First-tier Tribunal Determines New Fair Rent for Camden Property

OUTCOME: Allowed

FR24 First-tier Tribunal – [NAME_1] Chamber File Ref No. LON/00AG/F77/2024/0687

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises [ADDRESS] [POSTCODE]

[NAME_2]

Landlord Crown Estate Commissioners

Tenant [NAME_3]

1. The fair rent is £6,245.50 Per Calendar month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 27 January 2025

3. The amount for services is £1075 Per Calendar month

negligible/not applicable

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

nil Per

negligible/not applicable 5. The rent is to be registered as variable.

6. The capping provisions of the Rent Acts (Maximum Fair Rent) Order 1999 apply.

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

Central London bounding adjacent [ADDRESS]. Very large flat in purpose built block late Georgian. 7 rooms, kitchen, bathroom, wc, shower FGCH DG. FRI lease, but no copy available. No furniture. Service charge. Otherwise as register entry.

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. As the rent was above the MFR, it is capped. The uncapped Fair Rent without the MFR capping provisions, would otherwise be £22,500 per calendar month. The landlord may charge a rent at any level up to and including the Registered Fair Rent at box 1 above, but not a sum in excess of it.

[NAME_2] [NAME_2] Date of decision 27 January 2025

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE (2 months prior) X 390.9

PREVIOUS RPI FIGURE (2 months prior) Y 317.7

X 390.9 Minus Y 317.9 = (A) 73.2

(A) 73.2 Divided by Y 317.9 = (B) 0.2304

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.2804

Last registered rent* £4038 pcm excl £975 pcm sc Multiplied by (C) = £5170.3 pcm *(exclusive of any variable service charge)

Rounded up to nearest 50p = £5170.50 pcm

Variable service charge YES If YES add amount for services £1075 pcm

MAXIMUM FAIR RENT = £6245.5 Per pcm

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.

© CROWN COPYRIGHT 2013

FIRST-TIER TRIBUNAL [NAME_1] CHAMBER ([NAME_1]) Case Reference : LON/00AG/F77/2024/0687 [NAME_1] : [ADDRESS] [POSTCODE] Applicant : [redacted] (Landlord) Representative : [NAME_4] (Agent) Respondent : [redacted] (Tenant) Representative : None Type of Application : S.70 Rent Act 1977 – Determination of a new fair rent Tribunal Members : [NAME_2] Date and venue of Meeting : 27 January 2025 First Tier Tribunal (London) [ADDRESS] [POSTCODE] Date of Decision : 27 January 2025

REASONS FOR DECISION

Background

1 By an application, the landlord applied to the Rent Officer for registration of a fair rent at £6083.33 per calendar month. The rent stated as payable at the time of the application was said to be £4829 per calendar month including £791 pcm service charge, the registered rent.

2 With effect from 10 September 2024, the Rent Officer registered a fair rent of £4775 pcm including a service charge element of £1075 pcm.

2 The landlord objected to the new fair rent. The First Tier Tribunal was notified of this objection and a request for a fresh determination of the rent.

Directions

3 Directions dated 3 December 2024 were issued by the Tribunal, for case progression. Neither party requested a hearing.

Representations

4 Although standard Reply Forms were issued by the Tribunal prior, completed versions were not received back from either landlord or tenant. The landlord objected to the increase. There were no representations from the tenant.

5 The Tribunal determined the new rent with the assistance of such written statements from the parties as were received.

Inspection

6 The Tribunal did not inspect the [NAME_1]. The Tribunal was however able to externally view the [NAME_1] from Google Streetview and other online records (@ October 2024). The [NAME_1] appeared to date from around the mid nineteenth century set on a relatively large plot being part of the larger residential block purpose built but low rise containing other flats. The building of which the [NAME_1] formed part overlooked [ADDRESS]. There is parking to the front of the block but there is no record of tenant’s right to use this area.

