First-tier Tribunal Sets Fair Rent for Property Considering Condition and Scarcity

OUTCOME: Allowed

FR27 First-tier Tribunal – [NAME] Chamber File Ref No. CAM/34UF/F77/2025/0034

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 47 [ADDRESS], [POSTCODE]

[NAME] [NAME]

Landlord [APPELLANT]

Tenant [NAME]

1. The fair rent is £467 per month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 24 January 2026

3. The amount for services included in the rent is £0 Per moth

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

Nil Per N/A

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

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

8. The calculated Fair Rent is £467 per week. As this is lower than the Capped Rent the Fair Rent applies

[NAME] [NAME] of decision 24 January 2026

FR27 MAXIMUM FAIR RENT CALCULATION

Address of premises 47 [ADDRESS], [POSTCODE]

LATEST RPI FIGURE

x

PREVIOUS RPI FIGURE

y

x

minus y

= (A)

(A)

divided by y

= (B)

First application for re-registration since 1 February 1999

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C)

Last registered rent*

Multiplied by (C) = *(exclusive of any variable service charge)

Rounded up to the nearest 50 pence =

Variable service charge (Yes/No)

If YES add amount for services =

MAXIMUM FAIR RENT =

per

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 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 application of the formula is ascertained the service charge is then added to that sum in order to produce the maximum fair rent.

£477 month 0 £420 £476.81 1.135282 N/A 376.4 408.5 376.4 376.4 0.085282 32.1 408.5 32.1 N/A £477 No

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL [NAME] CHAMBER ([NAME]) Case reference : CAM/34UF/F77/2025/0034 HMCTS code : P:[NAME] : 47 [ADDRESS], [POSTCODE] Applicant (Landlord) : [APPELLANT] Respondent (Tenant) : [NAME] of application : Determination of a fair rent under section 70 of the Rent Act 1977 Tribunal members : [NAME] [NAME] of Determination : 24 January 2026

DECISION

Description of hearing This has been a remote determination on the papers which the parties are taken to have consented to, as explained below. The form of determination was a paper determination described above as P:PAPERREMOTE The documents that the Tribunal was referred to are in bundles from the Applicant and the Respondent. The Tribunal has noted the contents and the decision is below.

2 Decision The Tribunal determined a Fair Rent of £467 per month effective from 24 January 2026.

Reasons Background 1. The Landlord made an application dated 4 June 2025 to register the rent of the [NAME] at £450 per month. This was stated to be exclusive of any variable Service Charge.

2. The Rent Officer registered a Fair Rent of £450 per month on 18 July 2025 effective from 10 August 2025. This was in lieu of the previous rent of £420 per month which was effective from 10 August 2023.

3. Even though the Rent Office determined the rent at the level proposed by the Landlord the Landlord’s agents submitted an objection on 3 September 2025.

4. The Tribunal issued Directions on 8 October 2025, inviting the parties to submit any further representations (including any photographs and details of rentals for similar properties) they wished the Tribunal to consider.

The [NAME]

5. The Tribunal inspected the [NAME] on 15 December 2025. In addition, the Tribunal has had the benefit of information in the public domain including [ADDRESS] images.

6. The [NAME] comprised a period mid-terraced house of brick with pebbledash rendering and slate roof providing a lounge, dining room, kitchen and shower room at ground floor with two double and one single bedroom at first floor level. It benefits from heating and double glazing. There is a narrow garden and outbuildings to the rear and on-street car parking.

7. The Tenant fitted the kitchen and installed the original bathroom prior to the installation of a shower by the Landlord. The Tenant has installed roof insulation, floor coverings and curtains and provided White Goods.

8. The [NAME] is fitted to a basic standard and there is evidence of water damage and damp throughout. It is understood that some of the water damage may have resulted through historic issues with the guttering. The Law

9. The relevant law is set out in section 70 of the Rent Act 1977 (the Act) and The Rent Acts (Maximum Fair Rent) Order 1999 (the Order). 10. Section 70 (1) of The Act provides that in assessing the rent:

3

“regard shall be had to all the circumstances (other than personal circumstances) and in particular to— i. the age, character, locality and state of repair of the dwelling-house, ii. if any furniture is provided for use under the tenancy, the quantity, quality and condition of the furniture and iii. any premium, or sum in the nature of a premium, which has been or may be lawfully required or received on the grant, renewal, continuance or assignment of the tenancy.” 11. Section 70 (3) of the Act provides that:

