First-tier Tribunal Sets Fair Rent for Tenancy Agreement

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. MAM/LON/00BK/F77/2023/0416

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 43 [ADDRESS], [POSTCODE]

[NAME] [NAME] JP.

[APPELLANT]

Tenant Mr [APPELLANT] & Ms [APPELLANT]

1. The fair rent is £16830.00 Per Year (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 24 June 2024

3. The amount for services is £1333.63 Per Year

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 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

None

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 £20217.00 per annum including £1333.63 per annum for services.

[NAME]- [NAME] of decision 24 June 2024

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 386.4

PREVIOUS RPI FIGURE Y 314.3

X 386.4 Minus Y 314.3 = (A) 72.1

(A) 72.1 Divided by Y 314.3 = (B) 0.2293

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) 1.2793

Last registered rent* 13154 Multiplied by (C) = 16829.21 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £16,830

Variable service charge NO If YES add amount for services -

MAXIMUM FAIR RENT = £16,830.00 Per Annum

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.

1

Case Reference

: LON/00BK/F77/2023/0416.

Property : 43 [ADDRESS] [POSTCODE].

Tenant

: Mr. [APPELLANT]. [APPELLANT] & Ms. [APPELLANT]. [APPELLANT].

Landlord : [RESPONDENT].

Date of Objection : 22 November 2023.

Type of Application : Section 70, Rent Act 1977

Tribunal

: [NAME]

[NAME] JP.

Date of Reasons

: 27 June 2024.

_______________________________________________

DECISION

The sum of £16,830.00 per annum will be registered as the fair rent with effect from 24 June 2024 being the date the Tribunal made the Decision. ____________________________________

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

2 © CROWN COPYRIGHT 2023

REASONS FOR THE DECISION

Background 1. The Rent Officer Service registered a rent of £14,976.00 for the subject property on 18 November 2023. The registered rent prior to the registration was £13,154.00 including service charges. The landlord requested a rent of £15,785.00 per annum in an RR1 dated 11 September 2023. Having received the new registered rent, the landlord objected to the rent and the matter was referred to this tribunal.

2. The tribunal issued directions on 19 December 2023, these requested that the parties provided examples of comparables on which they wished to rely in support of their case, and to say whether they wished the tribunal to have a hearing and inspect the property. Mr. [NAME] requested a hearing, but neither party requested an inspection of the property.

3. Neither the landlord or tenant provided details of any comparable properties they wished the tribunal to take into account. Mr. [NAME] provided a written submission in which he said that the tribunal should not set a market rent for the property, and that a fair rent should be set.

Hearing and Inspection.

3. During the hearing Mr. [NAME] explained that the he was happy with the fair rent set by the Rent Officer, that the block was not modernised, did not have a lift, concierge, or air conditioning as would be found in modern lettings. He also confirmed that the property had been let without white goods, carpets or curtains and had not been furnished.

4. The tribunal confirmed that our jurisdiction is confined to setting the fair rent for the property, and that to do so, we must start with the market rent for the property and then make adjustments to reflect the actual tenancy and the property.

Evidence

6. There were no written submissions from the landlord, despite their objection. The tribunal therefore had no evidence of open market rentals for similar properties in the area.

Determination and Valuation

7. The tribunal must therefore use its own expert knowledge of rental values of similar properties in the area. Having done so, we came to an open market rent of £3,000 per calendar month (£36,000 per annum). However the

3 subject property is not in the condition that would be found in an open market rental, and the different terms of the tenancy must be taken into account, as well as making a deduction for the scarcity element as required under the Rent Act 1977. In this instance the tribunal makes the following deductions from the open market rent stated above.

• A deduction of 20% to reflect the absence of white goods, carpets and curtains, and modern fixtures and fittings, and the differing terms of the tenancy. • 10% deduction to reflect condition on the basis that the property has not been modernised to a modern standard. • A deduction of 20% to reflect the element of ‘scarcity’ as defined in the Rent Act 1977.

8. The full valuation is shown below:

Market Rent per annum

:

£36,000.00

Less 20% for lack of white goods, carpets etc and different Terms of the tenancy:

£ 7,200.00

£28,800.00 Less 10% to reflect unmodernised condition:

£ 2,880.00

£25,920.00

Less scarcity @ 20%

£ 5,184.00 Adjusted market rent:

£20,736.00

The tribunal determines that the adjusted market rent for the subject property is £20,736.00 per annum.

9. Having carried out the above calculation, the tribunal is then required to calculate the Maximum Fair Rent using the statutory formula. A copy of the calculation is appended to the decision, and produced a MFR of £16,830.00 per annum

10. The rent payable by the tenant is the lower of either the MFR (£16,830) or the adjusted market rent (£20,736), and therefore the Tribunal determines that the fair rent for the property is £16,830.00 per annum with effect from 24 June 2024.

Chairman: [NAME]: 27 June 2024.