First-tier Tribunal Sets Fair Rent for Property

OUTCOME: Allowed

1

Case Reference

: LON/00BD/F77/2024/0044.

Property : 121 [ADDRESS] [POSTCODE].

Tenant

: Mr. [APPELLANT]. [APPELLANT]. [APPELLANT].

Landlord : [COMPANY].

Date of Objection : 21 December 2023.

Type of Application : Section 70, Rent Act 1977

Tribunal

: Valuer Chair, [NAME].

Date of Summary Reasons

: 3 April 2024

_______________________________________________

DECISION

The sum of £1,043.30 per calendar month will be registered as the fair rent with effect from 3 April 2024 being the date the Tribunal made the Decision. ____________________________________

© CROWN COPYRIGHT 2023

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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REASONS FOR THE DECISION

Background 1. Following an objection by the landlord 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.

Inspection 2. Tribunal did not inspect the property but considered this case based on the papers provided by the parties.

Evidence 3. The Tribunal has considered the documents supplied that include the Rent Officer’s calculations and notes. The landlord objects on the basis that the rent set by the Rent Officer is too low.

The Application

4. By an RR1 dated 26 October 2023 the landlord sought an increase in the rent from the rent passing of £940.00 per month to £1,128.00 per month.

5. On 12 December 2023 the Rent Officer Service registered a new rent at £990.00 per month with effect from 13 January 2024. At that time the Rent Officer considered the market rent at £1,750 per month from which statutory deductions were made.

6. By an email dated 21 December 2023 the landlord objected to the rent set and the matter was referred to this tribunal.

7. The tribunal issued directions on 8 February 2024 that requested the parties provide details of any comparable properties that they wished the tribunal to consider, and any other details of the property that should be taken into consideration. No comparable evidence was provided by either party.

Consideration:

9. Tin the absence of any comparables from either party, the tribunal is entitled to use its own wide knowledge and experience of rentals in the Greater London area and concludes that an open market rent for a property of this size in this location would be £1,900.00 per calendar month.

10. This rental would be for a modernised property, with white goods, carpets and curtains and let by a willing tenant/landlord on the terms of a modern assured shorthold tenancy. However, the subject property is not in this condition, and according to the Rent Officer has no central heating, no modern kitchen or bathroom, and was let unfurnished without carpets of curtains. In the circumstances this tribunal considers that the market rent above must be discounted to reflect these differences. The tribunal must then

3 apply a deduction (shown as a percentage) to take account of the scarcity of property as required by the Rent Act 1977. The valuation is set-out below.

11. Having carried out the valuation for the adjusted market rent, the tribunal must then carry out the valuation using the Maximum Fair Rent Order formula (MFR), a copy of this calculation is appended to the decision.

12. The legislation requires the tribunal to set the Fair Rent at either the adjusted market rent, or the rent calculated using the MFR whichever is the lower.

Valuation

13.

per month Market Rent

£1,900.00

Less

Difference for tenancy terms @ 5%.

(£ 95.00)

£1,805.00 Difference for lack of carpets, curtains, and white goods 15%

(£ 270.75)

£1,534.25 Difference for lack of modernisation to bathroom and Kitchen and lack of central heating 15%

(£ 230.13)

£1,304.12 Less Scarcity @ 20%

(£ 260.82)

Fair rent:

£1,043.30

13. The Tribunal determines that the Fair Rent for the subject property would be £1,043.30 per calendar month. However, the tribunal must then carry out the Maximum Fair Rent Order calculation, which in this instance produced a figure of £1,174.50.

14. As noted above the tribunal must register as the maximum Fair Rent the lower of these two sums and in this instance the Maximum Fair Rent is £1,043.30 per calendar month, with effect from 3 April 2024.

Chairman: [NAME]: 3 April 2024.

FR27 First-tier Tribunal – Property Chamber File Ref No. HS/LON/00BD/F77/2024/0044

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 21 [ADDRESS], [POSTCODE]

[NAME]

Landlord [APPELLANT]

Tenant Mr [APPELLANT]

1. The fair rent is £1,043.30 Per Month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 3 April 2024

3. The amount for services is N/a Per

negligible/not applicable

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

N/a 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 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 £ 1,174.50 ............................................................. per month.

[NAME] of decision 3 April 2024.

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 381.0

PREVIOUS RPI FIGURE Y 317.7

X 381.0 Minus Y 317.7 = (A) 63.3

(A) 63.3 Divided by Y 317.7 = (B) 0.1992

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) 1.2492

Last registered rent* £940.00 Multiplied by (C) = £1,174.25 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £1,174.50

Variable service charge NO If YES add amount for services -

MAXIMUM FAIR RENT = £1,174.50 Per month

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.