First-tier Tribunal Sets Market Rent at £1,000 Per Month

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : CAM/42UD/MNR/2023/0073 HMCTS code : P:PAPERREMOTE

Property : 1 [ADDRESS], [POSTCODE] Applicant (Tenant) : [APPELLANT] and [APPELLANT] Respondent (Landlord) : [RESPONDENT] and [RESPONDENT] of application : Determination of a Market Rent: Sections 13 and 14 Housing Act 1988 Tribunal members : Mr [NAME] [NAME] of Determination : 15 August 2023 This has been a remote determination on the papers which the parties are taken to have consented to, as explained below. The form of determination was a paper determination described above as P:PAPERREMOTE The documents that the Tribunal was referred to are in bundles from the Applicant and the Respondent. The Tribunal has noted the contents and the decision is below.

2 Decision The Tribunal determined a market rent of £1,000 per calendar month effective from 29 May 2023.

Reasons Background

1. On 21 April 2023 the Landlord served notice under section 13 (2) of the Housing Act 1988 to increase the passing rent from £925 per month (pm) to £1,100 pm with effect from 29 May 2023.

2. This rent is stated to be exclusive of Council Tax, Water Charges and fixed service charges.

3. The Tenant made an application dated 12 May 2023 to the Tribunal in reliance on section 13 (4) of the Housing Act 1988.

4. The Tribunal issued directions on 5 June 2023, inviting the Parties to submit any further representations (including any photographs and details of rentals for similar properties) they wished the Tribunal to consider.

The Property 5. The Tribunal inspected the Property on 31 July 2023 accompanied by the Tenant and Ms [APPELLANT] of [NAME] on behalf of the Landlord.

6. The Property comprises a semi-detached house on a [COMPANY] housing estate. The accommodation comprises a hall, lounge and kitchen on the ground floor, two bedrooms and family bathroom on the first floor and a third bedroom with ensuite shower/WC on the second floor.

7. There is central heating and timber double glazing throughout together with an external garage and rear garden.

8. The Tribunal understands that the EPC banding is B and that the stated assumed floor area is 118 sqm. The Tenancy 9. The Tenant occupied the Property by virtue of an undated Assured Shorthold Tenancy for a period of 12 months from 29 June 2017.

10. The rent under this Tenancy was £895 pcm.

11. The Tenant’s repair obligations are set out within the Lease, predominantly in section 4.1 of Schedule 1 which states:

3 “To take reasonable steps to keep the interior of the Premises and the Fixtures and Fittings in the same decorative order and condition throughout the Term as at the start of the Tenancy as noted in the Inventory and the Schedule of Condition. The Tenant is not responsible for the following:  Fair wear and tear...  Repairs for which the Landlord has responsibility…  Damage covered by the Landlord’s insurance policy”.

12. The Landlord’s repair obligations are set out at section 3.1 of Schedule 2 of the Lease which refers to sections 11 to 16 of the Landlord and Tenant Act 1985.

13. In the absence of a new Tenancy being entered into, an Assured Periodic Tenancy pursuant to Section 5 (2) of the Housing Act 1988 (the 1988 Act) has arisen such that Sections 13 and 14 of the Act now apply. The Law 14. Section 5 (3) of the Act provides that the periodic tenancy arising on expiry of the Assured Shorthold Tenancy is one: “(a) taking effect in possession immediately on the coming to an end of the fixed term tenancy; (b) deemed to have been granted by the [NAME] under the fixed term tenancy immediately before it came to an end to the [NAME] under that tenancy; (c) under which the premises which are let are the same dwelling- house as was let under the fixed term tenancy; (d) under which the periods of the tenancy are the same as those for which rent was last payable under the fixed term tenancy; and (e) under which, subject to the following provisions of this Part of this Act, the other terms are the same as those of the fixed term tenancy immediately before it came to an end, except that any term which makes provision for determination by the landlord or the tenant shall not have effect while the tenancy remains an assured tenancy” 15. Section 14 of the 1988 Act provides that the Tribunal is required to determine the rent at which the Property might reasonably be expected to let in the open market by a willing landlord under an assured tenancy: a. “having the same periods as those of the tenancy to which the notice relates;

4 b. which begins at the beginning of the new period specified in the notice; c. the terms of which (other than relating to the amount of rent) are the same as those of the existing tenancy.” 16. Section 14 (2) of the 1988 Act requires the Tribunal to disregard: a. “Any effect on the rent attributable to the granting of a tenancy to a sitting tenant; b. Any increase in the value of the dwelling-house attributable to a relevant improvement (as defined by section 14 (3) of the Act) otherwise than as an obligation; c. Any reduction in the value of the dwelling-house attributable to a failure by the tenant to comply with any terms of the tenancy.” 17. Examples of a tenant’s failure to comply with the terms of the lease may include, for example, a lack of redecoration.

