First-tier Tribunal Determines Fair Rent for Property

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. CHI/43UF/F77/2019/0061

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 34a [ADDRESS], [POSTCODE]

[NAME] Mr [RESPONDENT]

Landlord [NAME] ([COMPANY]) [APPELLANT]

Tenant Mrs [APPELLANT]

1. The fair rent is £730.00 Per Calendar Month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 16 December 2019

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

not applicable

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

n/a Per n/a

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 £792.00 per calendar month prescribed by the Order.

[NAME] of decision 16 December 2019

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 290.4

PREVIOUS RPI FIGURE Y 274.7

X 290.4 Minus Y 274.7 = (A) 15.7

(A) 15.7 Divided by Y 274.7 = (B) 0.057153

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.107153

Last registered rent* £715.00 Multiplied by (C) = 791.61 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £792.00

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £792.00 Per Calendar Month

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.

© CROWN COPYRIGHT 2019

Case Reference : CHI/43UF/F77/2019/0061

Property : 34a [ADDRESS] [POSTCODE]

Landlord

: [NAME] ([COMPANY]) [APPELLANT].

Represented by : [APPELLANT]

Tenant : Mrs. [APPELLANT]. [APPELLANT] of Application : Rent Act 1977 (“the Act”) Determination by a First Tier Tribunal of the fair rent of a property following an objection to the rent registered by the Rent Officer.

Tribunal Members : [NAME] (Valuer Chairman)

[NAME] (Valuer Member)

Date of Inspection : Monday 16th December 2019

No hearing. Paper determination.

Date of Decision : Monday 16th December 2019

_______________________________________________

DECISION AND REASONS ____________________________________

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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Background 1. On 8th July 2019 the landlord applied to the Rent Officer for registration of a fair rent of £822 per month for the property. The Application states that the landlord provides no services.

2. The previous registration by the Rent Officer on 15th August 2017 was £715 per calendar month, effective from 26th September 2017. The uncapped rent is not stated on the register.

3. On the 14th August 2019, the Rent Officer registered a fair rent of £725 per calendar month, effective from 26th September 2017. The amount of the uncapped rent is not stated on the register.

4. The landlord objected to the rent determined by the Rent Officer and the matter was referred to the First Tier Tribunal (Property Chamber) Residential Property. This was a late application which was accepted by the Rent Officer.

5. Neither party requested a hearing at which oral representations could be made.

Inspection 6. The Tribunal Members inspected the property on Monday, 16 December 2019 in the company of the tenant, Mrs. [APPELLANT]. The landlord had been informed of the inspection but was not present or represented.

7. The property is a self-contained first floor flat and is part of a building arranged as two self-contained units probably built in about 1937. The rear garden has been subdivided and each flat has exclusive use of the relevant portion. The property is part of a mixed, established residential area within reasonable reach of all usual amenities. There is no garage or space but parking in nearby roads is currently unregulated.

8. The main roof is pitched and covered with tiles. The elevations are brick with rendered and painted panels. The windows in the flat are single glazed, timber casement type and in need of overhaul. The Tribunal noted that the external paintwork to timber surfaces is in need of preparation and renewal and that there are defects to the rear guttering.

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9. An unattractive external staircase leads up to the flat which comprises living room, main bedroom and small additional bedroom, kitchen and bathroom/WC. There is no central heating and limited electric heating has been provided by the tenant. A gas fire in the living room was also installed by the tenant.

10. Carpets, curtains and white goods have been provided by the tenant. The kitchen is small and in need are modernisation and upgrading. The flat was rewired by the landlord about 8 years ago. The bathroom fittings are old and in need of renewal.

11. The tenant has been in occupation for 55 years and it is apparent that little has been to modernise or improve the flat. In addition to matters referred to elsewhere, the Tribunal noted staining caused by condensation to various wall surfaces.

12. The Tribunal has not been provided with a copy of any Tenancy Agreement but the application states that the tenancy began 1st January 1987. As far as repairing and decorating liabilities are concerned, the Application to the Rent Officer states that the landlord is responsible for all repairs and external decorations and that the tenant is responsible for internal decorations and repairs. The Rent Register confirms this allocation of liability for repairs, subject to S11 Landlord and Tenant Act 1985. The parties have not provided any further information concerning the apportionment of responsibility for repairs and decorations. Representations and correspondence 13. Neither party has requested a hearing and the Tribunal thus proceeded to make the determination based on the inspection and written representations. Submissions by Tenant 14. No written representations have been received from the tenant Submissions by Landlord 15. The landlord made written representations and referred to the following comparables which are stated to be self-contained purpose built flats within 1 mile of the subject property.

