First-tier Tribunal Sets Fair Rent for Unfit Property

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. JM/LON/00AE/F77/2022/0265

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 10A St. [ADDRESS], [POSTCODE]

[NAME] [NAME]

Landlord [RESPONDENT] [COMPANY]

Tenant [APPELLANT]

1. The fair rent is £20.00 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 20 February 2023

3. The amount for services is not applicable Per

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

not applicable 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)/ do not apply because 1st registration/15% exemption.

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

Parts of ceiling in one room, kitchen and bathroom/wc have collapsed. The flat is not fit for human habitation in its current condition. It provides some storage space only.

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 below the maximum fair rent of £183 per week prescribed by the Order.

Chairman E [NAME] of decision 20 February 2023

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 360.4

PREVIOUS RPI FIGURE Y 294.3

X 360.4 Minus Y 294.3 = (A) 66.1

(A) 66.1 Divided by Y 294.3 = (B)

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 0.2246

Last registered rent* £143 Multiplied by (C) = £182.26 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £183

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £183 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 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.

Case Reference : JM/LON/00AE/F77/2022/0265

P:PAPERREMOTE

Property : 10A [ADDRESS] [POSTCODE]

Applicant: [redacted]

Respondent: [redacted] : 14 November 2022

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

Tribunal

: Mrs [NAME]

[NAME] and venue of : 20 [ADDRESS] [POSTCODE]

_______________________________________________

DECISION ____________________________________

This has been a hearing on the papers which has been consented to by the tenant and not objected to by the landlord. A face to face hearing was not held because it was not practicable and no-one requested one. The documents that we were referred to were in an electronic bundle the contents of which we have recorded.

The registered rent with effect from 20 February 2023 is £20 per week.

© CROWN COPYRIGHT

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Background

1. On 28 July 2022 the landlord applied to the rent officer for registration of a fair rent of £175 per week for the above property.

2. The registered rent at the date of the application was £143 per week which had been registered by the tribunal on 23 October 2020 with effect from the same date.

3. On 16 September 2022, the rent officer registered a fair rent of £170 per week with effect from 23 October 2022.

4. On 14 November 2022 the tenant objected to the registered rent stating that the ceilings in three rooms had collapsed.

5. The tribunal issued Directions on 29 November 2022. No written representations were received from the tenant nor from or on behalf of the landlord.

The Inspection

6. The property is a two storey plus loft conversion mid Victorian terraced house converted to three flats in a residential area approximately a third of a mile from bus stops and local shops.

7. Externally the property was in poor decorative order, there were cracks in the bay above the window and the single glazed sash windows to the front were in poor condition.

8. The common parts comprised a small entrance lobby. A glazed partition separated the ground floor flat from the staircase leading to the flats above.

9. The subject premises are on the ground floor and comprise two rooms, kitchen and bathroom/wc. The front living room had a gas fire. The ceilings in the bedroom, kitchen and bathroom/wc had partially collapsed. The kitchen was unmodernised with a single drainer sink unit with base unit below and some open shelving, French doors opened into the rear garden. There was a gas fired boiler providing hot water only. The bathroom was unmodernised with old, worn sanitary ware, a number of wall tiles were missing. The floors throughout the flat were a mixture of floorboards and concrete.

10. Apart from the gas fire the flat was unheated. The condition of the ceilings together with the poor windows resulted in the flat not being fit for human habitation.

The Law

11. When determining a fair rent the tribunal, in accordance with section 70 of the Rent Act 1977, must have regard to all the circumstances

including the age, location and state of repair of the property. It also must disregard the effect of any relevant tenant’s improvements and the effect of any disrepair or any other defect attributable to the tenant or any predecessor in title under the regulated tenancy, on the rental value of the property. The Tribunal is unable to take into account the tenant’s personal circumstances when assessing the fair rent.

12. 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 ordinarily 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 to that of a regulated tenancy, and

That for the purposes of determining the market rent, assured tenancy market rents are usually appropriate comparables; adjusted as necessary to reflect any relevant differences between the comparables and the subject property.

Valuation

13. In the first instance the Tribunal would usually determine 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 and on the terms that is considered usual for such an open market letting. However, in this instance the tribunal determined that such an approach was not appropriate because the condition of the property was such that it was only suitable to be used for poor quality storage.

14. The tribunal determines that the rental value of the flat, being accessed by a narrow corridor with significant parts of the ceiling in all but the front room having collapsed was £20 per week.

Decision

15. The uncapped fair rent initially determined by the Tribunal, for the purposes of section 70, was accordingly £20 per week. This is below the maximum fair rent of £183 per week calculated under the Rent Acts (Maximum Fair Rent) Order 1999.

19. Accordingly, the sum of £20 per week will be registered as the fair rent with effect from 20 February 2023 being the date of the Tribunal's decision.

Chairman: [NAME]: 20 February 2023

ANNEX - RIGHTS OF APPEAL

i. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber) then a written application for permission must be made to the First-tier Tribunal at the Regional office which has been dealing with the case.

ii. The application for permission to appeal must arrive at the Regional office within 28 days after the Tribunal sends written reasons for the decision to the person making the application.

iii. 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.

iv. The application for permission to appeal must identify the decision of the Tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal, and state the result the party making the application is seeking.