First-tier Tribunal Recalculates Fair Rent for Tenancy

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. BIR/00GG/F77/2019/0019

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 52 [ADDRESS], [POSTCODE]

Mr [APPELLANT] Mrs [APPELLANT]

Landlord [APPELLANT] & [COMPANY]

Tenant [RESPONDENT]

1. The fair rent is £95.00 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 02 December 2018

3. The amount for services is not applicable -- Per --

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

-- Per --

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 the maximum fair rent as prescribed by the Rent Acts (Maximum Fair Rent) Order 1999. The rent that would otherwise have been registered was £83.00 per week.

Chairman Mr [NAME] J Ellis Date of decision 18 June 2019

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 284.5

PREVIOUS RPI FIGURE Y 267.1

X 284.5 Minus Y 267.1 = (A) 17.4

(A) 17.4 Divided by Y 267.1 = (B) 0.06514

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.1151

Last registered rent* 85 Multiplied by (C) = 94.7873 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 95.00

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £95 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.

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.

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case Reference : BIR/00GG/F77/2019/0019

Property : 52,[ADDRESS],

[POSTCODE]

Applicant: [redacted]

Applicant’s : [APPELLANT]

Respondent: [redacted]

Respondent’s : None Representative

Application : Application for determination of fair rent

Under s70 Rent Act 1977 and the Rent Acts

(Maximum Fair Rent)Order 1999 Tribunal : Tribunal Judge P. J. Ellis.

Tribunal Member [NAME].

Date of Inspection : 18 June 2019 And Decision

Date of Extended : 15 August 2019 Reasons

_____________________________________________________

DECISION _____________________________________________________

© CROWN COPYRIGHT 2019

Introduction

1. On 18 June 2019 the Tribunal inspected 52, [ADDRESS] [POSTCODE] ([NAME]) in response to an application by [APPELLANT] on behalf of the [APPELLANT] and [COMPANY] from a decision of the rent officer to determine a fair rent with effect from 2 December 2018.

2. The rent registered was £90.00 per week with effect from 2 December 2018. The last registration in December 2016 was £85.00 per week.

3. [RESPONDENT] is the regulated tenant of [NAME]. She has lived in [NAME] since 1982. The Tribunal made its determination after the inspection and issued it to the parties on 19 June 2019. By letter dated 26 June 2019 the Respondent asked the Tribunal for its reasons for the decision.

4. The matter was referred to the Tribunal on 4 April 2019 when it was asked to consider a late objection to the rent registered by the Rent Officer. The circumstances leading to the late application were that [APPELLANT] on behalf of the Applicant wrote to the [NAME] objecting to the new rent on 24 November 2018 but the objection was overlooked by reason of an error. The Tribunal accepted the explanation and directed that [NAME] be inspected on 18 June 2019. As neither side requested a hearing the matter was dealt with by determination on the papers.

5. The Tribunal received a brief submission from the Applicant but Mrs [RESPONDENT] made no written submissions. Mr [RESPONDENT], [NAME] Manager of [COMPANY] attended the inspection but made no further submissions. Mrs [RESPONDENT] was present during the inspection. The Tribunal summarises the representations taking account of written and oral material provided to it.

[NAME]

6. [ADDRESS] is an end of terrace three bedroom property of standard brick and tile construction. The terrace comprises three properties. From an external observation what is now a three building terrace originally comprised two smaller buildings. At some time well before commencement of the tenancy the original structure was enlarged by adding additional height and adding the third building which comprises [NAME].

7. Mrs [RESPONDENT] and her late husband fitted double glazing throughout shortly after taking occupation in 1982 with the aid of a grant from the local authority. There is no central heating. Space heating is provided by electric heaters in each room. Water is also heated by electricity.

8. The ground floor has a living room immediately off the front entrance door and a kitchen immediately off the living room. There are two steps down to the kitchen from the living room. The walls of the kitchen are painted brick. All white goods were supplied by the tenant. There is no seating in the kitchen.

9. A separate w/c and bathroom are off the kitchen in a small purpose built extension. There is also a small store once a coal store off the kitchen. A small open porch beyond the back door was fitted at the same time as the double glazing.

