First-tier Tribunal Determines Fair Rent for Regulated Property

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. TR/LON/00AW/F77/2023/0328

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 1 [ADDRESS], [POSTCODE]

Judge M [NAME] [NAME]

Landlord Northumberland and [APPELLANT]

Tenant Mrs [APPELLANT] [NAME]

1. The fair rent is £25,845.00 Per Year (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 15 January 2024

3. The amount for services is N/A 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

negligible/not applicable

5. The rent is not to be registered as variable.

6. The capping provisions of the Rent Acts (Maximum Fair Rent) Order 1999 do not apply.

7. Details (other than rent) where different from Rent Register entry

Double reception room. Tenants' improvements include second floor addition, ground floor shower room and central heating. Tenants' alterations included in description but disregarded in valuation.

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 below the maximum fair rent of £31,977.05 per year prescribed by the Order.

Chairman Judge M [NAME] of decision 15 January 2024

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 377.3

PREVIOUS RPI FIGURE Y 290.4

X 377.3 Minus Y 290.4 = (A) 86.9

(A) 86.9 Divided by Y 290.4 = (B) 0.29924242

First [NAME] for re-registration since 1 February 1999 YES/NO

If yes (B) plus 1.075 = (C) n/a

If no (B) plus 1.05 = (C) 1.34924242

Last registered rent* £23,700 Multiplied by (C) = 31,977.05 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 31,977.05

Variable service charge NO If YES add amount for services -

MAXIMUM FAIR RENT = £31,977.05 Per year

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 [NAME] was the first since 1 February 1999) or 5% (if it is a second or subsequent [NAME] 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 [NAME] of the formula is ascertained the service charge is then added to that sum in order to produce the maximum fair rent.

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00AW/F77/2023/0328 Property : 1 [ADDRESS] [POSTCODE] Landlord : [COMPANY] c/o [APPELLANT] Tenant : Mrs [APPELLANT] [NAME] of [NAME] :

Determination of a fair rent under Section 70 of the Rent Act 1977

Tribunal members : Judge M [NAME] [NAME] of decision : 15 January 2024 Date of Reasons : 27 January 2024

REASONS FOR DECISION

2 Decision of the tribunal

The FTT determines the fair rent to be £25,845.00 per year, with effect from 15 January 2024. Background 1. On 14 July 2023, the landlord applied to the Rent Officer for registration of a fair rent of £28,440 per annum for the above property.

2. The rent payable at the time of the [NAME] was £1,975 per month, which is the equivalent of £23,700 per annum. The tenancy commenced on 1 January 1972.

3. On 11 September 2023, the rent officer registered a fair rent of £24,440 per year with effect from 11 October 2023.

4. By letter dated 27 September 2023, the landlord objected to the rent determined by the Rent Officer and the matter was referred to the Tribunal.

5. On 2 November 2023 the Tribunal issued directions accompanied by a Reply Form to the parties. The landlord was directed to provide details of the property comparables and any other comments by 16 November 2023. The tenant was directed to do likewise by 30 November 2023. The landlord was permitted to serve a Reply by 7 December 2023.

6. Neither party requested a hearing or inspection. The Landlord’s Case 7. The landlord did not respond to the appeal. The Tenant’s Case 8. The tenant did not respond to the appeal. The Property 9. The Tribunal has relied on the rent register and Google Maps. It finds that the property is a fine end terraced town house in Knightsbridge comprising lower ground, ground, first and second floors. The property has a stucco portico and comprises 1 kitchen/diner in the basement, 1 double reception room and a shower/wc on the ground floor, 2 rooms and a wc on the first floor and 1 room and a bath/shower room/wc on the second floor. There is a rear garden.

3 10. The rent register records tenants’ improvements as “second floor addition, ground shower room and central heating.” The Law

11. When determining a fair rent the Tribunal, in accordance with the Rent Act 1977, section 70, had regard to all the circumstances (other than personal circumstances) including the age, location and state of repair of the property.

12. In addition, by section 70(3): “...there shall be disregarded ... (b) any improvement carried ... out by the tenant...”

13. In [APPELLANT] v Chairman of the Greater Manchester etc. Tribunal (1995) 28 HLR 107 and [NAME] v [NAME] Tribunal [1999] QB 92 the Court of Appeal emphasised that ordinarily a fair rent is the market rent for the property discounted for 'scarcity' (i.e. that element, if any, of the market rent, 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 rent - to that of the regulated tenancy) and 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 those comparables and the subject property).

14. In addition, the Tribunal is required to take into account the Rent Acts (Maximum Fair Rent) Order 1999.

Findings 15. The Tribunal first determined what rent 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 provided by the rent officer and its own knowledge of rents in Knightsbridge. In view of the tenant’s construction of the second floor, it disregarded that improvement. Therefore, the Tribunal found that this rent was £92,304 per annum.

16. The Tribunal then found that an adjustment of 30% was required to reflect the addition of the second-floor accommodation, and a further 10% was required to reflect the installation of the ground floor bathroom facilities by the tenant. The Tribunal also found that the tenant had provided white goods, requiring a downward adjustment of 5%, and floor coverings and window curtains requiring a downward adjustment of 5%.

4 17. Further, the Tribunal found that the need for modernisation required a downward adjustment of 10% and the tenant’s repairing liability warranted a further adjustment of 5%.

18. These adjustments therefore aggregated to 65% or £59,997.60 per annum, leaving an adjusted rent of £32,306.40 per annum.

19. The Tribunal found that there was substantial scarcity in the locality of Greater London and therefore made a deduction of 20% (£6,461.28 per annum) from the adjusted market rent to reflect this element.

20. The uncapped fair rent determined by the Tribunal, for the purposes of section 70, was accordingly £25,845 per annum.

21. This rent was unaffected by the Rent Acts (Maximum Fair Rent) Order 1999 as it was below the maximum fair rent of £31,977.50 per annum. (Details are provided on the back of the decision form).

22. Accordingly, the sum of £25,845.00 per annum was registered as the fair rent with effect from 15 January 2024, being the date of the Tribunal’s decision.

Name:

Judge M [NAME]:

27 January 2024

ANNEX - RIGHTS OF APPEAL

• The Tribunal is required to set out rights of appeal against its decisions by virtue of the rule 36 (2)(c) of the Tribunal Procedure (First-tier Tribunal)(Property Chamber) Rules 2013 and these are set out below.

• If a party wishes to appeal against this decision to the Upper Tribunal (Lands Chamber) then a written [NAME] for permission must be made to the First-tier Tribunal at the Regional office which has been dealing with the case.

• The [NAME] for permission to appeal must arrive at the Regional office within 28 days after the Tribunal sends written reasons for the decision to the [NAME].

• If the [NAME] is not made within the 28-day time limit, such [NAME] must include a request for an extension of time and the reason for not complying with the 28-day time limit; the Tribunal will then look at such reason(s) and decide whether to allow the [NAME] for permission to appeal to proceed despite not being within the time limit.

5 • The [NAME] for permission to appeal must identify the decision of the Tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal, and state the result the party [NAME] the [NAME] is seeking.