[ADDRESS]2

2 bed, 1 bath, 1 reception, kitchen £1,200pcm

[ADDRESS] [POSTCODE]

2 bed. 1 bath, 1 reception, kitchen £1,075pcm

[ADDRESS]1

2 bed, 1 bath, reception £1,100pcm

16. The Tribunal has read and considered all the supplied correspondence and the above is only intended to be a summary of relevant points. The law 17. When determining a fair rent, the Committee, in accordance with section 79 of the Rent Act 1977, had regard to all the circumstances including the age, location and state of repair of the property. The Committee also disregarded the effect of (a) any relevant tenant's improvements and (b) 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 18. (a) 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) 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)

19. The Rent Acts (Maximum Fair rent) Order 1999 applies to all applications for registration of a fair rent (other than a first application for registration) made to the Rent Officer on or after 1 February 1999. Its effect is to place a “cap” on the permissible amount of the increase of a fair rent between one registration and the next by reference to the amount of the increase in the retail price index between the date of the two registrations plus 7.5% in the case of a first re-

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registration and 5% thereafter. The Committee must first determine a fair rent (“the uncapped rent”) and then consider whether the Order applies so as to limit the increase in the rent (“the capped rent”)

20. There are two principle exceptions. This is not the first registration so the relevant exception is contained in Art.2(7) of the 1999 Order and is as follows: “This article does not apply in respect of a dwelling-house if because of a change in the condition of the dwelling-house or the common parts as a result of repairs or improvements (including the replacement of any fixture or fitting) carried out by the landlord or a [NAME], the rent that is determined in response to an application for registration of a new rent under Part IV exceeds by at least 15% the previous rent registered or confirmed.” The Tribunal has not been made aware of any relevant works carried out to the property by the Landlord since the last registration. Valuation and Determination 21. First of all the Tribunal determined what rent the landlord could reasonably be expected to obtain for the property in the open market if it were let today on the terms and in the condition that is considered usual for such an open market letting.

22. The tenant did not provide any comparable evidence of rental value. The information provided by the landlord is sparse and the three comparables mentioned are not directly comparable to the subject.

23. The methodology applied by the applicant is also confusing. The application to the Rent Officer was for the sum of £822 per calendar month. However, the statement considers that “the open market rental value of [ADDRESS] is £1,150 per calendar month fully modernised” It then proceeds to make various deductions amounting to £160 pcm resulting in an adjusted rent of £990 per calendar month.

24. The tribunal had regard to the supplied comparables and supplemented this with its own knowledge of general rent levels for this type of property and

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determined that the starting point should be £975 per month.

25. However, this starting rent is on the basis of a letting in good, modernised condition. In this case, adjustment must be made to reflect the work carried out by the tenant and the need for work of modernisation as the rental bid in present condition would differ from the rent if the property were were in good, modernised condition. In addition, the tenant’s repairing obligations are more onerous than would normally be included in an Assured Shorthold Tenancy. In order to reflect these considerations, the Tribunal has made the following deductions from the starting point of £975 per calendar month: Unmodernised kitchen

£ 40 Lack of central heating

£ 50 White goods provided by the tenant

£ 20 Worn and dating bathroom fittings

£ 30 Carpets and curtains provided by the tenant

£ 50 Tenant responsible for internal decorations

£ 35 External decorations and outstanding repairs

£ 20

TOTAL DEDUCTIONS £ 245 per calendar month Adjusted rent

£ 730 per calendar month 26. We then considered the question of scarcity as referred to above. The Tribunal did not consider that there was any substantial scarcity element within a radius of 30 miles of the subject property and accordingly no further deduction was made for scarcity.

27. We therefore determined that the uncapped Fair Rent is £ 730 per calendar month exclusive of council tax and water rates.

28. The Tribunal finds that by virtue of the Rent Acts (Maximum Fair Rent) Order 1999 the maximum fair rent that could have been registered in the present case is the sum of £792 per calendar month.

29. As the adjusted rent is below the rent calculated in accordance with the Maximum Fair Rent Order, we determine that the lower sum of £730 per calendar month is registered as the fair rent with effect from Monday, 16th December 2019

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30. For information only, details of the rent calculated in accordance with the Maximum Fair Rent Order details are shown on the rear of the Decision Accordingly, the sum of £730 per calendar month will be registered as the fair rent with effect from Monday, 16th December 2019, being the date of the Tribunal's decision. Chairman: [NAME]:

Monday, 16th December 2019 Appeals

31. A person wishing to appeal this decision to the Upper Tribunal ([NAME]) must seek permission to do so by making written application to the First-tier Tribunal at the Regional office which has been dealing with the case.

32. The application must arrive at the Tribunal within 28 days after the Tribunal sends to the person making the application written reasons for the decision.

33. If the person wishing to appeal does not comply with the 28-day time limit, the person shall include with the application for permission to appeal a request for an extension of time and the reason for not complying with the 28-day time limit; the Tribunal will then decide whether to extend the time limit, or not to allow the application for permission to appeal to proceed.

34. The application for permission to appeal must 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.

34. If the First-tier Tribunal refuses permission to appeal, in accordance with section 11 of the Tribunals, Courts and Enforcement Act 2007, and Rule 21 of the Tribunal Procedure (Upper Tribunal) ([NAME]) Rules 2010, the Applicant/Respondent may make a further application for permission to appeal to the Upper Tribunal ([NAME]). Such application must be made in writing and received by the Upper Tribunal ([NAME]) no later than 14 days after the date on which the First-tier Tribunal sent notice of this refusal to the party applying for permission.