10. Stairs from the kitchen lead to the upper floor with two double bedrooms and one single bedroom.

11. Externally there is a large garden area once cultivated by Mrs [RESPONDENT]’s late husband but now covered in lawn. There is a separate garage for one vehicle.

12. All carpets, curtains, white goods, furniture and heating appliances were provided by the tenant. The Applicant had made no additions or alterations to [NAME] since the last rent registration other than to construct a simple set of steps to the garden from a path at the side of [NAME]. The steps were unsuitable for a person of Mrs [RESPONDENT]’s age as there was no support rail.

Applicant’s submissions

13. The Applicant contended the rent should be £105.00 per week having regard to other properties within three miles of [NAME] which were supposedly comparable.

The Law

14. When determining a fair rent, the Tribunal, in accordance with the Rent Act 1977, Section 70, had regard to all the circumstances including the age, location and state of repair of [NAME]. 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 predecessor in title under the Regulated Tenancy, on the rental value of [NAME].

15. In [COMPANY] v Chairman of the Greater Manchester, etc. Committee [1995] 28HLR107 and [NAME] v [NAME] [1999] QB92 the Court of Appeal emphasised (a) that ordinarily a fair rent is the market rent for [NAME] 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 were usually appropriate comparables. (These rents may have to be adjusted where necessary to reflect any relevant differences between those comparables and the subject property.

Valuation

16. Notwithstanding the general assertion of comparables within three miles, the Applicant produced only one example, a three bedroom semi-detached property on [ADDRESS] which was within one mile of [NAME] offered at £160.00pw or £695.00pcm. The agents’ particulars for this property describe it in the following terms:

“This larger than average 3 Bedroom house offers wonderful modern contemporary accommodation. With (elec cooker and ceramic hob included), and bathroom with shower over bath. [NAME] enjoys a living room, separate Dining room/2nd sitting room, a downstairs toilet and an excellent adjoining storage room. There are also 2 large double bedrooms, plus a larger than average 3rd bedroom. [NAME] overlooks a private front aspect with a large rear garden featuring decked areas and a vegetable plot. Off road parking to the side. GAS C/H. UPVC D/G”

17. The subject Property does not have three large bedrooms, gas central heating, modern kitchen and bathroom fittings. There is one small living room and a kitchen. There is no door to the stairs but opening is closed off by a curtain. The comparable submitted is significantly larger and better equipped than the subject Property.

18. The Tribunal having made adjustments for size, layout and condition, relied upon the general information provided by the Rent Service and its own general knowledge of rents levels for this type of property in the locality. It also considered the comparable property submitted by the Applicant. The Tribunal concluded the market rent for this Property was in the region of £575.00 per calendar month for the reasons set out below.

19. The Tribunal then considered the question of scarcity although no evidence was submitted by either party. This was done by considering whether the number of persons genuinely seeking to become tenants of similar properties in the wider area of the West Midlands on the same terms other than rent is substantially greater than the availability of such dwellings as required by section 70(2) of the Rent Act 1977. The Tribunal is aware of a high demand for rural and semi-rural properties in and around Telford and Wrekin, east Staffordshire and Shropshire. Generally, demand for two and three bedroom

property (semi, terraced and detached) is high and exceeds the supply of properties available to let. The Tribunal therefore found that there was scarcity

Decision

20. The Tribunal is satisfied that the subject property is smaller and with less accommodation than the comparable property. The house at present is in only fair condition, the kitchen fittings are the tenants and the bathroom fittings are outdated. The living room is quite small. There is limited space for table and chairs. The third bedroom is for a single bed only. The second bedroom is large enough for a double bed but little other furniture. A deduction is made by the Tribunal for these differences. In good condition the market rent for [NAME] would be between £575.00 per calendar month or £132.00 per week.