7 The [NAME_1] is a modernized but assumed dated updated flat built towards 200 years ago. Accommodation is assumed to be on one level served by communal hallways within the building. The [NAME_1] includes 7 rooms, 1 bathroom, WC, shower room, kitchen. From an external view the [NAME_1] appeared to be in good condition. The front elevation is fair faced rendered brickwork maintained for the building by the freeholder. There is full gas fired central heating and double glazing provided by the landlord. No mention of furniture, carpets or white goods being provided by the landlord.

8 The tenancy began here in 1998 and the move appeared to be as a result as a re-location from another [NAME_1] of the landlord. The Tribunal assumes functional bath shower WC and kitchen facilities, only.

Law

9 When determining a fair rent the Committee, in accordance with the Rent Act 1977, section 70, had regard to all the circumstances including the age, location and state of repair of the [NAME_1]. It also 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

3 predecessor in title under the regulated tenancy, on the rental value of the [NAME_1].

10 [COMPANY_5] v [NAME_2] of the Greater Manchester etc. Committee (1995) 28 HLR 107 and Curtis v London Rent Assessment Committee [1999] QB 92 the Court of Appeal emphasized

(a) that ordinarily a fair rent is the market rent for the [NAME_1] 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

(b) 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 [NAME_1]).

11 Where the condition of a [NAME_1] is poorer than that of comparable properties, so that the rents of those comparables are towards twice that proposed rent for the subject [NAME_1], it calls into question whether or not those transactions are truly comparable. Would prospective tenants of modernized properties in good order consider taking a tenancy of an un-modernised house in poor repair and with only basic facilities or are they in entirely separate lettings markets? The problem for the Tribunal is that the only evidence of value levels available to us is of modernised properties. We therefore have to use this but make appropriate discounts for the differences, rather than ignore it and determine a rent entirely based on our own knowledge and experience, whenever we can.

12 On the evidence of the comparable lettings and our own general knowledge of market rent levels in and around Camden, the Tribunal accepts that the [NAME_1] would let on normal Assured Shorthold Tenancy (AST) terms, for £40,000 per calendar month. This then, is the appropriate starting point from which to determine the rent of the [NAME_1] as it falls to be valued.

13 A normal open market letting would include carpets, curtains and “white goods”, but these are assumed provided by the tenant. There is also reputedly a tenant “full repairing and insuring” lease though no copy was provided. There are only 2 washrooms for the 6 bedrooms. The kitchen and washing facilities are assumed functional but little more. Deductions for these shortcomings amounts to £12,000 pcm, leaving the adjusted market rent at £28,000 pcm.

14 The Tribunal also has to consider the element of scarcity and whether demand exceeded supply. The Tribunal found that there was scarcity in

4 the locality of Camden this type of [NAME_1] and makes a further deduction of £5,500 pcm from the adjusted market rent.

15 The fair rent to be registered on this basis alone would be £22,500 pcm including the latest service charge element of £1075 pcm, but, the new rent is limited by the statutory Maximum Fair Rent Cap calculation. The MFRC limits any increase to the change in RPI (set two months prior at each date), between the date of the last registration of a fair rent and the current, plus 5%. The calculations are shown in the MFR form and this caps the new fair rent at £6245.50 pcm including the service charge of £1075 pcm. The fair rent is therefore capped and registered at this figure.

16 The Rent Act makes no allowance for the Tribunal to take account of hardship arising from the new rent payable compared with the existing rent registered. The landlord is entitled but, not compelled, to charge the tenants rent at the registered figure from the effective date. However the landlord may not charge more than the fair rent.

[NAME_2] [NAME_2] 27 January 2025

Rights of appeal

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) ([NAME_1] Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If either party is dissatisfied with this decision, they may apply for permission to appeal to the Upper Tribunal (Lands Chamber) on any point of law arising from this Decision.

Prior to making such an appeal, an application must be made, in writing, to this Tribunal for permission to appeal. Any such application must be made within 28 days of the issue of this decision to the person making the application (regulation 52 (2) of The Tribunal Procedure (First-tier Tribunal) ([NAME_1] Chamber) Rule 2013).

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. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e., give the date, the [NAME_1], and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).