First-tier Tribunal Determines Fair Rent for Property

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. CHI/43UC/F77/2019/0014

Notice of the Tribunal [NAME] 1977 Schedule 11

Address of Premises The Tribunal members were 68 [ADDRESS], [POSTCODE]

[NAME] Mr [RESPONDENT]

Landlord [NAME] ([APPELLANT]) Limited

Tenant Mr [APPELLANT]

1. The fair [NAME] is £253.75 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 30 April 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 [NAME] allowance is

n/a Per n/a

not applicable

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

6. The capping provisions of the [NAME] ([NAME]) Order 1999 apply (please see calculation overleaf).

7. Details (other than [NAME]) where different from [NAME] entry

8. For information only:

(a) The fair [NAME] to be registered is not limited by the [NAME] ([NAME]) Order 1999, because it is below the maximum fair [NAME] of £272.00 per week prescribed by the Order.

[NAME] of decision 30 April 2019

FR24 [NAME] FIGURE X 285.0

PREVIOUS RPI FIGURE Y 265.5

X 285.0 Minus Y 265.5 = (A) 19.5

(A) 19.5 Divided by Y 265.5 = (B) 0.0734463

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.1234463

Last registered [NAME]* 242.00 Multiplied by (C) = 271.87 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 272.00

Variable service charge NO If YES add amount for services

[NAME] = £272.00 Per Week

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].

© CROWN COPYRIGHT 2019

Case Reference : CHI/43UC/F77/2019/0014

Property : 68 [ADDRESS] [POSTCODE]

Landlord

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

Represented by : [APPELLANT]

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

Tribunal Members : [NAME] (Valuer Chairman)

[NAME] (Valuer Member)

Date of Inspection : Tuesday 30 April 2019

No hearing. Paper determination.

Date of Decision : Tuesday 30 April 2019

_______________________________________________

DECISION AND REASONS ____________________________________

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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Background 1. On 10th December 2018 the landlord applied to the [NAME] for registration of a fair [NAME] of £278 per week for the property. The Application states that the landlord provides no services.

2. The last registration by the [NAME] on 19th January 2017 was £242 per week, effective from 4th March 2017. The amount of the uncapped [NAME] was not stated on the register.

3. On the 22nd January 2019, the [NAME] registered a fair [NAME] of £253 per week, effective from 4th March 2019. The amount of the uncapped [NAME] is not stated on the register.

4. The Landlord objected to the [NAME] determined by the [NAME] and the matter was referred to the First Tier Tribunal (Property Chamber) Residential Property.

5. Directions for the conduct of the matter were issued by the Tribunal Office on 22nd March 2019 and, amongst other things, the parties were advised that the determination will be made on the written representations unless a request for an oral hearing is made within fourteen days. Neither party requested a hearing at which oral representations could be made.’

Inspection 6. The Tribunal Members inspected the property on Monday, 30th April 2019 in the company of the tenant, Mr. [APPELLANT]. The landlord had been informed of the inspection but was not present or represented.

7. The property is a semi-detached house which was probably built in about 1935 and forms part of an established, residential area comprising mainly houses of similar age and style. There is no garage or space but off-road parking is provided for one small car. Parking in nearby roads is currently unrestricted and unregulated. There are poorly maintained gardens to front and rear.

8. The main roof is pitched and covered with tiles. The main walls are of cavity construction with brick and rendered elevations. All windows have been

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replaced by the landlord with uPVC double glazed units but the front door is apparently original. External paintwork is in broadly serviceable condition but poor to most soffits. 9. The accommodation is currently arranged as:

First floor:

Landing, two bedrooms, bathroom/WC

Ground Floor:

Front living Room, rear dining room, kitchen

Outside:

WC (not inspected) within single storey rear addition.

10. There is no central heating. Limited space heating is provided by an electric storage heater in the hall and it was supplied by the landlord. Hot water is supplied by an electric immersion heater fitted to a pre-insulated storage cylinder within a cupboard in the dining area and it was installed by the landlord.

11. The tenant has provided floor coverings, curtains and white goods. There are virtually no fitted units in the kitchen. The electrical installation and the bathroom fittings were renewed by the landlord about seven years ago.

12. The Tribunal formed the overall impression that the property was being adequately maintained for a property of this age and method of construction, albeit further expenditure is required on modernisation, upgrading and maintenance.

13. The Tribunal has not been provided with a copy of any Tenancy Agreement but the Application states that the tenancy began on 1st January 1987. As far as repairing and decorating liabilities are concerned, the Application to the [NAME] states that the landlord is responsible for all repairs and external decorations and that the tenant is responsible for internal decorations and repairs. The [NAME] states that the allocation of liability for repairs is “Landlord responsible for repairs and external decorations. Tenant responsible for internal decorations”. The parties have not provided any further information concerning the apportionment of responsibility for repairs and decorations.