21. The Tribunal made the following deductions:

a. Central heating

£12.00 b. Double glazing now quite old

£3.00 c. Kitchen refit

£4.00 d. Bathroom refit

£3.00 e. Over bath shower

£1.00 f. Wardrobes

£0.50 g. Carpets and curtains

£8.50 h. White goods

£5.00 i. Decorating liability not less than 5%

£3.00

Total for adjustments

£40.00

Adjusted weekly rent before scarcity

£92.00

Scarcity 10%

£9.00

Fair Rent

£83.00

22. The Tribunal determined that the fair rent for [NAME] was therefore £83.00 per week.

23. The maximum fair rent permitted by the Rent Acts (Maximum Fair Rent) Order 1999 is £95.00 per week. This, therefore, has no impact on the rental determined by the Tribunal. Details of the maximum fair rent calculation have been provided with the previously released decision.

DECISION

24. The fair rent determined by the Tribunal for the purposes of Section 70 was, therefore, £83.00 per week with effect from 18 June 2019.

25. In reaching its determination, the Tribunal had regard to the evidence and submissions of the parties, the relevant law and their own knowledge and experience as an expert Tribunal but not any special or secret knowledge.

Appeal

26. If either party is dissatisfied with this decision they may apply for permission to appeal to the Upper Tribunal (Lands Chamber) on a point of law only. 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 which is given below (regulation 52 (2) of The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rule 2013) stating the grounds upon which it is intended to rely in the appeal.

Judge PJ Ellis Chair

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case Reference : BIR/00GG/F77/2019/0019

Property : 52, [ADDRESS],

[POSTCODE]

Applicant: [redacted]

Applicant’s : [APPELLANT]

Respondent: [redacted]

Respondent’s : None Representative

Application : Application for determination of fair rent

Under s70 Rent Act 1977 and the Rent Acts

(Maximum Fair Rent) Order 1999 Tribunal : Tribunal Judge P. J. Ellis.

Tribunal Member [NAME].

Date of Inspection : 18 June 2019 And Original Decision

Date of Decision : 15 August 2019

_____________________________________________________

DECISION ON SET ASIDE _____________________________________________________

© CROWN COPYRIGHT 2019

1. On 18 June 2019 the Tribunal issued its decision determining a regulated rent for the subject property in accordance with under s70 Rent Act 1977 and the Rent Acts (Maximum Fair Rent) Order 1999.

2. On 7 July 2019 the [NAME] notified the Tribunal that the decision was in error because the effective date was erroneously stated as 2 December 2018 rather than the date of the decision.

3. The Tribunal further noted that the Notice of the Tribunal Decision form had been incorrectly completed. The determined rent had been recorded in paragraph 1 as £95.00 per week when it should have recorded as £83.00 per week. The sum of £95.00 per week is in fact the maximum fair rent permitted by the Rent Acts (Maximum Fair Rent) Order 1999.

4. Having reviewed the decision the Tribunal has decided that it is in the interests of justice that the decision is set aside because of the procedural irregularity pursuant to Rule 51(1) and (2)(d) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 and remake the decision with the correct effective date for the new rent, the correct determined rent recorded in paragraph 1, and the maximum fair rent noted at paragraph 8 (b).

5. The remade decision is annexed to this Decision.

Judge PJ Ellis Chair

First-tier Tribunal – Property Chamber File Ref No. BIR/00GG/F77/2019/0019

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Mr [NAME] J Ellis Mrs [APPELLANT]

Landlord [APPELLANT] & [COMPANY]

Tenant [RESPONDENT]

1. The fair rent is £83.00 Per week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 18 June 2019

3. The amount for services is not applicable n/a Per --

4. The amount for fuel charges (excluding heating and lighting of common parts) not counting for rent allowance is not applicable n/a Per --

5. The rent is to be registered as variable.

---

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 £95.00 per week.

Chairman Mr [NAME] J Ellis Date of decision 18 June 2019

Corrected and remade on 15 August 2019

MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 284.5

PREVIOUS RPI FIGURE Y 267.1

X 284.5 Minus Y 267.1 = (A) 17.4 (A) 17.4 Divided by Y 267.1 = (B) 0.06514

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.1151

Rounded up to nearest 50p = 95.00

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £95 Per week

Explanatory Note

The result is rounded up to the nearest 50 pence.