First-tier Tribunal sets fair rent of £567 per month for property in Hertfordshire

OUTCOME: Allowed

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Case Reference

: CAM/26UF/F77/2020/0007

Property : 2 Tile Kiln Cottages, [ADDRESS], Weston, Hitchin, Hertfordshire [POSTCODE]

Tenant

: Miss [APPELLANT]

Landlord : [NAME] of Objection : 20th January 2020

Type of Application : Section 70 [NAME] 1977 (First Registration)

Tribunal

: Tribunal Judge Dutton

Miss M Krisko BSc (Est Man) FRICS

Date of Consideration : 17th April 2020

_______________________________________________

DECISION

The sum of £567.00 per month will be registered as the fair [NAME] with effect from 17th April 2020.

© CROWN COPYRIGHT 2018

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

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FULL REASONS

1. Background In an application dated 6th November 2019 the tenant Miss [APPELLANT] applied to the [NAME] for a re-registration of the fair [NAME] to £545.00 per calendar month for 2 Tile Kiln Cottages, [ADDRESS], Weston, Hitchin, Hertfordshire [POSTCODE] (the Property). The [NAME] previously registered on 24th October 2016 was £524 per calendar month. The parties had previously agreed in August 2019 a monthly [NAME] of £545, a figure, it seems, being put forward by the landlord. It would also seem from the Application to Register that the sum being paid by the tenant was only £505 per month. However, for reasons which are not wholly clear, the tenant applied to the VOA for this ‘agreed’ [NAME] of £545 per month to be registered.

On 23rd December 2019 the [NAME] registered a fair [NAME] of £601.00 per calendar month with effect from that date. The uncapped [NAME] was £780 per calendar month.

By a letter dated 20th January 2020 the tenant objected to the [NAME] determined by the [NAME] and the objection was referred to the Tribunal. The matter initially came before us for determination in the week commencing 30th March 2020. As a result of the Covid/19 pandemic it was decided by the tribunal that an inspection would not take place and indeed nor is it strictly necessary for the purposes of a determining the fair [NAME] for the Property. Neither party requested a hearing.

2. The Property

The property comprises a two bedroomed semi-detached house as described in our colleagues summary of reasons for a decision made in August 2013. In a letter from the Miss [NAME] and Mr [NAME], her partner dated 4th March 2020 they confirm that nothing has changed since that time. They do set out some repair works they have undertaken and an upgrading to the existing kitchen. The [NAME] confirms the accommodation and lack of landlord’s central heating

3. Evidence Neither party requested a hearing. Therefore, this matter was considered on the basis of the papers provided by the parties.

[NAME]: Miss [APPELLANT] had sent in a redacted submission to the [NAME] in support of her request to appeal the decision. This was dated 20th January 2020. Generally it is unhelpful to submit redacted correspondence, the more so as it originated from Miss [NAME]. We will proceed on the basis of the comments available to us and which

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we have noted. In addition, we took into account all that had been said in the letter sent to the tribunal on 4th March 2020. [NAME]: The Landlord, through Mr [RESPONDENT] had written to the Tribunal on 10th March 2020. Again, we carefully noted the contents. He gave a short history of Miss [NAME]’ occupation and confirmed that a [NAME] had been agreed before review by the [NAME]. Responding to issues of condition raised by the tenant he said that Miss [APPELLANT] had indicated a wish not to have workmen at the Property and that they would live with the damp problem. We noted what was said about other repair work and the attempts he had made to resolve the grievances.

We have taken both representations into account when reaching our decision.

4. The law A summary of the law in respect of this case is attached to this decision.

5. Determination and Valuation In the first instance we determined what [NAME] 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. We considered the market in and around Hitchin from our own general knowledge, rather than any specific knowledge of market [NAME] levels in the area. We did note the comparables, which it would seem were relied upon by the [NAME], although the information was scant. We do not have any submissions by the parties on open market [NAME] levels, the landlord content with the determination made by the [NAME] and the tenant seeking the [NAME] which appeared to have been agreed in August 2019. We concluded that an open market [NAME] for two bedroomed semi-detached property in this locality would be in the region of £850 t0 £950 per month. This level of [NAME] assumes a property in a refurbished condition, with central heating, carpets and curtains as well as white goods. We consider that a starting open market [NAME] would be £900 per month.

We need to consider any deduction to reflect the improvements undertaken by the Tenant as set out in our colleagues previous decision, the repairing obligations which would not be found in an open market assured shorthold letting and the lack of white goods which we consider would usually be found in such an open market let. We consider that an allowance of 30% is appropriate reducing the open market [NAME] to £630 per month.

