First-tier Tribunal Sets Fair Rent for Property Based on Condition and Market Comparables

OUTCOME: Allowed

FR27 First-tier Tribunal – Property Chamber File Ref No. CAM/11UC/F77/2019/0005 Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 7 [ADDRESS] [POSTCODE]

Judge JR Morris Mrs M Wilcox BSc MRICS

Landlord [NAME] ([COMPANY]) [APPELLANT], c/o [APPELLANT]

Tenant Mr [APPELLANT]

1. The fair rent is £170.50 Per week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 25th March 2019

3. The amount attributed to services is N/A Per N/A

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 N/A

negligible/not applicable

5. The rent is/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)/ do not apply because 1st registration/15% exemption.

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

8. For information only:

(a) The fair rent to be registered is the maximum fair rent as prescribed by the Rent Acts (Maximum Fair Rent) Order 1999. The rent that would otherwise have been registered was £175.00 per week including £.... per ... for services (variable).

(b) The fair rent to be registered is not limited by the Rent Acts (Maximum Fair Rent) Order 1999, because it is the same as/below the maximum fair rent of £217.00 per week including £ ......................................... per ................................. for services (variable) prescribed by the Order.

Judge John R Morris Date of decision 25th March 2019

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE Dec 2018 X 285.0

PREVIOUS RPI FIGURE March 2016 Y 268.4

X 285.0 Minus Y 268.4 = (A) 16.6 (A) 16.6 Divided by Y 268.4 = (B) 0.061848

First [NAME] for re-registration since 1 February 1999 YES/NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.111848

Last registered rent* 153.00 Multiplied by (C) = 170.1127

*(exclusive of any variable service charge)

Rounded up to nearest 50p = 170.50

Variable service charge YES / NO

If YES add amount for services N/A

MAXIMUM FAIR RENT = £170.50 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 [NAME] was the first since 1 February 1999) or 5% (if it is a second or subsequent [NAME] 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 Committee'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 [NAME] 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

: CAM/11UC/F77/2019/0005

Property

: 7 [ADDRESS] [POSTCODE]

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

: [APPELLANT]

Respondent (Tenant) : Mr [APPELLANT] of [NAME] : Determination of a fair rent under

Section 70 of the Rent Act 1977

Tribunal Members : Judge JR Morris Mrs M Wilcox BSc MRICS

Date of Decision : 25th March 2019

_______________________________________________

DECISION ____________________________________

© CROWN COPYRIGHT 2019

DECISION

1. The Fair Rent for [NAME] payable from 25th March 2019 is determined to be £170.50 per week which is the capped rent under the Rent Acts (Maximum Fair Rent) Order 1999; the uncapped rent being £175.00 per week.

[NAME]

2. [NAME] is a two-storey semi-detached period cottage of brick and flint under a clay tile roof.

Accommodation The front door opens from the street directly into the sitting room beyond which is the kitchen. Between the two rooms are stairs which rise to the first floor. Off the kitchen is a corridor which leads to the shower room which is in a single storey attached building. On the first floor are two bedrooms one to the front and the other to the rear. Off the rear bedroom are stairs leading to the second-floor bedroom. There is a garden and vehicular access to this area. FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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[NAME] has mains gas, electricity, water and drainage. Space and water heating is by a gas central heating system.

[NAME] is let unfurnished.

[NAME] is situated in the old town area of Chesham opposite a public house. There is local shopping and a range of facilities in Chesham.

THE TENANCY

3. The Tenancy is a statutory regulated weekly tenancy which commenced in 1982. Being a tenancy for 7 years or less, section 11 of the Landlord and Tenant Act 1985 applies in respect of Landlord’s repairing obligations. The Tenant is responsible for internal decoration.

THE REFERRAL

4. The current rent is £153.00 per week registered on 6th February 2017 and effective from 20th March 2017. The Landlord by a notice in the prescribed form received by the Valuation Office Agency on the 21st December 2018 proposed a new rent of £762.00 per calendar month which equates to £175.00 per week. On 4th February 2019 the Rent Officer registered a rent of £160.00 per week effective from 20th March 2019. The registered rent was not a capped rent under the Rent Acts (Maximum Fair Rent) Order 1999 as the capped rent was higher than that set by the Rent Officer. On 21st February 2019 the Landlord referred the Rent Officer’s assessment to the Tribunal. The referral was by way of written representations.

THE INSPECTION

5. The Tribunal inspected [NAME] in the presence of the [NAME] spouse.

6. [NAME] is in fair condition. The doors and windows, which have double glazed units, are timber. The windows were replaced some time ago but the sill to the sitting room window at the front was not and is now in poor condition. The paint is peeling off and there are signs of rot.

7. Internally as let the kitchen would be very basic and dated but for the [NAME] improvements in installing new units. The white goods are the [NAME]. The suspended timber floor in the kitchen rotted and collapsed and has been replaced by the Tenant. The floor in the pantry off the kitchen has rotted and collapsed but has not been replaced. The bathroom would be basic and dated but for the [NAME] improvements in installing a new w.c., wash hand basin and shower. The plaster is perished in a number of places [NAME] decoration difficult. The Tenant has dry lined the front bedroom and fitted a suspended ceiling.

3 8. The layout of the house is inconvenient in that the bedrooms are on the first and second floors and the bathroom on the ground floor. In addition, access to the third bedroom on the second floor is via the stairs which rise from the second bedroom on the first floor.

