First-tier Tribunal Determines Fair Rent for Property

OUTCOME: Allowed

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Case Reference : CAM/26UG/F77/2018/0039

Property : 23 [ADDRESS] [POSTCODE]

Applicant: [redacted]

Respondent: [redacted] : 10 December 2018

Type of Application : Determination of the registered [NAME] under Section 70 [NAME] 1977

Tribunal

: Mrs [NAME]

Mr [NAME] and venue of : 18 February 2019 meeting

[ADDRESS] [POSTCODE]

_______________________________________________

DECISION ____________________________________

The registered [NAME] with effect from 18 February 2019 is £115 per week.

© CROWN COPYRIGHT S E C FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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Background

1. On 9 October 2018 the landlord applied to the [NAME] officer for registration of a fair [NAME] of £122.40 per week for the above property.

2. The [NAME] payable at the date of the application was £102 per week which had been registered by the [NAME] officer on 14 November 2016 2015 with effect from 24 November 2016.

3. On 26 November 2018, the [NAME] officer registered a fair [NAME] of £114.50 per week with effect from the same date.

4. The tenant objected to the [NAME] determined by the [NAME].

5. Both the landlord and tenant wished the matter to be dealt with on the basis of written representations and an inspection by the Tribunal. Written representations were made by [RESPONDENT] on behalf of the landlord, written representations were also received on behalf of the tenant.

6. The tribunal inspected the house on the morning of 18 February 2019.

The Evidence

7. On behalf of the landlord, Ms [RESPONDENT] of [NAME] described the house as having 3 rooms, kitchen and bathroom/wc and stated that the market [NAME] was in excess of the registered [NAME]. They referred to two asking rents of three bedroom terraced houses: one in [ADDRESS] at £335 per week and another nearby at £368 per week. Taking into account the tenant’s improvements, the condition of the house and the terms of the tenancy the registered [NAME] was fair and reasonable.

8. On behalf of the tenant it was noted that the landlord’s comparables were both three bedroom properties: the subject had three bedrooms as built but no bathroom. Mr [APPELLANT] had converted the rear room into a shower room/wc, without this improvement there would be no bathing facilities.

9. The comparables are both in an excellent state of repair, have central heating and have been modernised throughout, justifying the level of asking [NAME]. The condition of the subject premises is poor by comparison.

Inspection

10. The property which comprises a two storey Victorian terraced house is situated in a heavily parked residential street close to local shopping and transport facilities, the main line station is approximately one mile.

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11. The accommodation comprises two small living rooms and a kitchen on the ground floor and two bedrooms and shower/wc on the first floor and an external wc. The tenant fitted the kitchen units in the 1970’s and replaced the window some years ago. The first floor layout is poor: the shower room is accessed via the rear bedroom. The stairs to the first floor are very steep.

12. The windows throughout are in poor condition: all are single glazed some are original sliding sash windows and others wooden framed opening and fixed units installed many years ago by the tenant. There are a number of slipped and cracked slates on the roof. There was damp staining on the chimney breast in the front bedroom.

13. [COMPANY] had an electric wall mounted heater installed in the living room and a fan heater in the shower room. The bedrooms and kitchen are unheated. The landlord has recently rewired with surface mounted conduit and installed a small hot water heater over the kitchen sink.

14. The tenant installed the shower and wc in what was a bedroom in the back addition, there is no wash basin in the shower room. The hot water is provided by an electric shower unit.

Valuation

15. In the first instance 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 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 [NAME] levels in St Albans. Having done so, it concluded that the likely market [NAME] for the flat would be £300 per week.

16. However, it was first necessary to adjust the hypothetical [NAME] of £300 per week to allow for the differences between the terms and condition considered usual for such a letting and the condition of the actual property at the date of the inspection, ignoring the tenant’s

improvements, (disregarding the effect of any disrepair or other defect

attributable to the tenant or any predecessor in title). The Tribunal

noted that the houses available on the open market were all

modernised and centrally heated with white goods, floor and window

coverings. The lack of a wash basin, central heating, double glazing,

floor coverings and curtains or blinds together with the general poor

state of repair would reduce the rental value. The Tribunal

considered that these differences required a deduction of £150 per

week.

17. This leaves an adjusted market [NAME] for the subject property of £150 per week. The Tribunal was of the opinion that there was substantial scarcity in the commuter belt of Hertfordshire for similar properties

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and therefore made a deduction of approximately 15% from the market [NAME] to reflect this element. The Tribunal’s uncapped fair [NAME] is £128 per month.

Decision

18. The uncapped fair [NAME] initially determined by the Committee, for the purposes of section 70, was accordingly £128 per week.