18. Section 11 of the Landlord and Tenant Act 1985 (the 1985 Act), provides that the Tribunal is to imply a covenant by the Landlord: a. “to keep in repair the structure and exterior of the dwelling- house (including drains, gutters and external pipes), b. to keep in repair and proper working order the installations in the dwelling-house for the supply of water, gas and electricity and for sanitation (including basins, sinks, baths and sanitary conveniences, but not other fixtures, fittings and appliances for making use of the supply of water, gas or electricity), and c. to keep in repair and proper working order the installations in the dwelling-house for space heating and heating water.” 19. Section 14 (7) of the 1988 Act states: “Where a notice under section 13(2) above has been referred to the appropriate tribunal, then, unless the landlord and the tenant otherwise agree, the rent determined by the appropriate tribunal (subject, in a case where subsection (5) above applies, to the addition of the appropriate amount in respect of rates) shall be the rent under the tenancy with effect from the beginning of the new period specified in the notice or, if it appears to the appropriate tribunal that that would cause undue hardship to the tenant, with effect from such later date (not being later than the date the rent is determined) as the appropriate tribunal may direct.”

5 Representations – The Tenant 20. The Tenant set out their representations within the Reply Form. Whilst the Tribunal has had regard to all the points raised therein, the main issues can be summarised as follows:  Settlement cracks throughout the Property  Patio door does not close properly, and windows are draughty  Bathroom floor is warped/bubbling, and the bath panel is cracked/flaking  Stained ceiling due to historic leak  Lack of servicing to the hot water cylinder  Mould in the ensuite  Damaged telecoms wiring  Wooden window frames flaking  Sunken lawn and patchy grass 21. It was submitted that these matters would impact upon the rental value. However, the Tenant did not provide an opinion as to the appropriate market rental value. Representations – The Landlord 22. The Landlord provided a floor plan and a Best Price Guide as prepared by [NAME] that set out four properties available to let at rents ranging from £1,050 pm to £1,100 pm. Determination 23. In determining the market rent, the Tribunal has had regard to prevailing levels of rent in the general locality and achieved rental values in respect of other properties of comparable accommodation and provision that would be likely to be considered by a prospective tenant. The current rent and the period that has passed since that rent was agreed or determined is not relevant.

24. The legislation requires the Tribunal to have regard to market demand assuming that the landlord is willing. The Tribunal is therefore unable to have any regard to the personal circumstances or identities of the actual landlord and tenant in assessing the level of rent.

25. The actual occupation of the Property is not relevant as it is considered to be vacant so that it can be occupied immediately, and the Tribunal has regard to the competing bids of hypothetical rather than actual

6 prospective tenants. In addition, it is assumed that the Tenant has complied with their repair/ decoration/maintenance covenants.

26. Historic matters between the actual landlord and tenant are not relevant to the rent likely to be offered by a prospective tenant. The Tribunal can therefore only have regard to the Property as it actually exists on the relevant date of the proposed rent review having regard to the statutory assumptions.

27. The test as to whether disrepair should be taken into account is whether the market considers there to be any impact on value. The market will take no account of third-party opinions and each prospective occupier will form their own view as to the acceptability of the disrepair and the impact of this on their rental bid.

28. In this context, the Tribunal understands that the Property was purchased by the Landlord from new in early 2017 and notes that the AST commenced in June 2017. It is therefore not surprising that the cracks, which are not uncommon with new-build houses due to the drying of plaster and initial settlement, have opened up during the Tenant’s occupation.

29. Neither these or any other of the other issues raised by the Tenant and listed above, appear to comprise disrepair nor it is surprising that they have arisen. They are all matters that could be rectified at relatively minor cost.

30. Whilst they should not affect the physical occupation of the Property, and there is no indication, at present, that there are Health and Safety concerns, they are unsightly and not to be expected in a modern house.

31. It is therefore the case that the Tribunal is of the opinion that that the general lack of attention on the part of the Landlord to these matters does impact on the attractiveness and therefore value of the Property relative to the other properties available on the market.

32. Having taken all relevant matters into account, the Tribunal is therefore of the opinion that the market rental value of the Property as at the effective date of 29 May 2023 was £1,000 per month.

Name: [NAME] [NAME]: 15 August 2023

Rights of appeal

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have.

7 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. 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. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).

8 First-tier Tribunal – Property Chamber File Ref No. CAM/42UD/MNR/2023/0073

Notice of the Tribunal Decision and Register of Rents under Assured Periodic Tenancies (Section 14 Determination)

Housing Act 1988 Section 14

Address of Premises The Tribunal members were 1 [ADDRESS], [POSTCODE]

[NAME] [NAME]

Landlord [RESPONDENT] and [RESPONDENT] [RESPONDENT] [ADDRESS] [POSTCODE]

Tenant [NAME] and [APPELLANT]

1. The rent is: £ 1,000 Per month (excluding water rates and council tax but including any amounts in paras 3)

2. The date the decision takes effect is: 29 May 2023

3. The amount included for services is not applicable Per

4. Date assured tenancy commenced 29 June 2017 5. Length of the term or rental period 12 months

6. Allocation of liability for repairs Tenant liable for internal repairs 8. Furniture provided by landlord or superior landlord N/A 9. Description of premises The Property comprises a semi-detached house on a [COMPANY] housing estate. The accommodation comprises a hall, lounge and kitchen on the ground floor, two bedrooms and family bathroom on the first floor and a third bedroom with ensuite shower/WC on the second floor. There is central heating and timber double glazing throughout together with an external garage and rear garden.

9 Chairman P [NAME] of Decision 15 August 2023