First-tier Tribunal Increases Service Charge for Tenant

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : HS/LON/00AY/F77/2025/0153 Tenants : Mr [RESPONDENT] Landlord :

[RESPONDENT] : [ADDRESS],[POSTCODE] Date of Decision : 30 September 2025

Chair : [NAME]:

1. There has been an objection by [RESPONDENT], the Landlord, to various Fair Rents registered by the Rent Officer and therefore these cases have been referred to the Tribunal.

2. Given the limited nature of the dispute a Case Management Hearing (CMH) was arranged. Ms [NAME] from [RESPONDENT], was in attendance on behalf of the Landlord. None of the Tenants were in attendance. Directions were issued that set out the timetable for parties to prepare for this case.

3. The main issue raised by the Landlord is that the Rent Officer has set a fixed sum of £9.00 for the service charge element in the registered rents. It is the Landlord’s position that the figure included in the rent should be £19.31. All the rents have been capped using the Rent Acts (Maximum Fair Rent) Order 1999 (the 1999 Order). The Landlord does not dispute the level of rent that has been registered but appreciates that any rent determined by the Tribunal may be different from the current registrations to reflect the application of the 1999 Order.

4. None of the tenants have made submissions on the issue in dispute. The only representations came from Ms [NAME] and are dated 11 July 2025. Those submissions explained that when the Landlord applied to have the rents re- registered a service charge element of £19.31 was sought. But that when the Rent

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Officer registered the rents the sum for the service charge element was set down as £9.00. A telephone call with the Rent Officer revealed that the difference between the two figures was because of the removal of lift costs which the Rent Officer said had been claimed incorrectly.

5. The appeal was made on the basis that in the past the lift expenses had been allowed; the lift expenses includes depreciation, maintenance, insurance and emergency telephone; the Rent Officer’s handbook (Valuation Officer Agency 2022) suggested a guideline of 25-30 years for the life of a lift and the Landlord’s position was that due to the level of use in the building, it is estimated that the lift will need replacing in 20 years; the 2021 lift refurbishment cost £609,680 and that equates to an annual depreciation of £30,484 and this in contrast with the figure being claimed of £29,000; that the Department for Work and Pensions has published advice on Universal Credit for service charges (Guidance for Social Landlords 2019) that includes on the list of eligible service charges “the provision, maintenance, cleaning or repair of communal lists including stairlifts in communal areas” and “a communal telephone (excluding the cost of telephone calls)”.

6. Included with the original application was a schedule setting out all the service charges and included a sum of £29,000 for the lift replacement fund contribution and administration costs of £4,860 for all of the services provided. The total services for 2024 was £66,260 and apportioned for the number of flats within the development the weekly service charges amounted to £19.31 per week for each flat.

7. It is clear from the Rent Officer’s Handbook (the Handbook) that the phrase “services” has a wide definition and is an item that represents a provision beyond the actual occupied residential unit. Service charges can include the provision of plant that is serving the communal parts of the building. From this I determine that the lift is communal plant and that given the depreciation tables in the Handbook that there is an anticipation that the depreciated of the lift can be included in the service charges. I accept the evidence given on behalf of the Landlord that replacement cost in 2021 was £609,680 and that for a 20-year period the depreciated cost if £30,484. I accept a depreciation period of 20 years given that this is an item of plant that is heavily used. Therefore, the depreciated sum of £29,00o, adopted by the Landlord seems reasonable and I am satisfied that this and the associated administration charge should be included in the service charges. From the calculations provided by the Landlord I adopt a service charge figure of £19.31 per week for each flat.

8. As there is no dispute on the level of the uncapped rents and as these are all significantly below the capped rent, I make no adjustment to those uncapped rents. However, as this is a new decision of the Tribunal the capping figures have been recalculated to reflect the RPI figures as they stand now. This re-registration should last for another two years from the date of this determination, unless there are any major works/improvements to the property.

9. Attached to this decision are the Decision Forms for all the properties included in this matter.

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Chair: [NAME]: 30 September 2025

RIGHTS OF APPEAL

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the Tribunal is required to notify the parties about any right of appeal they may have.

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. The application should be made on Form RP PTA available at https://www.gov.uk/government/publications/form- rp-pta-application-for-permission-to-appeal-a-decision-to-the-upper-tribunal- lands-chamber

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.

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 property and the case number), state the grounds of appeal and state the result the party making the application is seeking. Please note that if you are seeking permission to appeal against a decision made by the Tribunal under the Rent Act 1977, the Housing Act 1988 or the Local Government and Housing Act 1989, this can only be on a point of law.

If the First-tier Tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).

FR27 First-tier Tribunal – Property Chamber File Ref No. LON/00AY/F77/2025/0153

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal member was [ADDRESS], [POSTCODE]

[NAME]

Landlord [APPELLANT]

[NAME] [APPELLANT]

1. The fair rent is £173.00 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 30 September 2025

3. The amount for services is £19.31 Per week

None

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

Per

None

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:

(a) 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 £378.00 per week including £19.31 per week for services.

[NAME] of decision 30 September 2025

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 406.2

PREVIOUS RPI FIGURE Y 317.7

X 406.2 Minus Y 317.7 = (A) 88.5

(A) 88.5 Divided by Y 317.7 = (B) 0.278565

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

If yes (B) plus 1.075 = (C) N/A

If no (B) plus 1.05 = (C) 1.328565

Last registered rent* 130.00 Multiplied by (C) = £172.713 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £173.00

Variable service charge No If YES add amount for services

MAXIMUM FAIR RENT = £173.00 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.

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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.