First-tier Tribunal Sets Fair Rent for Property

OUTCOME: Allowed

Notice of the Tribunal [NAME] 1977 Schedule 11

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

Ms [APPELLANT]-Farey

Landlord [RESPONDENT]

Tenant [NAME] [APPELLANT]

1. The fair [NAME] is 748.80 Per Month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 17 September 2020

3. The amount for services is n/a Per

not applicable

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

n/a Per

not applicable

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

6. The capping provisions of the [NAME] ([NAME]) Order 1999 do not apply.

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

None

8. For information only:

(a) The fair [NAME] to be registered is not limited by the [NAME] ([NAME]) Order 1999, because it is below the maximum fair [NAME] of £870.50 per month prescribed by the Order.

Chairman Judge Hamilton- Farey Date of decision 17 September 2020

First-tier Tribunal – Property Chamber File Ref No. LON/00AL/F77/2020/0011

[NAME] FIGURE X 293.3

PREVIOUS RPI FIGURE Y 256.3

X 293.3 Minus Y 256.3 = (A) 47

(A) 37 Divided by Y 256.3 = (B) 0.1444

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) 1.1944

Last registered [NAME]* 728.50 Multiplied by (C) = 870.12 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 870.50

Variable service charge NO If YES add amount for services

[NAME] = £870.50 Per month

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].

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case Reference

:

LON/00AL/F77/2020/0011 Type of Determination : P (Paper) Remote.

Property

: 2[ADDRESS] [POSTCODE].

Applicant: [redacted]

: In person.

Respondent: [redacted]

: [NAME] of Application

:

[NAME] 1977 (“the Act”) Determination of the fair [NAME] of a property following an objection to the [NAME] registered by the [NAME]

Tribunal Member(s)

: Ms. A. Hamilton-Farey

Date of Decision

: 17 September 2020

DECISION

Covid-19 pandemic: description of hearing: This has been a remote determination on the papers which has not been objected to by the parties. The form of remote hearing was P: PAPERRMOTE. A face-to-face hearing was not held because it was not practicable, and all issues could be determined on paper]. The documents that I was referred to are in an application and supporting documents, including black and white photographs supplied by the applicant. No documents, except consent to the paper determination has been received from the respondent landlord. I have noted the correspondence in reaching my decision. The order made is described at the end of these reasons. Background:

1. By an RR1 dated 6 31 July 2019 the landlord made an application to register the [NAME] of the property at £994.50 per month. No services are provided under the tenancy. The current fair [NAME] passing at that time was £728.50 per month, effective from 26 June 2014 following a previous tribunal determination.

2. On 18 November 2019, the [NAME] registered the [NAME] at £855.00 per month with effect from 18 November 2019.

3. The tenant objected and the matter was referred to the First Tier Tribunal, Property Chamber.

4. The Tribunal made directions on 16 July 2020 stating that the application would be determined on the papers without a hearing in accordance with Rule 31 of the Tribunal Procedure Rules unless a party objected and requiring the landlord to send to the tenant and to the tribunal a written statement as to their assessment of the [NAME] and for the tenant to respond. The parties consented to the matter being dealt with on the papers, and the tenant produced a statement of case and some colour photographs of the property. No representations were made by the landlord.

Inspection

5. In accordance with the directions already given, the tribunal did not inspect the property due to the COVID-19 restrictions, but was able to use Google Earth for location purposes, and the applicants photographs and submissions. However, the [NAME] officer had had the benefit of an inspection, and their notes were also before the tribunal.

6. The property is a second floor flat comprising three rooms, kitchen, and bathroom w.c. It has neither double glazing or central heating and according to the [NAME] officer’s inspection notes is in a poor condition.

The tenant’s submission:

7. The tenant says that the property is in poor condition having not been repaired or maintained by the landlord. He says that the carpets are threadbare having been installed 35 years previously and the majority of the furniture, originally provided by the landlord, has had to be replaced at his expense, and the landlord’s [NAME] were unresponsive to requests for aids and adaptations.

8. He went on to say that the property had not been modernised, had little or no insulation to the roof space or between flats with the consequence that he suffered from noise nuisance from the flat below. The tenant also produced photographs to show cracked and broken tiles to the kitchen and fireplace.

9. Finally, the tenant said that the landlord was in the process of carrying out major repairs to the external fabric of the building, and possibly converting the basement into a self-contained flat. This work had caused disruption, dust, and noise nuisance throughout the working week. He requested that any [NAME] increase be deferred until the works had been completed.

The landlord’s submission:

10. The landlord did not provide any representations or comparable evidence of rents in the area.

The law

11. When determining a fair [NAME] the Tribunal, in accordance with the [NAME] 1977, section 70, must have regard to all the circumstances including the age, location and state of repair of the property. It must also disregard 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 [NAME], on the rental value of the property.

12. Case law informs the Tribunal -

a. 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 - other than as to [NAME] - to that of the [NAME]) and

b. That for the purposes of determining the market [NAME], 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).

Consideration and Valuation

13. In the first instance the tribunal must determine what [NAME] the Landlord could reasonably expect 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, i.e. with carpets, curtains, white goods and in a good decorative condition, and

with the tenant having little repairing obligation internally. The Tribunal did this by having regard to the data provided by the [NAME] officer, and the comparable [NAME] details supplied by the landlord. From this the tribunal assessed that the market [NAME] for the property in good condition on a usual AST would command a weekly rental of £1,300.00 per month.

14. However, the [NAME] referred to in the above paragraph is on the basis of a modern open market letting where the tenant has no liability to carry out repairs or decorations, there are up to date bathroom and kitchen fittings, the landlord supplies white goods, carpets and curtains and there are no wants of repair. In my view a deduction from the market [NAME] should be made to reflect the differences of the terms of tenancy, and the hypothetical market letting.

15. The tribunal adjusts the market [NAME] by 10%, to reflect the different terms of the tenancy, and a further 20% to reflect the lack of modernisation, white goods, flooring to some rooms and which the tribunal considers reflects those differences. The tribunal arrived at an adjusted market [NAME] of £936.00 per month.

16. The tribunal then considered the question of scarcity as referred to in paragraph 9a above and determined that there remained significant levels of demand over supply in this area and therefore make a deduction from the adjusted market [NAME] of 20% to reflect this scarcity, leaving a balance of £748.80 per month.

17. The tribunal therefore determines that the uncapped [NAME] is £748.80 per month exclusive of council tax and water rates.

18. This would be the [NAME] that, in my opinion would be payable by the tenant, if the [NAME] produced a higher [NAME].

19. The [NAME] produced, a higher figure of £870.50 per month. Under the Regulations, the tenant is liable for lower of either the adjusted market [NAME], or the capped [NAME]. In the circumstances the tribunal registers the [NAME] at £748.80 per month.

Name: Ms. [NAME]. [NAME] 17 September 2020.

RIGHTS OF APPEAL

1. A person wishing to appeal this decision to the Upper Tribunal ([NAME]) must seek permission to do so by making written application to the First-tier Tribunal at the [NAME] which has been dealing with the case.

2. The application must arrive at the Tribunal within 28 days after the Tribunal sends to the person making the application written reasons for the decision.

3. If the person wishing to appeal does not comply with the 28 day time limit, the person shall include with the application for permission to appeal a request for an extension of time and the reason for not complying with the 28 day time limit; the Tribunal will then decide whether to extend time or not to allow the application for permission to appeal to proceed.

4. The application for permission to appeal must identify the decision of the Tribunal to which it relates, state the grounds of appeal, and state the result the party making the application is seeking