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Representations 14. Neither party has made a request for a hearing. The Tribunal thus proceeded to make the determination based on the inspection and written representations, supplemented with its own knowledge and experience. 15. The tenant has not made any written representations.

16. The landlord made written representations and referred to the following

comparables within 1 mile of the subject property. It is not stated

whether or not the asking rents were achieved:

[ADDRESS], Epsom

This is a 3-bedroom, terraced house with a garage. The asking [NAME] is £1,300 pcm.

[ADDRESS], Epsom

This is a 3-bedroom, semi-detached house. The asking [NAME] is £1,500 pcm.

[ADDRESS], Epsom

This is a 3-bedroom, semi-detached house. The asking [NAME] is £1,600 pcm.

17. The above is a summary of the points made by the parties and the Tribunal has considered the whole of the contents of the above documents in making its decision. The law 18. When determining a fair [NAME], the [NAME], in accordance with section 79 of the [NAME] 1977, had regard to all the circumstances including the age, location and state of repair of the property. The [NAME] 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

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19. (a) Ordinarily a fair [NAME] is the market [NAME] for the property 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 similar terms - other than as to [NAME] - to that of the regulated tenancy) and (b) for the purposes of determining the market [NAME], 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)

20. The [NAME] ([NAME]) Order 1999 applies to all applications for registration of a fair [NAME] (other than a first application for registration) made to the [NAME] on or after 1 February 1999. Its effect is to place a “cap” on the permissible amount of the increase of a fair [NAME] 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-registration and 5% thereafter. The [NAME] must first determine a fair [NAME] (“the uncapped [NAME]”) and then consider whether the Order applies so as to limit the increase in the [NAME] (“the capped [NAME]”)

21. 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 superior landlord, the [NAME] that is determined in response to an application for registration of a new [NAME] under Part IV exceeds by at least 15% the previous [NAME] 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.

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Valuation 22. First of all the Tribunal determined what [NAME] 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. The Tribunal had regard to the comparables provided by the landlord and supplemented this with its own knowledge of general [NAME] levels for this type of property and determined that the starting point should be £300 per week.

23. However, this starting [NAME] is on the basis of a letting in good, modernised condition. In this case, adjustment must be made to reflect the need for work of modernisation and repair as the rental bid in present condition would differ from the [NAME] if the property were in good, modernised condition. In order to reflect all the relevant considerations, the Tribunal has made the following deductions from the starting point of £300 per week: Carpets and curtains provided by tenant

£ 9.25 White goods provided by tenant

£ 6.95 Kitchen refurbished by tenant

£ 9.25 Lack of central heating

£ 13.85 Tenant responsible for internal decorations

£ 6.95

TOTAL DEDUCTIONS £ 46.25 per week

[NAME]

£ 253.75 per week 24. We then considered the question of scarcity as referred to in paragraph 19(a) above. In the case of [COMPANY] ltd. v [NAME] (1975) 1 WLR 349, Lord [NAME] said “If the house has inherent amenities and advantages, by all means let them be reflected in the [NAME] under subsection(1); but if the market [NAME] would be influenced simply by the fact that in the locality there is a shortage, and in the locality rents are being forced up beyond the market figure then that element of market [NAME] must not be included when the fair [NAME] is being considered.” This statement highlights the distinction between increase in rents that results from the

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benefits of local amenities which is permitted under section 70(1) of the 1977 Act, and increases in [NAME] that are caused by demand exceeding supply which is not permissible and regulated by section 70(2) of the 1977 Act.

25. The Tribunal is required to consider scarcity in respect of demand and supply in the context of a sizeable area so as to ensure that the benefits of local amenities are neutralised and also to give a fair appreciation of the trends of scarcity and their consequences. The Tribunal should only give a discount for scarcity if it is substantial.

26. The Tribunal has given the matter careful thought and concludes that there is no substantial scarcity element in an area within a radius of approximately 50 miles of the subject property.

Accordingly, no further deduction was made for scarcity.

27. We therefore determined that the uncapped [NAME] is £253.75 per week per week exclusive of council tax and water rates.

28. The Tribunal finds that by virtue of the [NAME] ([NAME]) Order 1999 the maximum fair [NAME] that could have been registered in the present case is the sum of £272 per week.

29. As the adjusted [NAME] is below the [NAME] calculated in accordance with the [NAME], we determine that the lower sum of £253.75 per week is registered as the fair [NAME] with effect from Tuesday 30th April 2019 30. For information only, details of the [NAME] calculated in accordance with the [NAME] details are shown on the rear of the Decision Accordingly, the sum of £253.75 per week will be registered as the fair [NAME] with effect from Tuesday 30th April 2019, being the date of the Tribunal's decision.

Chairman: [NAME]:

Tuesday 30th April 2019

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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.

35. 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.