19. However, by virtue of the [NAME] ([NAME]) Order 1999 the maximum fair [NAME] that can be registered in the present case is the lower sum of £115 per week (Details are provided on the back of the decision form).

20. Accordingly the sum of £115 per week will be registered as the fair [NAME] with effect from 18 February 2019 being the date of the Tribunal's decision.

Chairman: [NAME]: 19 February 2019

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First-tier Tribunal Property Chamber (Residential Property)

The Law Relating to the Assessment of Fair Rents

INTRODUCTION

1. This is a brief summary of the law applied by the Tribunal (formerly call a [NAME]) when reaching its decision. It is an integral part of the decision.

2. The definition of [NAME] is contained in the [NAME] 1977 i.e.:-

70(1) In determining ......a fair [NAME] under a regulated tenancy of a dwelling house, regard shall be had to all the circumstances (other than personal circumstances) and in particular to:-

a) the age, character, locality and state of repair of the dwellinghouse

b) if any furniture is provided for use under the tenancy, the quantity, quality and condition of the furniture, and

c) any premium, or sum in the nature of a premium……

70(2) For the purposes of the determination it shall be assumed that the number of persons seeking to become tenants of similar dwellinghouses in the locality on the terms (other than those relating to [NAME]) of the regulated tenancy is not substantially greater than the number of such dwellinghouses in the locality which are available for letting on such terms

70(3) There shall be disregarded:-

a) any disrepair or other defect attributable to a failure by the tenant under the regulated tenancy or any predecessor in title of his……

b) any improvement carried out, otherwise than in pursuance of the terms of the tenancy, by the tenant under the regulated tenancy or any predecessor in title of his

e) if any furniture is provided for use under the regulated tenancy, any improvement to the furniture by the tenant under the regulated tenancy or any predecessor in title of his or, as the case may be, any deterioration in the condition of the furniture due to any ill-treatment by the tenant, any person residing or lodging with him or any sub-tenant of his

3. The Tribunal also has to take into account the Human Rights Act 1998. However, when interpreting the [NAME] 1977 (primary legislation) the Tribunal will have to follow the wording of the Act if it cannot be read or given effect in a way which is compatible with rights contained in the European Convention on Human Rights. Any party dissatisfied will then have to refer the matter to the High Court for the making of a Declaration of Incompatibility.

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Page 2 of 2 4. All other rights granted by the Convention such as the right to a fair and public hearing by an independent tribunal and the right to respect for a person’s private and family life are to be observed by the Tribunal

5. There have been a number of cases decided over the years most of which have been either unreported or reported only in professional journals. However in 1997 a Court of Appeal decision was reported as [NAME] v [NAME] (No. 2) [1997] 4 AER 842 where the Court reviewed the various authorities and provided guidance to Tribunals to assist them in reaching decisions.

6. [ADDRESS] confirmed that a Tribunal must first find an open market [NAME] for the property taking into account evidence before it from the parties and the [NAME]. It will not consider other registered rents unless there are very exceptional circumstances which will be set out in the decision if appropriate.

7. A Tribunal can use such factors as comparable rents being paid for similar properties in the locality, capital values and return on expenditure as well as the experience and expertise of its members.

8. Having established an open market [NAME] the Tribunal then has to consider the deductions and allowances referred to above

9. In all cases the Tribunal will try its best to give the parties details of its calculations. The [NAME] case (above) made it clear that a Tribunal’s decision must be supported by some workings out, but precise arithmetical calculations are not possible in all cases. There are many properties where the deductions and allowances are of such proportions that a Tribunal must simply take a view as to how much a [NAME] would have to be reduced in order to obtain a tenant. This may not be the same as the sum total of the Statutory deductions/allowances.

10. If the Tribunal considers that the demand for similar properties in the locality is substantially greater than the supply then a deduction has to be made in accordance with Section 70(2) [NAME] 1977. This is the so-called “scarcity factor”. The Tribunal is obliged to look at scarcity in terms of people wanting regulated tenancies. However the reality is that no new regulated tenancies are created nowadays and scarcity is therefore considered using the types of tenancy currently in use.

11. The word “locality” in Section 70(2) has a different meaning to that in Section 70(1). In the case of [COMPANY] v Finegold [1975] 1 WLR 349 it was decided that the “locality” for this purpose should be a really large [RESPONDENT]. A Tribunal must define the extent of that “locality” when reaching its decision.

12. In determining scarcity, Tribunals can look at local authority and housing association waiting lists but only to the extent that people on such lists are likely to be genuine seekers of the type of private rented accommodation in question if the [NAME] were to exclude the scarcity element.

13. The Tribunal must apply the [NAME] ([NAME]) Order 1999 – known as the “capping” provision – unless there is an exemption.