First-tier Tribunal Sets Fair Rent for Property

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. TR/LON/00AN/F77/2024/0156

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

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

[NAME] Mr. [RESPONDENT]. [NAME]

Landlord [NAME] ([COMPANY]) [APPELLANT]

Tenant Ms [APPELLANT]

1. The fair rent is £315.69 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 24 June 2024

3. The amount for services is £21.76 Per Week

negligible/not applicable

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

£4.15 Per Week

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 apply (please see calculation overleaf).

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

None

8. For information only:

(a) 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 £381.00 per week including £21.76 per week for services prescribed by the Order.

[NAME]- [NAME] of decision 24th June 2024

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 386.4

PREVIOUS RPI FIGURE Y 305.5

X 386.4 Minus Y 305.5 = (A) 80.9

(A) 80.9 Divided by Y 305.5 = (B) 0.2648

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) 1.3148

Last registered rent* 289.50 Multiplied by (C) = 380.63 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 381.00

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £381.00 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.

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/00AN/F77/2024/0156.

Property : [ADDRESS] [POSTCODE].

Tenant

: Ms [APPELLANT]. [APPELLANT].

Landlord : [COMPANY]: [NAME].

Date of Objection : 13 July 2023.

Type of Application : Section 70, Rent Act 1977

Tribunal

: [NAME]

[NAME] JP.

Date of Reasons

: 27 June 2024.

_______________________________________________

DECISION

The sum of £315.69 per calendar week will be registered as the fair rent with effect from 24 June 2024 being the date the Tribunal made the Decision. FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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© CROWN COPYRIGHT 2023

REASONS FOR THE DECISION

Background 1. The Rent Officer Service registered a rent for the subject property on 22 July 2023. The registered rent was £306.00 per week including services of £21.76 per week. The landlord requested a rent of £348.06 in an RR1 dated 3 May 2023. Having received the new registered rent, the landlord objected to the rent and the matter was referred to this tribunal.

2. The tribunal issued directions on 24 May 2024, these requested that the parties provided examples of comparables on which they wished to rely in support of their case, and to say whether they wished the tribunal to have a hearing and inspect the property. The tenant requested a hearing, neither party requested an inspection, and one was not undertaken. The tenant provided details of other fair rent comparables on which they wished to rely. The landlord did not provide any evidence.

Hearing and Inspection.

3. During the hearing the tenant outlined her occupation of the property. She said that the local area was good, but that the property did not meet modern standards. In particular the communal heating system was inefficient, with the radiator in the living room not working properly, and last winter the landlord had reduced the hours of supply to the extent that she had had to purchase additional radiators to provide sufficient heat.

4. Ms. [NAME] also said that she had been confused by the fact that she had already received a rent increase notice from the landlord and that, she would therefore have more than one increase in a two-year period, and she thought that this could not happen. The tribunal confirmed that it could not offer advice, and the tenant is seeking advice from the College of Law.

5. The tribunal confirmed that our jurisdiction is confined to setting the fair rent for the property, and that to do so, we must start with the market rent for the property and then make adjustments to reflect the actual tenancy and the property.

Evidence

6. There were no written submissions from the landlord, despite their objection. As previously mentioned, the tenant provided evidence of other fair rents on similar properties, which we explained during the hearing that we could not use. The tribunal therefore had no evidence of open market rentals for similar properties in the area.

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Determination and Valuation

7. The tribunal must therefore use its own expert knowledge of rental values of similar properties in the area. Having done so, we came to an open market rent of £2,250.00 per calendar month. However, the subject property is not in the condition that would be found in an open market rental, and the different terms of the tenancy must be taken into account, as well as making a deduction for the scarcity element as required under the Rent Act 1977. In this instance the tribunal makes the following deductions from the open market rent stated above.

• A deduction of 20% to reflect the absence of white goods, carpets and curtains, and modern fixtures and fittings. • 5% to reflect the differing terms of the tenancy, which would affect the rent payable. • A deduction of 20% to reflect the element of ‘scarcity’ as defined in the Rent Act 1977.

8. The full valuation is shown below:

Market Rent per calendar month:

£2,250.00

Less 20% for lack of white goods, carpets etc/dated Fixtures and fittings:

£ 450.00

£1,800.00 Less 5% to reflect terms of tenancy.

£ 90.00

£1,710.00

Less scarcity @ 20%

£ 342.00 Gross rent:

£1,368.00

The tribunal determines that the adjusted market rent for the subject property is £1,368.00 per calendar month. This is inclusive of the service charge of £21.76 per calendar month, and which equates to £315.69 per week.

9. Having carried out the above calculation, the tribunal is then required to calculate the Maximum Fair Rent using the statutory formula. A copy of the calculation is appended to the decision and produced a MFR of £381.00 per week.

10. The rent payable by the tenant is the lower of either the MFR (£381.00) or the adjusted market rent (£315.69), and therefore the Tribunal determines that the fair rent for the property is £315.69 per week with effect from 24 June 2024.

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Chairman: [NAME]: 27 June 2024.