough of Kensington & Chelsea Home Improvement Grant.” The Tribunal making the best of the evidence surrounding tenants improvements finds that improvements to the extent stated above have occurred. Services

FR27 Extensive submissions were made of costs of services. These fell into three categories. The first, is services specifically noted within the tenancy namely payment of water rates. The Tribunal finds that the inclusion of the payment of water rates should be taken into account when considering the rental bid, being an item not implicant within the bundle of contemporary market rental comparables. The second are general services which leaseholders or their occupants benefit from for example pest control. The Tribunal finds, that these services are implicant within the rental bid evidenced by the comparables and so no specific adjustment is required. Third the proposed costs of the repair work evidenced by the [NAME] letter dated 16th July 2021. The Tribunal notes the condition of the flat and the costs to repair but the material consideration is the application of section 70 , in particular here section 70 (3) (a). Namely the disregard of disrepair caused or exacerbated by the refusal of the Tenant to provide access. Rental level The Landlords Bundle of written submissions dated 27th August 2021 , the landlord provides a schedule of achieved rental comparables. These range in rental value from, £1343 pcm to £2383 pcm let on an exclusive of utilities bills basis. The Tenant in their submission, a note of meeting with [NAME] and Landlord on the 2nd July, notes a rental comparable of £1000pcm previously let at £1800pcm prior to COVID restrictions. Considering the nature of the [NAME] and the services received a tenant would it the date of determination be expected to pay £2250pcm for a [NAME] let on modern terms. However, the [NAME] is not in the condition considered usual for a modern letting at a market [NAME]. Therefore, it is necessary to adjust the above hypothetical [NAME] of £2250 pcm, a deduction of 15% is made. The adjusted [NAME] is £1912 pcm. In addition, the Tribunal determined that there should be a further deduction of 10% to reflect the fact the tenancy’s terms and conditions differ from those of modern tenancies from which the evidence is derived. The [NAME] after this adjustment is £1721 pcm. Thereafter the Tribunal considered the question of scarcity in section 70 (2) of the [NAME] 1977. A figure of 20% was adopted. The [NAME] after this final adjustment was £1377 pcm. The MFR Order 1999 provides for a limit on the increase of a [NAME], the calculation is attached and produces £1401.50 pcm. So adopted £1377.00 pcm from date of decision 28th September 2021.

[NAME] ([NAME]) Order 1999 The [NAME] to be registered is limited by the [NAME] ([NAME]) 1999. The [NAME] calculated in accordance with the Order is £ 1401.50 pcm. This figure is more than the figure calculated by reference to the market [NAME] with adjustments providing £1377.00pcm.

Accordingly, the sum of £1377.00 pcm will be registered as the fair [NAME] with effect from 28th September 2021, being the date of the Tribunal’s decision. Valuer Chair: [NAME]: 28th September 2021

Appeal to the Upper Tribunal A person wishing to appeal this decision to the Upper Tribunal ([NAME] Chamber) on a point of law must seek permission to do so by making a written application to the First-tier Tribunal at the Regional Office which has been dealing with the case which application must:

FR27 a. be received by the said office within 28 days after the Tribunal sends to the person making the application written reasons for the decision. b. identify the decision of the Tribunal to which it relates, state the grounds of appeal, and state the result the party making the application is seeking. If the application is not received within the 28 –day time limit, it must include a request for an extension of time and the reason for it not complying with the 28- day time limit; the Tribunal will then decide whether to extend time or not to allow the application for permission to appeal to proceed.