First-tier Tribunal Determines Fair Rent for Regulated Tenancy

OUTCOME: Allowed

First-tier Tribunal – Property Chamber File Ref No. LON/00AC/F77/2021/0014

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 27 [ADDRESS], [POSTCODE]

[NAME]

Landlord [RESPONDENT] [COMPANY]

Tenant [APPELLANT]

1. The fair rent is £880 Per month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 5 July 2022

3. The amount for services is £34.68 Per month

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

Per

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 apply (please see calculation overleaf).

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

8. For information only:

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 £923 per month including £34.68 per month for services prescribed by the Order.

[NAME] of decision 5 July 2022

MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 337.1

PREVIOUS RPI FIGURE Y 278.1

X 337.1 Minus Y 278.1 = (A) 59

(A) 59 Divided by Y 278.1 = (B) 0.21215

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.26215

Last registered rent* £731 Multiplied by (C) = £922.63 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £923

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £923 Per 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.

Case Reference : LON/00AC/F77/2021/0014

P:PAPERREMOTE

Property : [ADDRESS] east Finchley London [POSTCODE]

Applicant: [redacted]

: -

Respondent: [redacted] : 9 September 2020

Type of Application : Determination of the registered rent under Section 70 Rent Act 1977

Tribunal

: Mrs [NAME] and venue of : 5 July 2022 hearing

remote hearing on the papers

_______________________________________________

DECISION ____________________________________

The registered rent with effect from 5 July 2022 is £880 per month.

This has been a hearing on the papers which has been consented to by the parties. The form of remote hearing was P:PAPERREMOTE, a paper determination which is not provisional. A face to face hearing was not held because it was not practicable and all the issues could be determined on the papers. The documents that I was referred to are in a bundle, the contents of which I have recorded.

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

Background

1. On 4 March 2020 the landlord applied to the rent officer for registration of a fair rent of £533.32 inclusive of £438.17 fixed service charge per month for the above property.

2. The registered rent at the date of the application was £1731 per month which had been registered by the rent officer on 6 February 2018 with effect from 1 March 2018.

3. On 22 June 2020, the rent officer registered a fair rent of £795 per month inclusive of £34.68 service charge with effect from the same date.

4. On 9 September 2020 the tenant objected to the registered rent, the late objection which was accompanied by an explanation for the late submission was accepted by the tribunal on 12 March 2021.

5. The tenant occupies under the terms of a tenancy agreement which commenced on 1 April 1984.

6. Owing to the Covid 19 restrictions the parties were asked if they would consent to the application being dealt with on the papers. Neither party objected. Written representations were received from the tenant, no written representations were received from or on behalf of the landlord.

The Evidence

7. Miss [APPELLANT] stated that the landlord had increased her rent to £614.80 which was higher than the proposed rent of £533.52 stated on the application to the rent officer. Consequently, the rent for her flat was £50 per month more than that charged for identical flats within the block. The standard of the services was variable; the gardening was minimal and parts of the communal garden were overgrown. She referred to a number of secure and assured rents ranging from £135 to £155 per week and a house let at £500 per month in a variety of locations. However, there was insufficient detail to compare those properties with the subject property.

The Law

8. When determining a fair rent the tribunal, in accordance with section 70 of the Rent Act 1977, must have regard to all the circumstances including the age, location and state of repair of the property. It also must disregard the effect if any of any relevant tenant’s improvements and the effect of any

disrepair or any other defect attributable to the tenant or any predecessor in title under the regulated tenancy, on the rental value of the property.

9. In [COMPANY] v [NAME] of the Greater Manchester etc Committee (1995) 28 HLR 107 and [NAME] v [NAME] (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 to that of a regulated tenancy, and

That for the purposes of determining the market rent, assured tenancy market rents are usually appropriate comparables; adjusted as necessary to reflect any relevant differences between the comparables and the subject property.

Valuation

10. In the first instance the Tribunal 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. The Tribunal relied on its own general knowledge of rental values in East Finchley and concluded that the likely market rent for the property would be £1500 per month.

11. However, it was first necessary to adjust the hypothetical rent of £1500 per month 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 valuation date, ignoring any 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 properties available on the open market were modern or modernised, with white goods, floor and window coverings. The Tribunal considered that these differences and the terms and conditions of the tenancy required a deduction of £400 per month.

12. This leaves an adjusted market rent for the subject property of £1100 per month . The Tribunal was of the opinion that there was substantial scarcity in London for similar properties and therefore made a deduction of 20% from the adjusted market rent to reflect this element. The Tribunal’s uncapped fair rent is £880 per month.

Decision

13. The uncapped fair rent initially determined by the Tribunal, for the purposes of section 70, was accordingly £880 per month which is below the maximum fair rent of £923 per month which can be charged under the Rent Acts (Maximum Fair Rent) Order 1999.

14. Accordingly, the sum of £880 per week will be registered as the fair rent with effect from 5 July 2022 being the date of the Tribunal's decision.

17. The Landlord is not obliged to charge the registered rent which sets a ceiling on the amount which may be charged. As a social landlord it is governed by its own rules regarding the maximum annual increase which can be demanded from its tenants.

[NAME]: [NAME]: 5 July 2022

ANNEX - RIGHTS OF APPEAL

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

ii. The application for permission to appeal must arrive at the Regional office within 28 days after the Tribunal sends written reasons for the decision to the person making the application.

iii. If the application is not made within the 28 day time limit, such application 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 application for permission to appeal to proceed despite not being within the time limit.

iv. The application 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 making the application is seeking.