9. Much of the garden is taken up by a lean-to conservatory style structure against the house which was erected by the Tenant. The remainder of the garden is paved. There is a gate in the back fence to an area for parking two vehicles. Vehicular access to this area is via a shared lane to the side of the two semi-detached houses.

THE LAW

10. The law applicable to this [NAME] is contained in the Rent Act 1977.

REPRESENTATIONS

11. The Landlords’ Representative made written representations identifying the following properties which it was said were comparable (Internet details were provided): [ADDRESS], a newly built semi-detached house with lounge/dining room, kitchen, downstairs w.c., 2 bedrooms (one en-suite), bathroom, off street parking and gardens to let at £1,500 per calendar month (£346.00 per week). Described as having spacious lounge and en-suite bedroom. [ADDRESS] a semi-detached house with lounge/dining room, kitchen, 3 bedrooms, bathroom, garage/utility room, driveway parking and gardens to let at £1,600 per calendar month (£369.00 per week).

12. Taking the above properties into account the Landlord’s Representative submitted that £762.00 per calendar month was a fair rent.

13. The Tenant made no written representations.

RENT ASSESSMENT

14. The Tribunal assessed the rent for [NAME] as at the day of the inspection pursuant to section 70(1) Rent Act 1977 (having regard in particular to the age, character, locality, state of repair of [NAME] and all the circumstances other than personal circumstances). The Tribunal took account of the relevant cases and legislation including [COMPANY] v [NAME] (1996) 28 HLR 107, [NAME] v [NAME] [1997] 4 All ER 842 and [COMPANY] v Merseyside and Cheshire Rent Assessment Committee 24th May 1991.

15. The Tribunal is required under the legislation and case law to assess a market rent for [NAME] taking into account the matters referred to above and considering whether or not a deduction for scarcity should be made, which varies depending on the market within a locality from time to time.

16. The Tribunal determines the rent based on the condition of [NAME] as at the day of the inspection. The Tribunal considered the properties referred to

4 by the Landlord’s Agent and found that they were not comparable being more modern, larger with a different layout that [NAME]. [NAME], they also had up to date fittings and floor coverings and some white goods.

17. The Tribunal determined that a market rent for [NAME] in good condition, with modern kitchen and bathroom double glazing, central heating and floor coverings and white goods was £265.00 per week. This takes into account the size of [NAME] with the front door opening directly into the front living room from the street, the shared access to the rear. It also takes into account the access to the third bedroom through the second bedroom together with the bathroom being on the ground floor which most tenants would find inconvenient and would be reflected in the rent they would be prepared to pay.

18. The Tribunal considered that a deduction of £90.00 per week should be made for what would be a dated and basic kitchen and bathroom but for the [NAME] improvements, the lack of floor coverings and white goods. The deduction also includes relaying of the suspended timber kitchen floor by the Tenant, the perished plaster and the condition of the living room window sill. It should be noted that this figure cannot be a simple arithmetical calculation and is not based specifically upon capital cost but is the Tribunal’s estimate of the amount by which the rent would have to be reduced to attract a tenant to this Property.

SCARCITY

19. Assessing a scarcity percentage cannot be a precise arithmetical calculation because there is no way of knowing either the exact number of people looking for properties similar to the subject property in the private sector or the exact number of such properties available. It can only be a judgement based on the years of experience of members of the Tribunal together with a consideration of the properties advertised as being to let as at the time of the assessment.

20. That experience and consideration leads the Tribunal to the view that there is no substantial scarcity of “... similar dwelling houses in the locality...”, in this case Buckinghamshire as at the day of the inspection, that are available for letting, and so no deduction is made to reflect this.

TRIBUNAL’S CALCULATIONS

21. Market Rent:

£265.00 per calendar month Less global deduction

£90.00

£175.00

22. The provisions of the Rent Acts (Maximum Fair Rent) Order 1999 require that the registered rent is either the capped Fair Rent or the Fair Rent decided by the Tribunal whichever is the lower. The capped Fair Rent is calculated in accordance with a statutory formula using the existing rent as a base. The capped rent in this case is £170.50 per week which is less than the Fair Rent assessed by the Tribunal of £175.00 per week. Therefore the capped rent of £170.50 per week is to be registered.

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FAIR RENT = £170.50 per week

Judge JR Morris

Caution: The Tribunal inspected the subject property for the purposes of reaching this decision. The inspection was not a structural survey and any comments about the condition of [NAME] in this statement must not be relied upon as a guide to the structural or other condition of [NAME].

APPENDIX - RIGHTS OF APPEAL

1. If a party wishes to appeal the decision to the Upper Tribunal (Lands Chamber) then a written [NAME] for permission must be made to the First-tier Tribunal at the [NAME] which has been dealing with the case.

2. The [NAME] for permission to appeal must arrive at the [NAME] within 28 days after the Tribunal sends written reasons for the decision to the [NAME].

3. If the [NAME] is not made within the 28 day time limit, such [NAME] 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 [NAME] for permission to appeal to proceed despite not being within the time limit.

4. The [NAME] for permission to appeal must identify the decision of the Tribunal to which it relates (i.e. give the date, [NAME] and the case number), state the grounds of appeal, and state the result the party [NAME] the [NAME] is seeking.