“…there shall be disregarded. i. any disrepair or other defect attributable to a failure by the tenant under the regulated tenancy or any [NAME] to comply with any terms thereof. ii. any improvement carried out, otherwise than in pursuance of the terms of the tenancy, by the tenant under the regulated tenancy or any [NAME] iii. if any furniture is provided for use under the regulated tenancy, any improvement to the furniture by the tenant under the regulated tenancy or any [NAME] or, as the case may be, any deterioration in the condition of the furniture due to any ill-treatment by the tenant, any person residing or lodging with him, or any sub- tenant of his.” 12. In addition, section 70 (2) of The Act requires the Tribunal to assume:

“that the number of persons seeking to become tenants of similar dwelling- houses in the locality on the terms (other than those relating to rent) of the regulated tenancy is not substantially greater than the number of such dwelling-houses in the locality which are available for letting on such terms.” 13. This latter provision requires the Tribunal to assume that the demand for similar rented properties in the locality does not significantly exceed the supply of such properties for rent; in effect, if such scarcity exists, the Tribunal is to adjust the rental figure so that the fair rent is not affected by it.

14. 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: (a) “that ordinarily a fair rent is the market rent for the [NAME] discounted for ‘scarcity’ (i.e. that element, if any, of the market rent, 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 rent- to that of the regulated tenancy) and

4 (b) that for the purposes of determining the market rent, 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 [NAME]).” 15. In considering scarcity under section 70 (2) the Tribunal recognised that: (a) “there are considerable variations in the level of scarcity in different parts of the country and that there is no general guidance or “rule of thumb” to indicate what adjustment should be made; the Tribunal therefore considers the case on its merits. (b) terms relating to rent are to be excluded. A lack of demand at a particular rent is not necessarily evidence of no scarcity; it may be evidence that the prospective tenants are not prepared to pay that particular rent.” 16. Section 71 (1) of the Act provides that the registration of the rent takes effect from the date that the Tribunal makes its decision.

17. Fair rents are subject to a capping procedure under the Rent Acts (Maximum Fair Rent) Order 1999 which limits increases by a formula based on the increase in the Retail Price Index since the previous registration.

18. Section 72 (1) (b) of the Act provides that the registration of a rent takes effect: “…if the rent is determined by the appropriate tribunal, from the date when the tribunal make their decision” Representations – Tenant

19. In contrast to the Landlord, who was professionally represented, the Tenant completed and returned the Reply Form.

20. The Tenant advised that: “Approx 2024, Landlord replaced external guttering. This was incorrectly fitted at the front of the house and led to water coming into my bedroom and down into my recently decorated (by me) lounge. Although the guttering was fixed, I still worry when we have heavy rain. About three years ago the landlord replaced rotten flooring in the bay window area in the lounge. I then redecorated and re-carpeted the lounge. The dining room and kitchen desperately need decorating but I can’t do it because of the damp in these rooms. I though the Landlord would submit a reply but I have not received one. I am attached photos, however, this will all be clearly visible when the Tribunal visit. The [NAME] suffers from damp in the kitchen and dining room. I have been complaining about this forever. There have never been any repair or

5 renewal works done. To be honest I am ashamed of it. I am reluctant to have friends in my home because of the damp. The kitchen has very old cupboards which I bought years ago, although I believe it is the Landlord’s responsibility. The kitchen desperately needs updating but, as a pensioner I can’t afford to do it and there is so much damp in there anyway. The Landlord is responsible for external decoration. The front door has been in the [NAME] at least since I have lived here. It was last painted by the Landlord approximately 50 years ago. The door is extremely draughty. I try to compensate this with a curtain and a “sausage” style draught excluder. Again I have complained about this for decades. My lounge and bedroom need redecorating following the water coming in from wrongly fitted guttering, but I am worried about doing this in case there is a problem again.” 21. The Tribunal reviewed these matters during its inspection. Representations –Landlord 22. Ms [RESPONDENT] of [RESPONDENT] emailed the [NAME] on 3 September 2025 stating: “Afternoon. We would like to appeal this. We have had the determination back for [ADDRESS] which took effect 10.08.2025. The increase is 7.14% at a rate of £450 per week (increase of £360 per annum). The annualised rent increase i.e. 3.57%.” 23. Ms [NAME] did not provide any opinion as to what the rent should be, nor an explanation as to why the Landlord’s opinion had changed since the submission of the Application Form. In addition, Ms [NAME] offered no rental evidence or valuation to assist the Tribunal. To this end, the Tribunal had no indication as to what grounds, if any, the Landlord wished to rely on nor what the Landlord was advocating in respect of the rent that should be due.

