First-tier Tribunal Determines Fair Rent for Property

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. CHI/23UB/F77/2019/0018

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 6 [ADDRESS], [POSTCODE]

[NAME] Mr [APPELLANT]

Landlord [APPELLANT]

Tenant [RESPONDENT]

1. The fair rent is £65.00 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 03 June 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 £73.50 per week prescribed by the Order.

[NAME] of decision 3 June 2019

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 288.2

PREVIOUS RPI FIGURE Y 263.1

X 288.2 Minus Y 263.1 = (A) 25.1

(A) 25.1 Divided by Y 263.1 = (B) 0.0954

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.1454

Last registered rent* £64.00 Multiplied by (C) = 73.30 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £73.50

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £73.50 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 : CHI/23UB/F77/2019/0018

Property : 6 [ADDRESS]

[POSTCODE]

Applicant: [redacted] : [APPELLANT]

Respondent: [redacted]

: None

Type of Application : Rent Act 1977 (“the Act”) Determination by the First-Tier Tribunal of the fair rent of a property following an objection to the rent registered by the Rent Officer.

Tribunal Members : Mr [NAME] R [NAME]

Mr [NAME] of Inspection and Hearing : 3rd June 2019

Date of Decision : 3rd June 2019

_______________________________________________

REASONS FOR DECISION ____________________________________

© CROWN COPYRIGHT 2019

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

RPTS – Case Ref CHI/23UB/F77/2019/0018

2 Summary of Decision

On 3rd June 2019 the Tribunal determined a fair rent of £65 per week with effect from 3rd June 2019.

Background

1. On 29th January 2019 the Landlord’s Agent applied to the Rent Officer for registration of a fair rent of £85 per week for the above property. This would equate to £368.33 per calendar month.

2. The rent was previously registered on the 30th June 2016 at £64 per week following a determination by the Rent Officer. This equates to £277.33 per calendar month.

3. The rent was registered by the Rent Officer on the 1st March 2019 at a figure of £65 per week with effect from the 8th July 2016. This equates to a figure of £281.66 per calendar month.

4. By a letter dated 11th March 2019 the Landlord’s Agent objected to the rent determined by the Rent Officer and the matter was referred to the First Tier Tribunal Property Chamber (Residential Property) formerly the [NAME].

Inspection 5. The Tribunal inspected the property on the 3rd June 2019. Mr [RESPONDENT] was present but neither the Landlord nor Landlord’s Agent was present.

6. The property is a Grade II listed semi-detached house built in 1857 of 9” solid brick walls beneath a plain tiled roof. It has some ornate features to mouldings around the windows, feature ridge tiles and shaped fascias and bargeboards.

7. The property is situated in a small cul-de-sac of similar properties on the western side of Cheltenham, close to a large roundabout, opposite a park and ride car park and adjoining a drive-through KFC hot food outlet.

8. There is a [NAME] food [NAME] nearby and frequent buses to the town centre about 2 miles away.

9. The accommodation includes a small dining hall, kitchen and living room at ground floor level. Stairs rise from the hall to the first floor landing with access to a double bedroom, small single bedroom and bathroom with WC. airing cupboard and lagged hot water cylinder with electric immersion heater.

10. Outside there are gardens on 3 sides with a tarmac driveway, garage, garden [NAME] and workshop. Mains water electricity and drainage are all connected. Heating is from electric convector radiators provided by Mr [RESPONDENT] who has also installed secondary double glazing.

RPTS – Case Ref CHI/23UB/F77/2019/0018

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11. Mr [RESPONDENT] explained to the Tribunal that he had moved to the property in 1962 as an employee of the [COMPANY] who owned it at that time.

12. Since then he had carried out a number of improvements which included the removal of an internal wall to form the present kitchen, plastering what were bare brick walls in the kitchen and hall, providing the kitchen units, replacing an old Belfast sink, tiling the bathroom, installing secondary double glazing, installing the electric heaters, damp-proofing the sitting room floor, landscaping the gardens including the tarmac driveway and building the garage and garden [NAME].

