First-tier Tribunal Determines Fair Rent for Protected Tenant

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. BIR/00CN/F77/2019/0033

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 42 [ADDRESS], [POSTCODE]

[NAME] [NAME] [APPELLANT]

Landlord [APPELLANT] & Housing

Tenant [RESPONDENT]

1. The fair rent is £85.50 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 22 October 2019

3. The amount for services is not applicable N/A Per N/A

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

N/A Per N/A

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

None

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 £98.00 per week.

[NAME] of decision 22 October 2019

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 291.7

PREVIOUS RPI FIGURE Y 259.6

X 291.7 Minus Y 259.6 = (A) 32.1

(A) 32.1 Divided by Y 259.6 = (B) 0.12365

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.17365

Last registered rent* £72.50 Multiplied by (C) = £85.08 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £85.50

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £85.50 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.

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Case Reference : BIR/00CN/F77/2019/0033

Property

: 42 Needham St., Birmingham, West Midlands, [POSTCODE]

Applicant: [redacted]

Respondent: [redacted] : Appeal against the Rent Officer's Decision of Fair Rent under

the s.70 Rent Act 1977

Tribunal Members : [NAME] [NAME].D. [NAME] B.Sc.(Est.Man.) [NAME] [NAME]. [NAME] and Venue of : None. Paper Determination. Hearing

Date of Decision : 22nd October 2019

Date of Reasons : 6 November 2019

____________________________________________________________

DECISION

© CROWN COPYRIGHT 2019

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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1 The Fair Rent is determined at £85.50 (Eighty Five Pounds Fifty Pence) per week from 22nd October 2019.

REASONS

Introduction

2 Mrs [RESPONDENT] holds a protected tenancy of 42 Needham St., Birmingham, [POSTCODE]. The rent had previously been registered by the Rent Officer at £72.50 per week on 30th June 2015 to take effect that day. On 24th May 2019 the landlord applied for a new rent of £65.67 per week and on 20th August 2019 the Rent Officer registered a new rent of £78.50 per week to take effect from that date.

3 The tenant appealed against the Decision by letter to the Valuation Office Agency dated 2nd September 2019 and the matter was referred to the First-tier Tribunal for Determination. The Tribunal inspected the property and reached its decision on 22nd October 2019 and the Decision papers were sent to the parties with a copy of the Maximum Fair Rent calculation. On 29th October 2019 the Tribunal received a letter from the tenant requesting reasons for the Decision which are the subject of this document.

The Law

4 Mrs [RESPONDENT] is a protected tenant as acknowledged by the landlord. We have not been provided with a copy of the tenancy agreement but understand the property had been let unfurnished with the landlord responsible for repairs to the structure and exterior and the tenant responsible for internal decoration in accordance with s.11 of the Landlord & Tenant Act 1985.

5 Accordingly, the rent falls to be determined in accordance with s.70 of the Rent Act 1977.

6 S.70(1) states that in determining a fair rent, regard has to be had to all the circumstances of the tenancy (other than personal circumstances) including the age, character, locality and state of repair of the house, whether the property is let furnished and whether a premium had been paid or would be required to renew, continue or assign the tenancy.

7 s.70(2) adds a further qualification that it is assumed that the number of parties seeking to become tenants of similar houses in the locality on the terms of the tenancy (other than the rent) is not substantially greater than the number of houses available to let on such terms. This is usually referred to as 'scarcity' and the Court of Appeal held in [COMPANY]. v Chairman of the Greater Manchester Rent Assessment Committee (1995) 28 HLR 107 and [NAME] v [NAME] (1999) QB 92 that under normal circumstances the fair rent would be the market rent discounted for scarcity. [ADDRESS] also held that assured tenancy rents could be considered comparable to market rents.

8 s.70(3) requires the valuation to disregard any disrepair due to a tenant's failure to comply with the terms of the tenancy and any improvements carried out by either the tenants or their predecessor in title.

Facts Found

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9 The Tribunal inspected the property on 22nd October 2019. It is a two storey brick and slate, end-terraced house fronting [ADDRESS] but adjoining [ADDRESS], a road with industrial property on the opposite side and in particular a scrap metal yard opposite the

subject house. This is clearly undesirable and its presence has been reflected in the rental value determined by the Tribunal.

Generally, the location is about two miles north east of Birmingham city centre with shops and other facilities within easy reach.

10 The accommodation comprises an entrance hall, living room and kitchen on the ground floor with a landing, three bedrooms and bathroom on the first floor. The property has double glazing and central heating. Outside, the property has a small front garden and back garden fronting [ADDRESS].

11 Mrs [RESPONDENT] had a garage and verandah built and a shower fitted in the bathroom which are tenant's improvements to be disregarded from the rent under section 70 of the Rent Act 1977.

Submissions

12 Neither party requested a Hearing.

13 Mrs [RESPONDENT] wrote to the Tribunal on 2nd September drawing attention to the proximity of the scrap yard and vibrations caused by skip lorries causing damage to the building.

She also advised that it was cold and draughty in the winter due to cracks in the building.

14 The landlord did not send any submissions.

Decision

15 To assess the Fair Rent the Tribunal need to assess the rental value of the house in good condition as a starting point, assuming it has been well maintained and modernised with

central heating, reasonable kitchen units and a bathroom suite in fair condition, fully equipped with carpets and curtains and ready to let in the open market.

16 The Tribunal found the accommodation to be in fair condition (disregarding any effects of the tenant's occupation as required by the Rent Act 1977). Based on the Tribunal's own general knowledge and experience, the Tribunal assessed the market rent of the property in good condition at £140.00 per week.

17 However, it was not let in that condition. The Tribunal deducted £5.00 per week for the garage, £5.00 per week for the verandah and £1 per week for the electric shower which are tenant's improvements, £15.00 per week for the lack of carpets or curtains and £5.00 for the lack of white goods provided by the landlord. This left a net rent of £109.00 per week.

18 The Tribunal considered the question of scarcity in s.70(2) of the Rent Act 1977 and found that there would have been substantially more applicants for properties of this type to let than properties to let in the area and deducted £11 to reflect this. This left a net rent of £98.00 per week.

19 However, the rent was limited by The Rent Acts (Maximum Fair Rent) Order 1999, details of which were provided with the Decision Notice, limiting the maximum Fair Rent to £85.50 per week.

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20 There were no services to take into account.

21 Accordingly, the Tribunal determined the Fair Rent at £85.50 (Eighty Five Pounds Fifty Pence) per week with effect from 22nd October 2019.

[NAME] B.Sc.(Est.Man.) FRICS Chairman

Date: 6 November 2019

Appeal

If either party is dissatisfied with this decision an application may be made to this Tribunal for permission to appeal to the Upper Tribunal, Property Chamber (Residential Property) on a point of law only. Any such application must be received within 28 days after these reasons have been sent to the parties under Rule 52 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013.