First-tier Tribunal Determines Fair Rent for Property

OUTCOME: Allowed

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Property 5 Moor Edge, [NAME], Bingley, West Yorkshire [POSTCODE]

Landlord [COMPANY]

Tenant Ms [APPELLANT] number MAN/00CX/F77/2019/0027

Type of Application Rent Act 1977 – Section 70

Tribunal Members [NAME] (Judge)

[NAME] (Valuer Member)

Date of Decision

28 May 2019

Date of Extended

15 July 2019 Reasons

DECISION and REASONS

© CROWN COPYRIGHT 2019

DECISION

A fair rent of £353.17 per calendar month was determined by the Tribunal on 28 May 2019 with effect from 3 March 2019.

REASONS

PRELIMINARY

1. On 19 January 2019 an application for registration of a fair rent for 5 Moor Edge, [NAME] (‘the Property’) was received by the rent officer from [RESPONDENT] [NAME] as agents for the Landlord. The property was tenanted by Ms [APPELLANT] (‘the Tenant’).

2. A rent of £81 per week was determined by the rent officer on 3 March 2019 with effect from the same date.

3. The Tenant objected to the registered fair rent and requested the rent officer to refer the matter to the Tribunal which was received by the Tribunal on 14 March 2019.

4. A hearing was not requested by either party.

5. An internal and external inspection of the Property was made by the Tribunal on 28 May 2019 at which Ms [NAME] was present

6. The Tribunal also had the benefit of written submissions by both parties.

THE PROPERTY

7. The Tribunal found the Property to be a two bedroom stone terraced cottage with slate roof, laid out over three floors, basement, ground and first floor, on the edge of the village of [NAME], near Bingley. The property had the benefit of double glazing and central heating.

8. The Property has shared access to the back, giving entry to the lower ground floor where the kitchen and bathroom were situated. The living room is at ground floor level and 2 bedrooms at first floor level. The property showed evidence of damp throughout with plasterboard appearing to have been added in some places over the top of some areas of damp.

9. The Property was let without white goods, carpets and curtains, and the Tribunal were informed that the kitchen and bathroom and some radiators had been installed by the present tenant.

THE LAW

10. When determining a fair rent the Tribunal, in accordance with the Rent Act 1977, Section 70:

1. Has regard to all the circumstances (other than personal circumstances) including the age, location and state of repair of the property;

2. Disregards the effect on the rental value of the property of (a) any relevant tenant improvements and (b) any disrepair or other defect attributable to the tenant or any predecessor in title under the regulated tenancy;

3. Assumes (as required by s70(2) that, whatever might be the case, the demand for similar rented properties in the locality does not significantly exceed the supply of such properties for rent. In other words that the effect of such ‘scarcity’ on rental values is not reflected in the fair rent of the subject property.

4. 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 that section 70 means

i. That ordinarily a fair rent is the market rent for the subject property discounted for ‘scarcity’ and

ii. 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 these comparables and the subject property).

11. Thus, once the market rent for the Property has been determined by the exercise above, that rent must be adjusted, where necessary, for any scarcity.

12. The Tribunal must consider the application of the provisions of the Rent Acts (Maximum Fair Rent) Order 1999 by calculating the maximum fair rent applicable to the Property in accordance with the formula contained in the Order.

FAIR RENT

13. The Tribunal gave careful consideration to the written representations from both parties, together with the documentation derived from the rent officer.

14. Neither party having provided any evidence of comparable properties, the clearest starting point for assessing an appropriate fair rent is to consider any similar property, if such exists, in the locality let at a market rent under the Housing Act 1988, using that rent as the basis for a fair rent but then making appropriate deductions. Such direct evidence is not always available and in

the absence of any comparable evidence supplied by either party, the Tribunal must also rely upon its expertise gained from assessing rents for many similar properties throughout the North of England and [NAME] in particular.

15. The Tribunal considered based upon all of this evidence, including the comparable property information provided within the documents from the Rent Officer that a likely achievable market rent for a property such as 5 Moor Edge, [NAME] would be in the region of £130 per week, if let with carpets, curtains and white goods and in a good, modernised condition with central heating and windows and doors in good condition.

16. After taking into account a notional deduction in the rent for carpets, curtains and also landlord’s neglect in the form of the damp within the Property, the Tribunal arrives at a total initial deduction of £20 per week. The Tribunal also took into account the effect on the rent of the Tenant’s improvements, being mindful that the Tenant had incurred costs in having the property replastered, and had installed the kitchen and bathroom. The Tribunal concluded that the value of the tenants improvements was £25 per week, and therefore deducts this from the fair rent figure, so that the Landlord does not benefit from work done to the property by the Tenant.

17. The Tribunal therefore assesses that £85 per week or £368.35 per calendar month is a realistic adjusted market rent. The Tribunal was satisfied that this was not a situation where the demand for similar properties in the locality exceeded in any significant way the number of properties available to let.

18. The rent is however subject to the capping provisions of the Rent Acts (Maximum Fair Rent) Order 1999. After effecting the appropriate calculation, the Tribunal determined that the fair rent assessed above exceeds the maximum fair rent for the Property which was calculated at £81.50 per week, or £353.17 per calendar month.

19. The Tribunal received no evidence from the Landlord to suggest they had carried out substantial works done to the Property since the last registration which might mean that the maximum fair rent did not apply.

20. The Tribunal is mindful that the Tenant has been involved in other court proceedings in relation to the damp in the property, but the Tribunal cannot and does not offer any comment on that, as it is outside the jurisdiction of this Tribunal, whose task is to determine the fair rent for the Property in the condition which we found it to be upon viewing.

21. Accordingly, the Tribunal determines the fair rent for the Property to be £81.50 per week effective from 3 March 2019.

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Landlord [COMPANY]

Tenant Ms [APPELLANT] number MAN/00CX/F77/2019/0027

Type of Application Rent Act 1977 – Section 70

Tribunal Members [NAME] (Judge)

[NAME] (Valuer Member)

Date of Decision

28 May 2019

Date of Extended

15 July 2019 Reasons

DECISION and REASONS

© CROWN COPYRIGHT 2019

DECISION

REASONS

PRELIMINARY

1. On 19 January 2019 an application for registration of a fair rent for 5 Moor Edge, [NAME] (‘the Property’) was received by the rent officer from [APPELLANT] and Son as agents for the Landlord. The property was tenanted by Ms [APPELLANT] (‘the Tenant’).

4. A hearing was not requested by either party.

THE PROPERTY

THE LAW

FAIR RENT

FR24 First-tier Tribunal – Property Chamber File Ref No. MAN/00CX/F77/2019/0027

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 5 Moor Edge, [NAME], Bingley, West Yorkshire, [POSTCODE]

Mrs K [NAME] Mrs [RESPONDENT]

[APPELLANT]

Tenant Ms [APPELLANT]

1. The fair rent is £353.17 Per Calendar Month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 03 March 2019

3. The amount for services is

Per

not applicable

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

Per

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:

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 £368.33 per month.

Judge Mrs K [NAME] of decision 28 May 2019

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 285.1

PREVIOUS RPI FIGURE Y 268.4

X 285.1 Minus Y 268.4 = (A) 16.7

(A) 16.7 Divided by Y 268.4 = (B) 0.[PHONE]

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.112220566

Last registered rent* £73.00 Multiplied by (C) = 81.19210134 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £81.50

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £81.50 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.