13. Internally the carpets curtains and white goods are all provided by Mr [RESPONDENT].

14. Internally the property had been maintained in reasonable order by Mr [RESPONDENT] but rising damp has necessitated removal of the lower plaster in the dining hall. Penetrating damp is also evident at various points throughout the house. External decorations are in poor condition with wood rot affecting some fascias and barge boards. Rainwater pipes are rusty and the external surfaces of doors, windows and fascia boards need redecorating.

15. The staircase stringer has rotted away and the stairs are supported by jacks.

Evidence and representations

16. Both parties had made written representations to the Tribunal which had been copied to both parties.

17. A hearing was held on 3rd June 2019 at Gloucester and [ADDRESS] commencing at 12.45. Mr [RESPONDENT] reiterated the representations that he had made in writing and at the earlier inspection. The Landlord was not present or represented.

18. The submission from the Landlord’s Agent also included evidence of comparable properties in the same road which are currently let on Assured Shorthold Tenancies.

19. The Tribunal had regard to the observations and comments by the parties and also relied on its own knowledge and experience of local rental values in determining the rent.

The Law

20. When determining a fair rent the Tribunal, in accordance with the Rent Act 1977, section 70, 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.

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

22. The Tribunal also has to have regard to the Rent Acts (Maximum Fair Rent) Order 1999 where applicable. Most objections and determinations of registered rents are now subject to the Order, which limits the amount of rent that can be charged by linking increases to the Retail Price Index. It is the duty of the Property Tribunal to arrive at a fair rent under section 70 of the Act but in addition to calculate the maximum fair rent which can be registered according to the rules of the Order. If that maximum rent is below the fair rent calculated as above, then that (maximum) sum must be registered as the fair rent for the subject property.

Valuation

23. In the first instance 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 in the condition that is considered usual for such an open market letting. It did this by having regard to the evidence supplied by the parties and the Tribunal's own general knowledge of market rent levels in the area of North Gloucestershire. Having done so it concluded that such a likely market rent would be £560 per calendar month.

24. However, the property was not let in a condition considered usual for a modern letting at a market rent. Therefore it was first necessary to adjust that hypothetical rent of £560 per calendar month particularly to reflect the condition, the fact that the carpets, curtains and white goods were all provided by the Tenant and the improvements that Mr [RESPONDENT] had made to the property.

25. The Tribunal therefore considered that this required a total deduction of £280 per month made up as follows:

Lack of central heating £60 Reconfiguration and provision of Kitchen with new £100 built-in cupboards Provision of Carpets, curtains and white goods £30 Disrepair- dampness and dangerous staircase £50

RPTS – Case Ref CHI/23UB/F77/2019/0018

5 Provision of secondary double glazing £20 Provision of garage and garden [NAME] £20

TOTAL £280

26. The Tribunal did not consider that there was any substantial scarcity element in the area of North Gloucestershire.

Decision

27. Having made the adjustments indicated above the fair rent initially determined by the Tribunal for the purpose of section 70 of the Rent Act 1977 was accordingly £280 per calendar month equating to £65 per week.

28. This is the same figure as registered by the Rent officer in March 2019.

29. The Section 70 Fair Rent determined by the [NAME] is below the maximum fair rent permitted by the Rent Acts (Maximum Fair Rent) Order 1999 details of which are shown on the rear of the Decision Notice and accordingly that rent limit has no effect

Accordingly the sum of £65 per week will be registered as the fair rent with effect from the 3rd June 2019, this being the date of the Tribunal’s decision.

Chairman: [NAME]: 3 June 2019

Appeals

30. A person wishing to appeal this decision to the Upper Tribunal ([NAME]) 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.

31. 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.

32. 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.

RPTS – Case Ref CHI/23UB/F77/2019/0018

6 33. 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.

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 take 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 the permission.