First-tier Tribunal Determines Fair Rent for Property

OUTCOME: Allowed

First-tier Tribunal – Property Chamber File Ref No. LON/00AT/F77/2019/0098

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 29 [ADDRESS], [POSTCODE]

Mr [NAME] Miss [RESPONDENT]

Landlord Northumberland and [APPELLANT]

Tenant Mrs [APPELLANT]

1. The fair rent is 11340.00 Per Year (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 01 October 2019

3. The amount for services is 1392.96 Per Year

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

N/A Per

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

None

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 the same as/below the maximum fair rent of £12542.00 per Year including £1392.96 per Year for services prescribed by the Order.

Chairman Mr [NAME] Date of decision 1st October 2019

MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 289.2

PREVIOUS RPI FIGURE Y 264.9

X 289.2 Minus Y 264.9 = (A) 24.3

(A) 24.3 Divided by Y 264.9 = (B) 0.091733

First application for re-registration since 1 February 1999 - NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.141733

Last registered rent* 10985.00 Multiplied by (C) = 12541.93 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 12542.00

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £12542.00 Per Year

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

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : KA/LON/00AT/F77/ 2019/0098 Property : 29 [ADDRESS] [POSTCODE] Applicant : [redacted] : In house Respondent : [redacted] : In person Type of Application : Determination of a fair rent under section 70 of the Rent Act 1977 Tribunal Members :

Mr [NAME] (Chairman) [NAME] of Decision : 2 August 2019 Date of Reasons : 21 October 2019

REASONS

2

Background

1. On 11 March 2019 the landlord applied to the Rent Officer for registration of a fair rent of £239.33 per week (£12,445 per annum) for the above property.

2. The rent payable at the time of the application was £211.25 per week (£10,985 per annum).

3. On 17 April 2019 the Rent Officer registered a fair rent of £11,500 per annum with effect from the same date.

4. By letter dated 15 May 2019, the landlord objected to the rent determined by the Rent Officer and the matter was referred to the Tribunal.

5. On 12 June 2019 the Tribunal issued directions setting the matter down for determination by written representations. The landlord was directed to serve any documents or evidence upon which it sought to rely by 5 July and the tenant by 19 July 2019. The Directions stated that the Tribunal would inspect the property after 10 am on 2 August 2019.

6. The Tribunal made its determination on 2 August 2019 and the landlord subsequently requested Reasons.

[ADDRESS] of the Property `

7. The tenant informed the Tribunal that she would be unable to allow inspection on the 2 August 2019. Therefore, the Tribunal carried out an unaccompanied external view of the property, on 2 August 2019. Based on this and information provided by the rent register, the property comprises a self-contained top floor flat comprising 2 bedrooms, kitchen and bathroom. There is central heating. Windows are sliding sash timber framed. The property is situated on a quiet road in Chiswick, a high value area.

Evidence

The Landlord’s Case

8. The landlord’s case was set out in written representations. The landlord referred to three comparables of two bedroomed flats in Chiswick ranging from £1,440 to £1,573 per calendar month supported by the agents’ particulars. The landlord referred to the desirable location and nearby railway stations. The landlord contended that a fair rent of £11,500 per annum was appropriate.

3

The Tenant’s Case

9. The tenant’s written representations may be summarised as follows, (disregarding comments relating to her personal circumstances which the tribunal, by law, must disregard (see below)). There was a history of water ingress latterly in 2015; the flat is unmodernised; the tenant had installed central heating the bathroom suite and carried out decoration and the landlord’s comparables were all modernised properties.

The Law

10. 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.

11. In [COMPANY] v Chairman of the Greater Manchester etc. Tribunal (1995) 28 HLR 107 and [NAME] v [NAME] 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 - 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).

Valuation

12. From the landlords comparables the Tribunal accepted the landlord’s that the subject property would command a rent of approximately 1575 per month (£18,900 per annum) if it had been in the condition considered usual for a modern letting at a market rent. However, the subject property is not in such a condition. Further, the effect of the tenants’ improvements (bathroom and central heating) and the unmodernised kitchen must be taken into account ant the tenants’ white goods. Therefore, it was necessary to adjust that hypothetical rent of £36,500 per annum to allow for the differences between the condition considered usual for such a letting and the condition of the actual property. The Tribunal considered that the effect of the condition required an adjustment from the rent of 25% or £4,725 per annum.

13. This leaves an adjusted market rent for the subject property of £14,175 per annum.

4 14. The Tribunal found that there was substantial scarcity in the locality of Greater London and therefore made a deduction of 20% (£2835 per annum) from the adjusted market rent to reflect this element.

15. It follows that the Tribunal found that the fair rent was £11,340 per annum.

16. This was not limited by the Rent Acts (Maximum Fair Rent) Order 1999, as it fell below that level, the calculations for which were supplied with the Notice of the Tribunal’s Decision.

17. The Tribunal considered the services schedule provided by the landlord and considered that that part of the rent attributable to services to a tenant was as follows:

pension contributions 2,600.00 £ employers ni 11,600.00 £ salaries 117,500.00 £ Clothing refershments welfare 10,000.00 £ Equipment maintenance 10,000.00 £ Telephone and Internet 3,800.00 £ Light and heat 7,000.00 £ Common parts maintenance 18,000.00 £ Streetlights 1,200.00 £ Gardens and trees 14,000.00 £ Pest control 500.00 £ Window cleaning 1,300.00 £ 197,500.00 £ 0.6133% 1,211.27 £ Profit / management 15.00% 181.69 £ 1,392.96 £

18. As the rent is not registered as having a variable service charge this does not affect the amount to be registered as fair rent.

19. Accordingly, the sum of £11340 per annum was determined as the fair rent with effect from 2 August 2019 being the date of the Tribunal’s decision.

[NAME] Chairman

ANNEX - 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 application for permission must be

5 made to the First-tier Tribunal at the Regional office which has been dealing with the case.

• The application for permission to appeal must arrive at the Regional office within 28 days after the Tribunal sends written reasons for the decision to the person making the application.

• If the application is not made within the 28-day time limit, such application 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 application for permission to appeal to proceed despite not being within the time limit.

• The application 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 making the application is seeking.