Next we need to consider the issue of scarcity. We were not provided with any specific evidence on this issue. However, the issue of scarcity is considered on the basis of the number of properties available to let and also considering the demand for such properties and over a really large area. Therefore using our general, rather than any specific knowledge and experience, we consider that in the wide geographical

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area, being north of London to include Buckinghamshire, Hertfordshire and Bedfordshire, there is an imbalance between supply and demand and this impacts upon rental values. Accordingly, we make a deduction of 10% for scarcity. The full valuation is shown below.

£/month [NAME]

900.00 Less Tenant’s improvements, repairing obligations and lack of white goods

270.00

630.00

Scarcity @10%

63.00

[NAME]

£567.00

6. Decision Accordingly, the sum of £567.00 per month will be registered as the fair [NAME] with effect from 17th April 2020 being the date of the Tribunal’s decision.

Tribunal Judge Dutton

Date: 17th April 2020

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First-tier Tribunal Property Chamber (Residential Property)

The Law Relating to the Assessment of Fair Rents

INTRODUCTION

1. This is a brief summary of the law applied by the Tribunal(formerly call a [NAME]) when reaching its decision. It is an integral part of the decision.

2. The definition of [NAME] is contained in the [NAME] 1977 i.e.:-

70(1) In determining ......a fair [NAME] under a regulated tenancy of a dwelling house, regard shall be had to all the circumstances (other than personal circumstances) and in particular to:-

a) the age, character, locality and state of repair of the dwellinghouse

b) if any furniture is provided for use under the tenancy, the quantity, quality and condition of the furniture, and

c) any premium, or sum in the nature of a premium……

70(2) For the purposes of the determination it shall be assumed that the number of persons seeking to become tenants of similar dwellinghouses in the locality on the terms (other than those relating to [NAME]) of the regulated tenancy is not substantially greater than the number of such dwellinghouses in the locality which are available for letting on such terms

70(3) There shall be disregarded:-

a) any disrepair or other defect attributable to a failure by the tenant under the regulated tenancy or any [NAME]……

b) any improvement carried out, otherwise than in pursuance of the terms of the tenancy, by the tenant under the regulated tenancy or any [NAME]

e) 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

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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

3. The Tribunal also has to take into account the Human Rights Act 1998. However, when interpreting the [NAME] 1977 (primary legislation) the Tribunal will have to follow the wording of the Act if it cannot be read or given effect in a way which is compatible with rights contained in the European Convention on Human Rights. Any party dissatisfied will then have to refer the matter to the High Court for the making of a Declaration of Incompatibility.

4. All other rights granted by the Convention such as the right to a fair and public hearing by an independent tribunal and the right to respect for a person’s private and family life are to be observed by the Tribunal

5. There have been a number of cases decided over the years most of which have been either unreported or reported only in professional journals. However in 1997 a Court of Appeal decision was reported as [NAME] v [NAME] (No. 2) [1997]4 AER 842 where the Court reviewed the various authorities and provided guidance to Tribunals to assist them in reaching decisions.

6. [ADDRESS] confirmed that a Tribunal must first find an open market [NAME] for the property taking into account evidence before it from the parties and the [NAME]. It will not consider other registered rents unless there are very exceptional circumstances which will be set out in the decision if appropriate.

7. A Tribunal can use such factors as comparable rents being paid for similar properties in the locality, capital values and return on expenditure as well as the experience and expertise of its members.

8. Having established an open market [NAME] the Tribunal then has to consider the deductions and allowances referred to above

9. In all cases the Tribunal will try its best to give the parties details of its calculations. The [NAME] case (above) made it clear that a Tribunal’s decision must be supported by some workings out, but precise arithmetical calculations are not possible in all cases. There are many properties where the deductions and allowances are of such proportions that a Tribunal must simply take a view as to how much a [NAME] would have to be reduced in order to obtain a tenant. This may not be the same as the sum total of the Statutory deductions/allowances.

10. If the Tribunal considers that the demand for similar properties in the locality is substantially greater than the supply then a deduction has to be made in accordance with Section 70(2) [NAME] 1977. This is the so-called “scarcity factor”. The Tribunal is obliged to look at scarcity in terms of people wanting regulated tenancies. However the reality is that no new regulated tenancies are created nowadays and scarcity is therefore considered using the types of tenancy currently in use.

11. The word “locality” in Section 70(2) has a different meaning to that in Section 70(1). In the case of [COMPANY] v Finegold [1975] 1 WLR 349 it was decided that the “locality” for this purpose should be a really large area. A Tribunal must define the extent of that “locality” when reaching its decision.

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12. In determining scarcity, Tribunals can look at local authority and housing association waiting lists but only to the extent that people on such lists are likely to be genuine seekers of the type of private rented accommodation in question if the [NAME] were to exclude the scarcity element.

13. The Tribunal must apply the [NAME] ([NAME]) Order 1999 – known as the “capping” provision – unless there is an exemption.

ANNEX - RIGHTS OF APPEAL

1. 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.

2. 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.

3. 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.

4. 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.