First-tier Tribunal sets fair rent under Rent Act 1977

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. LON/00AZ/F77/2021/0022

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 127 [ADDRESS], [POSTCODE]

[NAME] [NAME]

Landlord [COMPANY]

Tenant Miss [APPELLANT]

1. The fair rent is 169.00 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 06 May 2021

3. The amount for services is N/A Per

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 the maximum fair rent as prescribed by the Rent Acts (Maximum Fair Rent) Order 1999. The rent that would otherwise have been registered was £208.00 per Week.

[NAME] [NAME] of decision Thursday 6th May 2021

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 296.9

PREVIOUS RPI FIGURE Y 257.1

X 296.9 Minus Y 257.1 = (A) 39.8

(A) 39.8 Divided by Y 257.1 = (B) 0.15480

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

If yes (B) plus 1.075 = (C) No

If no (B) plus 1.05 = (C) 1.20480

Last registered rent* £140.00 Multiplied by (C) = 168.672 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £169.00

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £169.00 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.

© CROWN COPYRIGHT 2013

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : LON/00AZ/F77/2021/0022

HMCTS code :

P: PAPERREMOTE

Property : 127 [ADDRESS], [POSTCODE] Landlord : [COMPANY] : In House Tenant : Miss [COUNSEL] : In Person Type of Application : Determination of a fair rent under section 70 of the Rent Act 1977 Tribunal Members :

Mr [NAME] [NAME] of Decision :

6 May 2021

Date of Reasons :

25 May 2021

REASONS

2

Covid-19 pandemic: description of hearing

This has been a remote hearing on the papers. The form of remote hearing was P:PAPERREMOTE. The Directions dated 2 March 2021 set out that the tribunal was not able to hold face to face hearings or carry out internal inspections. The decision made is described at the end of these reasons.

Background

1. On 19 August 2020, the Landlord applied for registration of a fair rent of £154.00 per week.

2. The Rent Officer registered a rent of £167.50 per week. The rent was registered on 6 November 2020 and is effective from the same date. The uncapped rent was £243.00 per week.

3. Accommodation is ground floor 2 rooms, kitchen/diner, and first floor 3 rooms and bathroom/WC. The house has central heating.

4. The previous registered rent was £140.00 per week registered on 13 March 2015 and effective from 22 March 2015. The uncapped rent was £289.00 per week.

5. The Tenant objected to the registered rent by letter dated 15 November 2020 and the matter was referred to the tribunal.

6. On 2 March 2021, the tribunal issued Directions for proceeding by written representations.

Evidence

The Landlord’s Case

7. There were no submissions by the Landlord

The Tenant’s case

8. In her objection letter dated 15 November 2020 Miss [NAME] stated that since the last increase of rent a water meter have been fitted to the property so that she pays for all water. Ms [NAME] also mentioned she was a receptionist at the hospital and on limited income.

3 Inspection

9. In accordance with the directions the tribunal did not inspect the property. The tribunal took into account photographs on Street view which show a Victorian terrace house with a concrete tiled roof, sash windows and in reasonable external decorative order.

The Law

10. When determining a fair rent, the tribunal, in accordance with section 70 of the Rent Act 1977, has regard to all the circumstances (other than personal circumstances) including the age, location and state of repair of the property.

11. 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 emphasized 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 - 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.

12. The rent has been previously registered, and the Rent Acts (Maximum Fair Rent) Order 1999 therefore applies unless there are significant improvements made by the Landlord which increase the rent which would be registered by more than 15%.

Discussion and Valuation

13. No rental evidence was provided by the parties. The tribunal therefore had to rely on its knowledge and experience. The tribunal noted the letter from Miss [NAME] but as the law stands is not able to take personal circumstances into account.

14. The tribunal firstly has to consider the rent in accordance with section 70 of the Rent Act as a market rent less scarcity. The tribunal has applied its knowledge and experience and considers that the rent for the subject house, in this location, and in the condition which the market would expect, would be £1500.00 per month (£346.00 per week). The tribunal has adjusted for the condition of the property, lack of white goods and for the different terms of the tenancy as compared with a standard assured shorthold tenancy and makes a deduction of 25% for these factors.

4 15. The Tribunal found that there was substantial scarcity of letting property in the locality of Greater London and using its knowledge and experience made a deduction of 20% from the adjusted market rent. The calculation of the s70 rent is set out below.

Capped rent

16. In accordance with the Rent Acts (Maximum Fair Rent) Order 1999 the maximum rent is the previous registered rent increased in accordance with the Order which provides for the previous rent to be increased by the percentage increase in the retail prices index plus 5% if the application is a second or later application since 1 February 1999.

17. The retail prices index figure to be used is the figure published in the month before the decision. The decision was made in May, and the figure published in April is that for March which was 296.9 and which is the upper figure to be used. The index at the date of the last registration was 257.1. Applying the formula produces a maximum fair rent of £169.00 per week which is below the s70 rent of £208.00 per week.

18. The rent to be registered is the lower of the two figures and is the capped rent of £169.00 per week.

19. The effective date is the date of the decision which is 6 May 2021.

[NAME] [NAME]

per week Market rent 346.15 £ less condition and terms 25% 86.54 -£ adjusted rent 259.62 £ less scarcity off adj rent 20% 51.92 -£ Fair rent 207.69 £ rounded to 208.00 £

5 ANNEX - RIGHTS OF APPEAL

• The Tribunal is required to set out rights of appeal against its decisions by virtue of the rule 36 (2)(c) of the Tribunal Procedure (First-tier Tribunal)(Property Chamber) Rules 2013 and these are set out below.

• If a party wishes to appeal against 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.

• 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.

• 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.

• 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.