First-tier Tribunal Determines Fair Rent Under Rent Act 1977

OUTCOME: Allowed

FR27 First-tier Tribunal – Property Chamber File Ref No. LON/00BE/F77/2024/0012

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 12 [ADDRESS], [POSTCODE]

Tribunal Judge Aileen Hamilton-Farey

Landlord [COMPANY]

Tenant Mr [APPELLANT]

1. The fair rent is £986.00 Per Calendar month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 14 March 2024.

3. The amount for services is N/a Per -

negligible/not applicable

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

N/a 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 (please see calculation overleaf for information), due to the fact that the rent to be registered is below the Maximum Fair Rent.

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

None

8. For information only:

The fair rent to be registered is £1,020.00. This rent is not capped by the Maximum Fair Rent Order because it is below the rent calculated using the Order (calculation appended to this decision).

Chairman Aileen Hamilton- Farey Date of decision 14 March 2024.

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 378.0

PREVIOUS RPI FIGURE Y 294.3

X 378.0 Minus Y 294.3 = (A) 83.7

(A) 83.7 Divided by Y 294.3 = (B) 0.2844

First application for re-registration since 1 February 1999 YES/NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.334

Last registered rent* £767.50 Multiplied by (C) = 1023.84 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £1,024.00

Variable service charge NO If YES add amount for services n/a

MAXIMUM FAIR RENT = £1,024.00 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.

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Case Reference

: LON/00BE/F77/2024/0012.

Property : 12 [ADDRESS] [POSTCODE].

Tenant

: Mr. [APPELLANT].

Landlord : [APPELLANT].

Date of Objection : 5 December 2023.

Type of Application : Section 70, Rent Act 1977

Tribunal

: Valuer Chair, Aileen Hamilton-Farey.

Date of Summary Reasons

: 14 March 2024

_______________________________________________

DECISION

The sum of £986.00 per calendar month will be registered as the fair rent with effect from 14 March 2024 being the date the Tribunal made the Decision. ____________________________________

© CROWN COPYRIGHT 2023

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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REASONS FOR THE DECISION

Background 1. Following an objection from the Tenant to the determination of a fair rent by the Rent Officer, the Tribunal has made a determination under the provisions of the Rent Act 1977.

Inspection 2. Tribunal did not inspect the property but considered this case on the basis of the papers provided by the parties.

Evidence 3. The Tribunal has consideration of the written submissions provided by the Landlord. There were no written submissions from the tenant.

The Application

4. By an RR1 dated 13 September 2023 the landlord sought an increase in the rent. At the time of the application the registered rent was £767.50 per calendar month (although £735.00 was payable by agreement between the parties).

5. On 6 November 2023 the Rent Officer Service registered a new rent at £975.00 per calendar month with effect from the same date. At that time the Rent Officer considered the market rent at £1,300.00 per calendar month, less deductions for only partial white goods and terms of the tenancy, plus scarcity, arriving at the £975.00. The Rent Officer did not ‘cap’ the rent in accordance with the Maximum Fair Rent Order presumably because the £975.00 was either the same as, or less than the figure obtained by the application of the MFR.

6. By an email dated 5 December 2023, the tenant objected to the rent set and the matter was referred to this tribunal.

7. The tribunal issued directions on 5 December 2023 that requested the parties provide details of any comparable properties that they wished the tribunal to consider, and any other details of the property that should be taken into consideration. During the consultation with the Rent Officer the tenant said that although the landlord had produced a schedule of services provided to the tenant, these were not provided, and the tenant had carried out the cleaning himself. The parties should be aware (and as has been noted on previous registrations), that they must agree to the inclusion of services in the tenancy agreement and amend that agreement so that it reflects their agreement. Without that agreement, the tribunal is unable to take any service costs into consideration and therefore they do not form part of the Fair Rent and cannot be recovered from the tenant.

8. The landlord provided evidence in the form of photographs and a floor plan of the subject property, together with evidence of other lettings in the block. In addition, [NAME] and Hayward, agents, suggested that the

3 rent passing for the property would have been £1,350.00 in September 2023 when the application was made.

9. This tribunal considers that the rents in this locality have risen since that time, and other market evidence suggests current letting rates for fully refurbished properties between £2,000 and £1,350.00. These rents reflect one-bedroomed properties, whereas the subject has a bedroom and living room as well as kitchen, bathroom and outside space. In the circumstances the tribunal considers that if this property were to come to the market today a rent of £1,450.00 per calendar month would be payable by a willing tenant. Deductions of 15% have been made from that amount to reflect the different terms of the subject tenancy and an assured shorthold, and a further 20% to reflect the ‘scarcity’ element of the Rent Act 1977. The calculations for the Fair Rent are detailed below.

Determination and Valuation 10. Having consideration of the submissions by the landlord, and our own expert, general knowledge of rental values in the area, we consider that the open market rent for the property in good tenantable condition would be in the region of £1,450.00 per calendar month. From this level of rent we have made adjustments in relation to:

• The different terms of the tenancy between a market rent (assured shorthold tenancies), and the fair rent. • Lack of recent modernisation and partial white goods.

11. The Tribunal has also made an adjustment for scarcity.

12. The full valuation is shown below:

per calendar month Market Rent

£1,450.00

Less

Terms of tenancy and lack of recent Modernisation approx. 15%

(£217.50)

£1,232.50

Less Scarcity

approx. 20%

(£246.50)

£ 986.00

13. The Tribunal determines a rent of £986.00 per calendar month as the Fair Rent for the property. The tribunal then carried out the rental calculation using the Maximum Fair Rent Order, a copy of which is appended to the decision. By applying the MFR the tribunal determined that the maximum rent payable under this tenancy would be £1,024.00 per calendar month, as

4 this is higher than the Fair Rent above, the lower amount becomes the Fair Rent with effect from today’s date.

Decision 14. The uncapped fair rent determined by the Tribunal, for the purposes of section 70, was £986.00. The capped rent for the property according to the provisions of the Rent Acts (Maximum Fair Rent) Order 1999 is calculated at £1,024.00 per calendar month. The calculation of the capped rent is shown on the decision form. In this case the lower rent of £986.00 is to be registered as the fair rent or this property.

Chairman: Aileen Hamilton-Farey Date: 14 March 2024.

APPEAL PROVISIONS

These summary reasons are provided to give the parties an indication as to how the Tribunal made its decision. If either party wishes to appeal this decision, they should first make a request for full reasons and the details of how to appeal will be set out in the full reasons. Any request for full reasons should be made within a month. Any subsequent application for permission to appeal should be made on Form RP PTA