24. Neither the Landlord or Ms [RESPONDENT] took any part in these proceedings and no Reply Form or response to the Tenant’s points was received despite there being ample opportunity. Determination

25. The Tribunal would refer the Parties, in the first instance, to the document entitled “Fair Rent Objections Questions and Answers” as provided by the Tribunal which sets out further details as to the differences between Market Rents and Fair Rents.

26. In assessing the Fair Rent the Tribunal is unable to take into account the personal circumstances of the Parties. As such, the assessment of rent has no regard to the personal, financial or health circumstances of either party both of whom are considered to be hypothetical. The Tribunal has therefore had regard to hypothetical willing parties in the open market. The ownership costs arising to the actual Landlord are therefore irrelevant to this exercise.

6 27. Having determined that the parties to the assumed transaction are hypothetical, the next step, as set out in the [NAME] case as referred to above, is to determine the rent which a landlord could reasonably expect to obtain for the [NAME] in the open market if it were let today in the condition and on the terms now usual for open market lettings.

28. The rent currently paid and/or registered is not relevant to this exercise. As such, the Tribunal has not relied upon the previous rent in any way and has disregarded historic evidence/determinations. Similarly, the previous condition of the [NAME] is not relevant as the Tribunal’s assessment considers the current circumstances.

29. It is also not relevant whether or not the Landlord considers that the rent paid is sufficient to fund its liabilities and/or repair obligations. The cost to the Landlord of putting the [NAME] into a suitable state and complying with its obligations is not a matter for consideration in determining the rent payable.

30. The Tenant may have their own personal reasons for paying a certain level of rent in order to remain in occupation but as has already been set out, the Parties to the assumed letting are hypothetical. The rent that the Tenant might be prepared to pay to remain in occupation, is therefore of no assistance in considering the rent that would be paid by a hypothetical incoming tenant who is under no compulsion to take occupation. In essence, it cannot, in the absence of compelling evidence, be automatically assumed that the actual Tenant would be the hypothetical tenant.

31. The Tribunal has determined that, if the [NAME] was in a state commensurate with modern market expectations following full refurbishment and decoration and on modern lease terms it could attract a rent of £900 per month.

32. However, the [NAME] requires modernisation and refurbishment to put it into a state capable of attracting a rent at this level. It is also necessary to discount for the improvements carried out to the [NAME] by the Tenant and assume that the [NAME] is in the state that would have existed had those works not been carried out. In addition, regard is had to the Tenant’s decoration and maintenance of the [NAME] over and above the obligations commonly set out within modern leases.

33. The Tribunal has therefore adopted an adjusted current rent of £825 pcm, and made a deduction of 5% each in respect of the kitchen and bathroom fitments, 5% on account of carpets and curtains, 5% each for the provision of White Goods and lack of insulation, 10% on account of the damp issues and resulting disrepair and 5% on account of decorating and repair liabilities over and above the requirements of modern leases.

34. The Tribunal has also applied a scarcity allowance of 10%.

35. The Fair Rent is therefore £467 per month.

7 36. The provisions of the Rent Acts (Maximum Fair Rent) Order 1999 require that the registered rent is either the capped Fair Rent, details of which are attached to this Decision, or the Fair Rent.

37. As set out above, the capped rent is determined by a formula that has regard to the increase in the Retail Price Index since the date of the last rent registration.

38. The calculated capped net rent as at the date of this Determination is £477 per month.

39. The Fair Rent is below the Capped Net Rent. Therefore, the Fair Rent of £467 per month applies.

40. The Tribunal directs that the revised Rent takes effect from the date of this Determination.

Name: [NAME] [NAME]: 24 January 2026

Rights of appeal

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) ([NAME] Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If either party is dissatisfied with this decision, they may apply for permission to appeal to the Upper Tribunal (Lands Chamber) on any point of law arising from this Decision. Prior to making such an appeal, an application must be made, in writing, to this Tribunal for permission to appeal. Any such application must be made within 28 days of the issue of this decision to the person making the application (regulation 52 (2) of The Tribunal Procedure (First-tier Tribunal) ([NAME] Chamber) Rule 2013). 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. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e., give the date, the [NAME], and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).

8 If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).