First-tier Tribunal Sets Fair Rent for Ground-Floor Flat

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. TR/LON/00AT/F77/2023/0349

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

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

[NAME]

Landlord [APPELLANT] c/o [NAME]

Tenant Ms [APPELLANT]

1. The fair rent is £640.00 Per Calendar Month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 12th February 2024

3. The amount for services is

Per

not applicable

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

0.00 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 as this is the first registration.

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

[NAME] [NAME] of decision 12th February 2024

FR24

1

Case Reference

: LON/00AT/F77/2023/0349

Property : [ADDRESS] [POSTCODE]

Tenant

: Ms [APPELLANT]

Landlord : [APPELLANT] c/o [NAME] of Objection : 2nd October 2023

Type of Application : Section 70, Rent Act 1977

Tribunal

: Mr [NAME] of Summary Reasons

: 12th February 2024

_______________________________________________

DECISION

The sum of £640 per calendar month will be registered as the fair rent with effect from 12th February 2024 being the date the Tribunal made the Decision. ____________________________________

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

2 © CROWN COPYRIGHT 2023

SUMMARY REASONS

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.

Evidence

2. The Tribunal has consideration of the written submissions from both parties which included photographs, comparable evidence from the Landlord together with the Rent Officers calculations and Rent Registers.

Determination and Valuation

4. Having consideration of our own expert, general knowledge of rental values in the Greenwich area together with the Landlords comparable evidence, we consider that the open market rent for the property in its current condition would be in the region of £1,600 per calendar month. From this level of rent we have made adjustments in relation to:

Terms of tenancy, no white goods, no carpets or curtains, dated kitchen and bathroom fittings, no central heating which equates to approximately 50%

5. The Tribunal has also made an adjustment for scarcity at 20%

6. The full valuation is shown below:

Market Rent £1,600 pm

Less

approx. 50%

£800

Leaves

£800

Less Scarcity

approx. 20%

£160

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Leaves

£640 pm

7. The Tribunal determines a rent of £640 per calendar month

Decision

8. The uncapped fair rent initially determined by the Tribunal, for the purposes of section 70, was £640 per calendar month. This is the first registration and therefore the rent is not subject to the capping calculation. The rent to be registered is £640 per month as the fair rent for this property effect from 12th February 2024 being the date the Tribunal made the Decision.

[NAME]: [NAME]: 12th February 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 subsequent application for permission to appeal should be made on Form RP PTA

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference :

LON/00AT/F77/2023/0349

Property : [ADDRESS] [POSTCODE]

Applicants (Landlord)

: [APPELLANT] : Mr [COUNSEL] Respondent (Tenant) : Ms [COUNSEL] : None Type of application : Section 70 of the Rent ACT 1977 Tribunal members :

Mr [NAME] : Paper determination Date of Reasons : 22nd February 2024

DECISION

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The Tribunal determines £640 per month is to be registered as the fair rent for the above property with effect from the 12th February 2024 being the date of the Tribunal's decision.

The reasons for this decision are set out below.

Reasons

Background

On 27th June 2023 the landlord, applied to the Valuation Office Agency (Rent Officer) for registration of a fair rent of £700 per month for the property.

Based upon the information provided by the Rent Officer this was a first registration and was therefore not limited by the capping provisions in the Rent Acts (Maximum Fair Rent Order 1999)

On the 24th August 2023 the Rent Officer registered a fair rent of £630 per month, effective from the 24h August 2023. In accordance with the above, the rent increase imposed by the Rent Officer had not been “capped” or limited by the operation of the Rent Acts (Maximum Fair Rent) Order 1999 (the Order).

By a letter dated 2nd October 2023 from [RESPONDENT], on behalf of the landlord objected to the rent determined by the Rent Officer and the matter was referred to this Tribunal.

The law

When determining a fair rent the Tribunal, in accordance with the Rent Act 1977, section 70, must have regard to all the circumstances including the age, location and state of repair of the property. It also must disregard the effect of (a) any relevant tenant's improvements and (b) the effect of any disrepair or other defect attributable to the tenant, on the rental value of the property. Section 70(2) of the Rent Act 1977 imposes on the Tribunal an assumption that the number of persons seeking to become tenants of similar dwelling house in the locality on the terms (other than those relating to rent) of the regulated tenancy is not substantially greater than the number of such dwelling houses in the locality which are available for letting on such terms. This is commonly called ‘scarcity’.

