First-tier Tribunal Determines Fair Rent for Property

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. MAN/00BY/F77/2019/0010

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 37 [ADDRESS], [POSTCODE]

[NAME] Mr [APPELLANT]

Landlord [COMPANY]

Tenant Mr [APPELLANT]

1. The fair rent is £ 510.00 Per Calendar Month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 02 May 2019

3. The amount for services is 0.00 Per

not applicable

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

0.00 Per

not applicable

5. The rent is/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 the below the maximum fair rent of £550.00 per Calendar Month prescribed by the Order.

[NAME] of decision 02 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) 0.0622

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

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.1122

Last registered rent* 494.50 Multiplied by (C) = 549.98 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 550

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £ 550 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.

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : MAN/00BY/F77/2019/0010

Property : 37 [ADDRESS] [POSTCODE]

Landlord : [COMPANY]

Tenant : [APPELLANT] of Application : Determination of a fair rent under Section 70 of the Rent Act 1977

Tribunal Members : [NAME] (chairman) and [NAME] and venue of hearing

: Determination on the papers following an inspection of the Property on 2 May 2019

Date of Decision : 02 May 2019 Date of reasons : 21 May 2019

REASONS FOR DECISION

© CROWN COPYRIGHT 2019

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DECISION A fair rent of £510.00 per calendar month was determined by the Tribunal on 2 May 2019 with effect from the same date

REASONS Preliminary 1. On 16 November 2018, an application for registration of a fair rent for [ADDRESS] (“the Property”) was received by the Rent Officer from [COMPANY] (“the Agent”) on behalf of [NAME] ([RESPONDENT] (“the Landlord”). The Property is tenanted by [APPELLANT] (“the Tenant”). There is no service charge.

2. A rent of £500.00 per calendar month was determined by the Rent Officer on 18 December 2018 with effect from 13 February 2019.

3. On 14 November 2019, the Agent objected to the registered fair rent and requested the Rent Officer to refer the matter to the Tribunal. Inspection 4. The Tribunal inspected the Property internally and externally on 2 May 2019. The Property is a semi-detached house comprising two ground floor living rooms and a kitchen and three bedrooms and a bathroom on the first floor, with gardens front and rear. There is PVC double-glazing and partial central heating. The letting is unfurnished.

5. The Tribunal noted the following items of landlord’s disrepair: substantial cracking on the gable and rear walls, the need for repointing, cracking in the ceiling in bedroom 2, and dampness under the window in the main bedroom. Necessary improvements consist of central heating in two bedrooms and updating of the bathroom. Tenant’s improvements consist

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of a new fire and surround, new kitchen units and units and new units and tiles in the bathroom. Evidence 6. The Tribunal received written representations from the Agent which provided details as to the location of the Property, that they considered the Landlord to be responsible but recognised that the Property was not to modern day standards. Also included were details of three other properties, all three-bedroom semi-detached houses in Childwall, available for letting together with the asking rents: at [ADDRESS], at £775.00 pcm, [ADDRESS] at £825.00 pcm, and [NAME] at £795.00 pcm. No written representations were received from the Tenant. Neither party requested a hearing when oral representations could have been made. The Tribunal therefore re-convened following the inspection to consider its decision. Law 7. When determining a fair rent the Tribunal, in accordance with the Rent Act 1977, Section 70: 7.1. Has regard to all the circumstances (other than personal circumstances) including the age, location and state of repair of the property; 7.2. 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; 7.3. 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

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words that the effect of such 'scarcity' on rental values is not reflected in the fair rent of the subject property.

8. 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: 8.1. that ordinarily a fair rent is the market rent for the subject property discounted for “scarcity”, and 8.2. 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)

9. 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.

10. 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. Valuation and Fair Rent

11. The Tribunal determined what rent the Landlord could reasonably be expected to obtain for the property in the open market if it were let now in the condition that is considered fit and usual for such an open market letting.

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12. The Tribunal carefully reviewed the comparables provided and it was considered that they were on the high side for properties of this nature and were in considerably better condition than the Property. The Tribunal also had regard to the fact that these were asking rather than actual rents. The Tribunal considered that in the light of the evidence and its general knowledge of rents in the locality the market rent for the Property in the condition referred to in paragraph 11 above would be £700.00 per calendar month including white goods and some furnishings.

13. Having regard to the condition of the property from its inspection and relying on its own and general experience in the region the Tribunal concluded that the property is below the condition considered fit and usual for a modern letting at such a market rent. Therefore, it was considered appropriate to make some adjustment and allow for the condition of the property as seen and commented upon by the Tribunal.

14.

Accordingly, the assessment of the fair rent is as follows: Market rent in good condition 700.00 per calendar month White goods and furnishings (70.00) Landlord’s neglect (30.00) Necessary improvements (40.00) Tenant’s improvements (50.00)

(190.00)

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Occupational rent per calendar month 510.00 15. The Tribunal does not consider that in the present-day market, there is any substantial scarcity element and accordingly no further deduction is made for scarcity 16. The rent is however, subject to the capping provisions of the 1999 order. After effecting the appropriate calculation, the Tribunal determined that the fair rent assessed above was below the maximum fair rent for the Property, which was calculated to be £550.00 per calendar month. Signed : Judge C. [NAME]: 21 May 2019