First-tier Tribunal Sets Fair Rent for Regulated Tenancy

OUTCOME: Allowed

First-tier Tribunal – Property Chamber File Ref No. LON/00AG/F77/2019/0131

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 18 [ADDRESS], [POSTCODE]

[NAME] Mr [APPELLANT]

Landlord [APPELLANT] and [COMPANY]

Tenant [NAME] [RESPONDENT]

1. The fair rent is 3900.00 Per Quarter (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 20 September 2019

3. The amount for services is 182.86 Per Quarter

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

N/A Per

5. The rent 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).

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

None.

8. For information only:

(a) 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 £4793.00 per Quarter including £182.86 per for services prescribed by the Order.

[NAME] of decision 20th September 2019

MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 289.5

PREVIOUS RPI FIGURE Y 272.3

X 289.5 Minus Y 272.3 = (A) 17.2

(A) 17.2 Divided by Y 272.3 = (B) 0.063166

First application for re-registration since 1 February 1999 - NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 0.113166

Last registered rent* 4305.50 Multiplied by (C) = 4792.73 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 4793.00

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £4793.00 Per Quarter

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 Tribunal’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.

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Case Reference : KA/LON/00AG/F77/2019/0131

Property : 18 [ADDRESS] [POSTCODE]

Applicant: [redacted]

Respondent: [redacted] : 5 July 2019

Type of Application : Determination of the registered rent under Section 70 Rent Act 1977

Tribunal

: Mrs [NAME]

Mrs [NAME] and venue of : 20 September 2019 meeting

10 [ADDRESS], [POSTCODE]

_______________________________________________

DECISION ____________________________________

The registered rent with effect from 20 September 2019 is £3900 per quarter.

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

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Background

1. On 8 March 2019 the landlord applied to the rent officer for registration of a fair rent of £5139.83 per quarter for the above property.

2. The rent payable at the date of the application was £4305.50 per quarter which had been registered by the rent officer on 6 June 2017 with effect from the 23 July 2017.

3. On 4 June 2019, the rent officer registered a fair rent of £4175 per quarter with effect from 23 July 2019.

4. On 4 July the landlord objected to the rent determined by the Rent Officer.

5. A hearing was offered however neither party wished to attend. The landlord sent written representations; the tenant did not provide any written evidence.

6. The tribunal inspected the flat on 13 July 2019.

The Evidence

7. Ms [RESPONDENT], on behalf of the landlord, stated that the property is a ground floor flat in a purpose built block. The accommodation comprises four rooms, kitchen and bathroom/wc, the flat is centrally heated.

8. The flat is situated in a desirable location within close proximity to transport and other local amenities.

9. She referred to three lettings of three bedroom flats situated in [ADDRESS], Cricklewood and NW4 where the rents ranged from £1625 per month to £1746 per month.

Inspection

10. [ADDRESS] is a quiet tree lined residential street. The subject flat is on the ground floor of a four storey mansion block, situated within walking distance of local shops, restaurants, transport and other leisure facilities.

11. The accommodation comprises a living room with bay window to the front, two bedrooms, kitchen with boxroom off and bath/wc. The flat has good natural light, the windows are single glazed, some rewiring is surface mounted, the bathroom is part tiled but dated. Indeed, without the tenant’s improvements the flat would be unmodernised and unheated. The tenant had installed gas fired central heating,

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modernised the kitchen and installed fitted wardrobes in one of the bedrooms.

The law

12. When determining a fair rent the Tribunal, in accordance with the Rent Act 1977, section 70, had regard to all the circumstances including the age, location and state of repair of the property. It also disregarded 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.

13. 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 0rdinarily a fair rent is the market rent for the property 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 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 property).

Valuation

14. In the first instance the Tribunal determined what rent the landlord could reasonably be expected 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. The evidence supplied by the landlord was not helpful because the properties were in different parts of London to the subject property. Consequently the Tribunal had to rely on its own general knowledge of rents in West Hampstead. Having done so, it concluded that the likely market rent for the flat would be £525 per week.

15. However, it was first necessary to adjust the hypothetical rent of £525 per week to allow for the considerable differences between the terms and condition considered usual for such a letting and the condition of the actual property at the date of the inspection, ignoring the tenant’s

improvements, (disregarding the effect of any disrepair or other defect

attributable to the tenant or any predecessor in title). The Tribunal considered that these differences required a deduction of £150 per week.

16. This leaves an adjusted market rent for the subject property of £375 per week. The Tribunal was of the opinion that there was substantial scarcity in Greater London for similar sized properties and therefore made a deduction of 20% from the market rent to reflect this element giving a weekly uncapped rent of £300. The rent is a quarterly one therefore the uncapped fair rent is £3900 per quarter.

Decision

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17. The uncapped fair rent initially determined by the Committee, for the purposes of section 70, was accordingly £3900 per quarter.

18. The uncapped fair rent is below the maximum rent payable, by virtue of the Rent Acts (Maximum Fair Rent) Order 1999 the maximum fair rent therefore the Order does not apply. (Details of the calculation are provided on the back of the decision form).

19. Accordingly the sum of £3900 per quarter will be registered as the fair rent with effect from 20 September2019 being the date of the Tribunal's decision.

Chairman: [NAME]: 22 October 2019