First-tier Tribunal Sets Fair Rent for Property Under Rent Act 1977

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. TR/LON/00AL/F77/2023/0370

Notice of the Tribunal [NAME] 1977 Schedule 11

Address of Premises The Tribunal members were 28 [ADDRESS], [POSTCODE]

Tribunal Judge Aileen Hamilton-Farey

Landlord [RESPONDENT]

Tenant [NAME]

1. The fair [NAME] is 256.00 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 24 January 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 [NAME] allowance is

N/a Per

negligible/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

None

8. For information only:

(a) The fair [NAME] to be registered is the maximum fair [NAME] as prescribed by the [NAME] ([NAME]) Order 1999. The [NAME] that would otherwise have been registered was £340 per week.

Chairman Aileen Hamilton- Farey Date of decision 24 January 2024

FR24 [NAME] FIGURE X 379.0

PREVIOUS RPI FIGURE Y 314.3

X 379 Minus Y 314.3 = (A) 64.7

(A) 64.7 Divided by Y 314.3 = (B) 0.2058

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) 1.25585

Last registered [NAME]* 203.50 Multiplied by (C) = 255.56 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 256.00

Variable service charge NO If YES add amount for services -

[NAME] = £256.00 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].

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case Reference

:

LON/00AL/F77/2023/0370.

Property

:

28 [ADDRESS] [POSTCODE].

Applicant: [redacted]

Representative

:

In person.

Respondent: [redacted]

:

In person.

Type of Application

:

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

Tribunal Member(s)

:

Tribunal Judge Aileen Hamilton-Farey.

Date of Decision

:

24 January 2024. Date of Reasons: 1 March 2024.

REASONS FOR THE DECISION

2 1. By an RR1 dated 28 August 2023, the landlord made an application to re-register the [NAME] of the subject property. At the time of the application the [NAME] passing under the tenancy was £203.50 per week effective from 16 November 2021. The landlord sought an increase to £244.00 per week. No service charges are payable under the tenancy.

2. On 16 November 2023 the [NAME] registered a fair [NAME] of £256.00 per week.

3. The tenant objected to that [NAME] on 17 October 2023, and said that the increase was unsustainable. The matter was referred to this tribunal for a determination. Prior to the referral to the tribunal the [NAME] has explained the basis of the [NAME] increase mechanism, referring to the [NAME] and suggesting that the market [NAME] for the property in its existing condition would be £415.38 per week.

4. The tribunal sent directions to the parties on 22 November 2023, requesting them to suggest any discrepancies in the Register, and providing copies of any comparable rents that they would wish the tribunal to consider. Neither party produced any comparables, and neither party suggest that the [NAME] register details were incorrect.

5. I also confirm to the parties the basis which this tribunal must take into consideration, that is that any [NAME] is based on a market [NAME] for a similar property, with deductions made for any differences between such a tenancy and the subject one. In addition, the tribunal must take into consideration ‘scarcity’ ie the imbalance in the market due to a scarcity of available properties to [NAME]. In addition, the tribunal must apply the [NAME] calculation, with the result that the registered fair [NAME] will be the maximum of whichever is the lower between the adjusted market [NAME] and the maximum fair [NAME]. The [NAME] that might be set by the tribunal might be higher or lower than that set by the [NAME] but commences with the existing fair [NAME] when the application to re-register is made, in this case £203.50.

6. The [NAME] for this property is subject to capping under the [NAME] because the [NAME] had been registered previously.

Representations:

7. None were received.

Inspection

8. The property was not inspected, and the tribunal used the documents provided to it.

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The law

9. 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, but excluding any personal circumstances of either the landlord or tenant. The tribunal 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 regulated tenancy, on the rental value of the property. In this case, no evidence was provided of disrepair were provided, but significant improvements had been carried out by the tenant during the tenancy, that must be disregarded when carrying out the valuation of the property.

10. 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 regulated tenancy) 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

11. The tribunal must therefore consider that if this property came to the market (without any tenants’ improvements) what would a willing tenant pay.

12. Without any evidence from the parties, I must rely on my own knowledge and experience of rental values in the area.

13. On this basis I find that a market [NAME] for a similar property, fully modernised and with the usual white goods, carpets and curtains found in such a tenancy would be £530.00.

14. However, the property is not in the condition that would be found in an open market letting, for example the tenant has a liability to decorate the property internally, and no white goods, carpets or curtains are provided as part of the tenancy. The tribunal therefore makes a deduction of 20% of the market [NAME] to reflect those differences. This results in an adjusted market [NAME] of £424.00 per week.

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15. The tribunal is then required to make further adjustments to reflect the scarcity of properties in the Greater London area. In this case a deduction of 20% was made, resulting in a fair [NAME] of £340.00 per week.

16. The final step is for the tribunal to carry out the valuation required by the Maximum Fair Rents Order. The calculation for this is appended to the decision and resulted in a fair [NAME] of £256.00 per week. The tribunal is required to register the lower of the [NAME] calculated using the MFR or the fair [NAME] shown in 17 above. The tribunal therefore registers the [NAME] for this property at £256.00 per week with effect from 24 January 2024.

Name: Ms. [NAME]. [NAME] 1 March 2024.

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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.