First-tier Tribunal Determines Fair Rent for Protected Tenancy

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. CHI/18UG/F77/2021/0042

Notice of the Tribunal [NAME] 1977 Schedule 11

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

[NAME] Mr [RESPONDENT] Mr [RESPONDENT]

Landlord [COMPANY]

Tenant Mr [APPELLANT]

1. The fair [NAME] is £680.00 Per Calendar Month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 14 October 2021

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 £715.00 per Calendar Month prescribed by the Order.

[NAME] of decision 14 October 2021

FR24 [NAME] FIGURE X 307.4

PREVIOUS RPI FIGURE Y 288.2

X 307.4 Minus Y 288.2 = (A) 19.2

(A) 19.2 Divided by Y 288.2 = (B) 0.0666

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.1166

Last registered [NAME]* £640.00 Multiplied by (C) = 714.62 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £715.00

Variable service charge NO If YES add amount for services

[NAME] = £715.00 Per Calendar Month

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].

1

Case reference : CHI/18UG/F77/2021/0042 Tenant : Mr [APPELLANT] Landlord : [COMPANY] :

6 [ADDRESS], [POSTCODE]

Date of Objection : Referred to First-tier Tribunal

by Valuation Office Agency on

20th August 2021

Type of Application : Section 70 [NAME] 1977 (the Act)

Tribunal

: Mr [NAME] Mr [NAME] Mr [NAME]

Date of Decision : 14th October 2021

_______________________________________________

REASONS FOR DECISION ____________________________________

© CROWN COPYRIGHT 2021

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

2

Background 1. The Tribunal gave formal notice of its decision by a Notice dated 14th October 2021 that the [NAME] would be £680.00 per calendar month (pcm) with effect from the same date.

2. On the 2oth May 2021 the landlord's agent of the above property applied to the [NAME] for registration of a fair [NAME] of £666.00 pcm. The [NAME] having been previously determined by the [NAME] at £640.00 pcm on 15th April 2019 and effective from the same date.

3. On the 26th July 2021 the [NAME] registered a fair [NAME] of £680.00 pcm effective from the same date.

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

5. The tenancy appears to be a statutory protected periodic tenancy. There is a written tenancy agreement and the Tribunal is advised the tenancy commenced on 1st August 1987. The tenancy (not being for a fixed periodic tenancy of 7 years or more) is subject to Section 11 of the Landlord and Tenant Act 1985 (the landlord's statutory repairing obligations).

Factual Background and Submissions 6. Following the Directions dated 1st September 2021 and the explanation contained therein, the Tribunal did not inspect the premises. A hearing was not requested in the current proceedings.

7. Extracting such information as it could from the papers supplied to the Tribunal by the parties, by reference to information publicly available on the internet and with the benefit of its knowledge and experience, the Tribunal reached the following conclusions and found as follows:

8. The property is described in the [NAME]'s record as comprising a semi-detached house with partial central heating. The accommodation comprises: 1 reception room, Kitchen/diner, W.C, Utility Room, 4 bedrooms and Bathroom with shower and WC. Outside: Garage and gardens. No off street parking.

9. The property was let unfurnished with floor coverings. Curtains and white goods were not included.

10. All mains services are assumed to be connected.

11. The Tribunal noted during its consideration:

a) The property was let unfurnished.

b) Partial central heating,

3

c) Dated Kitchen and Bathroom Fittings.

12. The Tenant did not complete the Reply Form but a chain of emails supplied to the Tribunal explained that Mr [NAME] concern was that he did not understand the [NAME]'s calculation.

13. The Landlord's agent completed the Reply Form. In which he stated:

a) The house is centrally heated and partially double glazed.

b) Works orders had been raised to carry works to: Roof over bathroom, gutter cleaning, repair rotten lounge window cill and replace kitchen draining board.

c) The kitchen and bathroom were installed many years ago but are in good condition as the Tenant has looked after the property.

d) Totnes Railway station is 1.5 miles away. Bus service from the estate Monday to Sunday.

e) Comparable properties in the same location command rents of between £680.00 and £962.00 pcm.

f) Carpets and floor coverings are provided and the landlord is responsible for all repairs and external decorations.

g) The Landlord receives regular enquiries from prospective tenants.

h) Photographs of the property are attached to the Reply Form.

