First-tier Tribunal Sets Fair Rent for Property

OUTCOME: Allowed

First-tier Tribunal – Property Chamber File Ref No. LON/00BJ/F77/2022/0195

Notice of the Tribunal [NAME] 1977 Schedule 11

Address of Premises The Tribunal members were 44 [ADDRESS], [POSTCODE]

[NAME] Mr [APPELLANT]

Landlord [RESPONDENT] [COMPANY]

Tenant [APPELLANT]

1. The fair [NAME] is £250 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 22 February 2023

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 [NAME] allowance is

Per

not applicable

5. The [NAME] is not to be registered as variable.

6. The capping provisions of the [NAME] ([NAME]) Order 1999 apply (please see calculation overleaf).

7. Details (other than [NAME]) where different from [NAME] entry

8. For information only:

The fair [NAME] to be registered is not limited by the [NAME] ([NAME]) Order 1999, because it is below the maximum fair [NAME] of £306 per week prescribed by the Order.

Chairman E [NAME] of decision 22 February 2023

[NAME] FIGURE X 360.4

PREVIOUS RPI FIGURE Y 294.3

X 360.4 Minus Y 294.3 = (A) 66.1

(A) 66.1 Divided by Y 294.3 = (B) 0.2246

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.2746

Last registered [NAME]* £240 Multiplied by (C) = £305.90 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £306

Variable service charge NO If YES add amount for services

[NAME] = £306 Per week

Explanatory Note

1. The calculation of the maximum fair [NAME], in accordance with the formula contained in the Order, is set out above.

2. In summary, the formula provides for the maximum fair [NAME] to be calculated by:

(a) increasing the previous registered [NAME] 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 [NAME] determination was made.

4. The process differs where the tenancy agreement contains a variable service charge and the [NAME] is to be registered as variable under section 71(4) of the [NAME] 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 [NAME].

Case Reference : LON/00BJ/F77/2022/0199

P:PAPERREMOTE

Property : 44 [ADDRESS] [POSTCODE] 1LR

Applicant: [redacted]

Respondent: [redacted] : 7 September 2022

Type of Application : Determination of the registered [NAME] under Section 70 [NAME] 1977

Tribunal

: Mrs [NAME]

Mr [NAME] and venue of : 22 [ADDRESS] [POSTCODE]

_______________________________________________

DECISION ____________________________________

This has been a hearing on the papers which has been consented to by the parties. A face to face hearing was not held because it was not practicable, no-one requested the same. The documents that we were referred to were in an electronic bundle the contents of which we have recorded.

The registered [NAME] with effect from 22 February 2023 is £250 per week.

© CROWN COPYRIGHT FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Background

1. On 28 June 2022 the landlord applied to the [NAME] officer for registration of a fair [NAME] of £1206.40 per month for the above property.

2. The registered [NAME] at the date of the application was £240 per week which had been registered by the [NAME] officer on 18 September 2020 with effect from the same date.

3. On 17 August 2022, the [NAME] officer registered a fair [NAME] of £284 per week with effect from 18 September 2022.

4. On7 September 2022 the tenant objected to the registered [NAME].

5. The tribunal issued Directions on 29 September 2022. The tenant submitted details of her improvements. No written representations were received either from or on behalf of the landlord.

The Inspection

6. The tribunal inspected the property on the morning of 22 February 2023 in the presence of the tenant. The property is an end terrace house in a residential street of similar properties close to bus stops, Tooting Broadway underground station and local shops.

7. The accommodation comprises a living room and kitchen/diner on the ground floor two double and a single bedroom and shower/wc on the first floor. French windows in the dining area lead into the rear garden bounded by a close boarded fence supplied by the tenant.

8. The tenant has modernised the entire house to a good standard: including installing double glazed windows and central heating, merging the rear room with the kitchenette to provide a kitchen/diner, fitted kitchen units with appliances, shower, wash basin and wc, boarded out part of the loft, replaced the loft hatch and provided a loft ladder. The original external wc has been demolished.

The Law

9. When determining a fair [NAME] the tribunal, in accordance with section 70 of the [NAME] 1977, 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 any relevant tenant’s improvements and the effect of any disrepair or any other defect attributable to the tenant or any predecessor in title under the regulated tenancy, on the rental value of the property. The Tribunal is

unable to take into account the tenant’s personal circumstances when assessing the fair [NAME].

10. In [COMPANY] v Chairman of the Greater Manchester etc Committee (1995) 28 HLR 107 and [NAME] v [NAME] (1999) QB 92 the Court of appeal emphasised:

That ordinarily a fair [NAME] is the market [NAME] for the property discounted for scarcity i.e. that element, if any, of the market [NAME], that is attributable to there being a significant shortage of similar properties in the wider locality available for letting on similar terms to that of a regulated tenancy, and

That for the purposes of determining the market [NAME], assured tenancy market rents are usually appropriate comparables; adjusted as necessary to reflect any relevant differences between the comparables and the subject property.

Valuation 11. In the first instance the tribunal determined what [NAME] the landlord could reasonably be expected to obtain for the property in the open market if it were let today in the condition and on the terms that is considered usual for such an open market letting. The tribunal relied its own general knowledge of rental values in Tooting and concluded that the likely market [NAME] for the property would be £520 per week.

12. However, it was first necessary to adjust the hypothetical [NAME] of £520 per week to allow for the differences between the terms and condition considered usual for such a letting and the condition of the actual property at the valuation date, ignoring any tenant’s improvements, (disregarding the effect of any disrepair or other defect attributable to the tenant or any predecessor in title). The tribunal determined that the hypothetical [NAME] should be reduced by £208 to reflect the difference in the terms of the tenancy, no heating, external wc, no wash basin, dated kitchenette and bath, and the lack of carpets, curtains and white goods which are usually provided on the open market.

13. This leaves an adjusted market [NAME] for the subject property of £312 per week. The tribunal was of the opinion that there was substantial scarcity in Greater London for similar properties and therefore made a deduction of approximately 20% from the adjusted market [NAME] to reflect this element. The tribunal’s uncapped fair [NAME] is £250 per week.

Decision

14. The uncapped fair [NAME] initially determined by the tribunal, for the purposes of section 70, was accordingly £250 per week. This is below the maximum fair [NAME] of £306 per week calculated under the [NAME] ([NAME]) Order 1999.

19. Accordingly, the sum of £250 per week will be registered as the fair [NAME] with effect from 22 February 2023 being the date of the tribunal's decision.

Chairman: [NAME]: 23 February 2023

ANNEX - RIGHTS OF APPEAL

i. 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.

ii. 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.

iii. 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.

iv. 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.