[COMPANY] v [NAME] of the Greater Manchester Council (1995) 28 HLR 107 and [NAME] v [NAME] Tribunal [1999] QB 92 the Court of Appeal emphasised

(a) 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

3 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 property).

The Rent Acts (Maximum Fair Rent) Order 1999 places a “cap” on the permissible amount of the increase of a fair rent between one registration and the next, by reference to the amount of the increase in the United Kingdom Index of Retail Prices between the dates of the two registrations. Where the cap applies the Rent Officer and the Tribunal is prevented from increasing the amount of the fair rent that it registers beyond the maximum fair rent calculated in accordance with the provisions of the Order and the mathematical formula set out in the Order. By article 2(7) of the 1999 Order the capping provisions do not apply “in respect of a dwelling-house if because of a change in the condition of the dwelling- house or the common parts as a result of repairs or improvements (including the replacement of any fixture or fitting) carried out by the landlord or a superior landlord, the rent that is determined in response to an application for registration of a new rent under Part IV exceeds by at least 15% the previous rent registered or confirmed.”

Facts found without Inspection.

The parties did not request the Tribunal to inspect the property and the Tribunal were satisfied this was not required and relied on information provided by the parties together with its expert knowledge.

The property is a converted ground floor flat forming part of a former Victorian house located in an established residential area close to local amenities.

The accommodation comprises: one reception rooms, kitchen, one bedroom, shower room/WC, rear garden.

There is no central heating and original single glazed sash windows.

Terms of the tenancy

It is understood that this tenancy commenced on the 1st March 1984, although an agreement was not provided by the parties. It is agreed that the landlord is responsible for structural repairs and external decoration; the tenant is responsible for internal decorations. The property was let unfurnished.

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The evidence

The landlord submitted written representations together with details of four comparable properties which ranged from £1,998 pcm to £2,200 pcm.

The tenant completed the Reply Form and submitted a selection of photographs showing the before and after arrangements in connection with the garden. In a letter dated 13th December 2023, the tenant outlines the configuration of the flat with the shower in the kitchen pantry and the lavatory under the stairs.

The Rent Officer Calculations.

The Tribunal had copies of the Valuation Office Agency correspondence including the most recent Rent Register effective from the 24th August 2023 together with the calculations for that registration.

Valuation

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.

Based upon the evidence provided together with its expert knowledge, the Tribunal consider that the subject property, if finished to a reasonable standard would be likely to attract a rent let on an assured shorthold tenancy, for £1,600 per month.

Next, we need to adjust that hypothetical rent of £1,600 per month to allow for the differences between the terms of this tenancy and the lack of white goods, no carpets and curtains, tenants internal decoration responsibility, dated kitchen and shower fittings, poor configuration and no central heating (disregarding the effect of tenant’s improvements and any disrepair or other defect attributable to the tenant).

The Tribunal has considered very carefully the parties’ submissions and the notes prepared by the Rent Officer.

Using our own expertise we considered that deductions of approximately 50% should applied in order to take into account the terms of the tenancy, and condition of the property. This provides a deduction of £800 per month from the hypothetical rent. This reduces the figure to £800 per month.

It should be noted that this figure cannot be a simple arithmetical calculation and is not based upon capital costs but is the tribunal’s estimate of the amount by which the rent would need to be reduced to attract a tenant.

5 Scarcity

Thirdly, the tribunal then went on to consider whether a deduction falls to be made to reflect scarcity within the meaning of section 70(2) of the 1977 Act. The tribunal followed the decision of the High Court in [COMPANY] v [NAME], in which it was held that scarcity over a wide area should be considered rather than scarcity in relation to a particular locality.

In the Tribunals opinion there should be a deduction of 20% for scarcity as it is considered that demand outweighs supply for rented properties in the area. Applying this deduction of £160 produces a rental figure of £640.

Conclusion

The capping provisions of the Rent Acts (Maximum Fair Rent) Order do not apply and therefore the above figure applies.

Therefore, £640 per month is the fair rent to be registered limited by the Rent Acts (Maximum Fair Rent) Order 1999 with effect from the 12th February 2024 being the date of the Tribunals decision.

[NAME]

22nd February 2024

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