14. In a letter to the [NAME] the Landlord mentioned that, since last registration the following work had been undertaken to the property:

a) External decoration. b) Replacement shower and wash basin. c) Replacement wood burner.

The Law 15. When determining a fair [NAME] the Tribunal, in accordance with section 70 of the [NAME] 1977, had regard to all the circumstances including the age, location and state of repair of the property. It 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.

16. 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:

(a) that 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

4

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) that 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).

17. The [NAME] ([NAME]) Order 1999 restricts the amount by which the [NAME] may be increased to a maximum 5.oo% plus RPI since the last registration.

18. The only exception to this restriction is provided under paragraph 7 of the Order where a landlord carries out repairs or improvements which increase the [NAME] by 15% or more of the previous registered [NAME].

Tribunal’s deliberations 19. The Tribunal considered the matter with the benefit of the submissions of the parties. The Tribunal does not take into consideration the personal circumstances of the Landlord or Tenant in making its determination (including issues between Landlord and Tenant which do not affect the rental value of the property itself).

20. The Tribunal checked the National Energy Performance Register and noted that the Energy Performance Certificate (EPC) rates the property at F and the certificate expired on 4th October 2018. The minimum standard is Rating E (unless exempt) for offering a property to let on the open market the Tribunal considers that a rating of this level would have an adverse effect on the [NAME] achievable.

21. The Tribunal looked at the [NAME]'s valuation of the [NAME] under Section 70 of the [NAME] 1977. The [NAME] had started with a market [NAME] for the property assuming it was in good repair and available in the market today. He found that the [NAME] would be £825.00 pcm. However he then considered that certain deductions should be made to reflect the condition, facilities and differing nature of the tenancy. He concluded that the sum of £145.00 pcm should be deducted from the market [NAME] to reflect these matters, which included, but not exclusively: Tenant repairing and decorating liability, no white goods, no floor covering or curtains and un-modernised bathroom). He made no adjustment for scarcity (see explanation below). The result was a [NAME] of £680.00 pcm.

22. The Tribunal, acting as an expert tribunal, determined what [NAME] the landlord could reasonably be expected to obtain for the subject property in the open market if it were let today in the condition and subject to the terms of such a tenancy 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 the wider area of Devon. Having done so, it concluded that, after considering the observations of the [NAME], his calculation of

5

market [NAME] was correct and that it was appropriate to make a deduction of £145.00 pcm to reflect those matters in paragraph 20 above.

23. The Tribunal confirms the fair [NAME] as calculated by the [NAME] of £680.00 pcm.

Scarcity 24. The matters taken into account by the Tribunal when assessing scarcity were:- a) The Tribunal interpreted the ‘locality’ for scarcity purposes as being the area the wider area of Devon (i.e. a sufficiently large area to eliminate the effect of any localised amenity which would, in itself, tend to increase or decrease [NAME]. b) Local Authority and Housing Association waiting lists. c) House prices which could be an indicator of increased availability of housing and a reduction in scarcity. d) Submissions of the parties. e) The members of the Tribunal have between them many years of experience of the residential letting market and that experience leads them to the view that there is no substantial shortage of similar houses available to let in the locality defined above.

25. Assessing a scarcity percentage cannot be a precise arithmetical calculation because there is no way of knowing either the exact number of people looking for a particular type of house in the private sector or the exact number of such properties available. It can only be a judgment based on the years of experience of members of the Tribunal. However, the Tribunal did not consider that there was a substantial scarcity element and accordingly made no further deduction for scarcity.

Relevant Law 26. The [NAME] 1977.

27. [NAME] ([NAME]) Order 1999. In particular paragraph 7 which states:

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 [NAME], 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.

[NAME] ([NAME]) Order 1999 28. The [NAME] to be registered is not limited by the [NAME] ([NAME]) Order 1999 because it is below the maximum fair [NAME] (see calculation on reverse of decision sheet) of £715.00 pcm and accordingly the sum of £680.00 pcm will be registered as the fair [NAME] on and with effect from 14th October 2021 being the date of the Tribunal's decision.

6

RIGHTS OF APPEAL

1. A person wishing to appeal this decision (on a point of law only) 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. Where possible you should send your application for permission to appeal by email to [EMAIL] as this will enable the First-tier Tribunal Regional office to deal with it more efficiently.

2. 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.

3. 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 time or not to allow the application for permission to appeal to proceed.

4. 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