First-tier Tribunal Sets Fair Rent Under Rent Act 1977

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. TR/LON/00AP/F77/2024/0038

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 78C Grand Parade, Green Lanes, London, [POSTCODE]

[NAME]

Landlord [APPELLANT]

Tenant Ms [APPELLANT]

1. The fair rent is £1038.00 Per Calendar Month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 02 April 2024

3. The amount for services is £18.25 Per Calendar Month

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

Per

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)

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 £1,406.00 per month including £0 per month for services (variable).

[NAME]- [NAME] of decision 2 April 2024

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 381.0

PREVIOUS RPI FIGURE Y 290.6

X 381.0 Minus Y 290.6 = (A) 90.4

(A) 90.4 Divided by Y 290.6 = (B) 0.3110

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) 1.3610

Last registered rent* £762.50 Multiplied by (C) = £1,037.82 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £1,038.00

Variable service charge NO If YES add amount for services -

MAXIMUM FAIR RENT = £1,038.00 Per Month

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

: LON/00AP/F77/2024/0038

Property : 78C Grand Parade, Green Lanes, London [POSTCODE].

Tenant

: Ms. [APPELLANT]. [APPELLANT]. [APPELLANT].

Landlord : [RESPONDENT].

Date of Objection : 19 December 2023.

Type of Application : Section 70, Rent Act 1977

Tribunal

: Valuer Chair, [NAME].

Date of Summary Reasons

: 2 April 2024

_______________________________________________

DECISION

The sum of £1,038.00 will be registered as the fair rent with effect from 2 April 2024 being the date the Tribunal made the Decision. ____________________________________

© CROWN COPYRIGHT 2023

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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REASONS FOR THE DECISION

Background 1. Following an objection from the Tenant to the determination of a fair rent by the Rent Officer, the Tribunal has made a determination under the provisions of the Rent Act 1977.

Inspection 2. Tribunal did not inspect the property but considered this case on the basis of the papers provided by the parties.

Evidence 3. The Tribunal has considered the written submissions provided by the parties, as well as the Rent Officer’s conference notes. The tenant says that no furniture was provided as part of the tenancy, and that the property is in a poor state of repair. She also says that the landlord is responsible for repairs and redecorations, but no redecoration has been carried out to the property by the landlord, and that she has replaced a carpet. The landlord did not provide any evidence to suggest that repairs and improvements had been carried out during the tenancy, and accepts that no furniture was supplied as part of the tenancy. It should be noted that the rent register does not identify that this is a furnished tenancy.

4. For clarification the tenancy is one where the landlord is obliged to carry out repairs and redecoration to the structure of the building (for example roof, windows etc), to have all gas and electrical safety inspections undertaken, and I do not therefore consider these matters to fall within the definition of service charge. The tenant is obliged to keep the property in good condition, and if necessary redecorate internally. The usual open market letting which is used for comparables prohibits the tenant from carrying out redecoration without permission and it is for this reason that adjustments are made from open market letting rental figures.

The Application

4. By an RR1 dated 19 September 2023 the landlord sought an increase in the rent. At the time of the application the registered rent was £762.50 per month inclusive of any service provided.

5. On 15 November 2023 the Rent Officer Service registered a new rent at £1,010.00 per calendar month with effect from that date, including £18.25 per month for services. At that time the Rent Officer considered the market rent at £1,600 per calendar month, from which the statutory deductions should be made.

6. By an email dated 19 December 2023, the tenant objected to the rent set and the matter was referred to this tribunal.

7. The tribunal issued directions on 6 February 2024 that requested the parties provide details of any comparable properties that they wished the

3 tribunal to consider, and any other details of the property that should be taken into consideration. No representations were received from either party, except those made by the tenant as part of the objection.

9. This tribunal considers that the rents in this locality have risen since the last registration and that a market rent for a fully refurbished, modernised property with white goods, carpets and curtains would attract a rent of £2,200.00 per calendar month.

10. However, the subject property is not in the condition, nor has it the same amenities as an open market letting and the tribunal must therefore make adjustments to the market rent to reflect those differences.

11. First of all the tribunal adjusted the market rent to reflect the terms of the tenancy, that is the tenant’s obligation to decorate internally, and deducted 5% from the starting rent for this purpose.

12 The tribunal then made a deduction of 10% to reflect the lack of furnishing, carpets, lack of modernisation, and the current condition of the property (lack of insulation, roof leak).

13. Finally the tribunal then had to consider the level of scarcity to be deducted from the rent to reflect the imbalance of supply and demand for properties of this type in the Greater London Area, and made a deduction of 20%.

Determination and Valuation

14.

per month Market Rent

£2,200.00

Less

Terms of tenancy and lack of recent Modernisation approx. 15%

(£ 330.00)

£1,870.00

Less Scarcity

approx. 20%

(£ 374.00)

Adjusted market rent: £1,496.00

15. The Tribunal determines that the fully adjusted market rent for the subject property would be £1,496.00 per calendar month. However, the tribunal must then carry out the calculation using the Maximum Fair Rent

4 Order, a copy of that valuation is attached to the decision. The application of the MFR produced a rental of £1,038.00 per calendar month.

14. The tribunal is therefore required to register whichever of the two valuations produces the lowest rent. In this case the MFR produces the lower figure of £1,038.00 per calendar month. This is therefore the rent that has been registered with effect from 2 April 2024.

Decision 14. The tribunal registers the Maximum Rent for the subject property at £1,038.00 with effect from 2 April 2024. This figure is inclusive of service charge of £18.25.

Chairman: [NAME]: 2 April 2024.

APPEAL PROVISIONS

These summary reasons are provided to give the parties an indication as to how the Tribunal made its decision. If either party wishes to appeal this decision, they should first make a request for full reasons and the details of how to appeal will be set out in the full reasons. Any request for full reasons should be made within a month. Any subsequent application for permission to appeal should be made on Form RP PTA