First-tier Tribunal Sets Market Rent at £1,050 pcm

OUTCOME: Allowed

FIRST-TIER TRIBUNAL

PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case reference : CAM/00MG/MNR/2024/0617

HMCTS code : P:PAPERREMOTE

Property : 2A The Arch, Olney, MK46 5 HR

Applicant (Tenant) : [APPELLANT]

Respondent (Landlord) : [APPELLANT] of [NAME] : Determination of a Market Rent: Sections 13 and 14 Housing Act 1988

Tribunal members : Mr [NAME] [NAME] of Determination : 28 January 2025

DECISION

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.

Decision

The Tribunal determined a market rent of £1,050 per calendar month effective from 28 January 2025.

Reasons

Background

1. On 13 September 2024 the Landlord served notice under section 13 (2) of the Housing Act 1988 to increase the passing rent from £875 per calendar month (pcm) to £1,100 per month with effect from 4 November 2024.

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

3. The Tenant made an undated [NAME] to the Tribunal in reliance on section 13 (4) of the Housing Act 1988.

4. The Tribunal issued directions on 31 October 2024, 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 24 January 2025.

6. The Property comprises an end terraced house of brick and tile construction providing an open-plan lounge/kitchen at ground floor and two bedrooms with a family bathroom at first floor level. There is external car parking and a garden to the rear.

7. The Property has underfloor electric heating and an air-conditioning unit at ground floor level and wall mounted heaters on the first floor. The ground floor is tiled whilst the staircase and first floor is carpeted. The windows are double-glazed.

8. The condition of the Property is good subject to expected wear and tear throughout.

The Tenancy

9. The Tenant occupied the Property by virtue of an Assured Shorthold Tenancy that commenced 3 August 2018 for a term of 12 months.

10. The rent reserved under this Tenancy was £775 pcm.

11. The Tenant’s obligations are set out within the Tenancy at Section 4. The Tribunal has had regard to the provisions set out therein.

12. Clause 4.2.1 states that the Tenant shall “Keep the Property including all of the Landlord’s machinery and equipment clean and tidy and in good and tenantable condition, repair and decorative order (reasonable wear and tear, items which the Landlord is responsible to maintain and damage for which the Landlord has agreed to insure, excepted).”

13. The Tenancy is silent in respect of the Landlord’s repair obligations. However, the statutory provisions as set out at section 11 of the Landlord and Tenant Act 1985, as referred to at paragraph 17 below, 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 person who was the landlord under the fixed term tenancy immediately before it came to an end to the person who was then the tenant 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 (1) 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;

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. 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 [NAME] 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.”

18. 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.”

Representations – The Tenant

19. The Tenant advised that her concern related to the rent being paid in respect of properties within the same development which she contended were below that being contended for by the Landlord.

Representations – The Landlord

20. The Landlord completed the Reply Form. The covering email included a Best Price Guide from Rightmove detailing “…40 examples of properties that have been advertised and/or let agreed in the MK46 postcode over the last 12 months” together with a copy of the Property Inspection Report dated May 2024. Further comments were also set out in respect of the circumstances of the adjoining property

Determination

21. In addition to the representations set out above, the Tribunal also had the benefit of copies of email exchanges between the Parties concerning the letting of 2F The Arch.

22. For clarity, the Tribunal has had regard to all the correspondence and evidence provided by the Parties but is unable to refer to or make observations in respect of each point and document provided to it. The Tribunal would also stress that it has had the benefit of inspecting the Property.

23. In determining the market rent, the Tribunal has 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. Previous changes in rent are not, therefore, relevant as the Tribunal is required to assess the rent that would be offered by a prospective tenant who has no knowledge of the existing or previous rents. Similarly, historic rents achieved elsewhere are of limited relevance.

25. 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.

26. It is therefore irrelevant whether or not the Landlord requires the rent to be at a certain level to fund its liabilities and/or its repair obligations under the lease or whether the Tenant feels that the services provided by the Landlord are “value for money.” As such, the cost of property maintenance to the Landlord does not affect the rent that would be offered by a prospective tenant in the market and must be disregarded.

27. The Tribunal is aware that the Property is currently available for let with effect from 1 February 2025 at an asking rent of £1,150 pcm. However, the Tribunal is unaware as to whether any offers have been made. In addition, this evidence would need to be adjusted to account for rental growth since the effective date of 4 November 2024.

28. Similarly, the Tribunal is unclear as to when the rent of £1,200 pcm was agreed in respect of 2F the Arch but understands that this property had been refurbished prior to being let. In this regard an adjustment would be required to account for the differences between the properties.

29. The Tribunal has therefore reviewed all the evidence provided and determines the market rental of the Property to be £1,050 pcm. The rent payable may not, therefore, exceed this figure. However, this does not prevent the Landlord from charging a lower figure.

30. The Tribunal has been made aware of the Tenant’s financial situation and her intended consequential vacation of the Property. In this context, the Tribunal, as set out at paragraph 18 above, has discretion pursuant to section 14 (7) of the 1988 Act to adopt a date later than that specified by the Landlord for the revised rent to take effect.

31. This rent is therefore to be effective from 28 January 2025.

Name: [NAME] [NAME]: 28 January 2025

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.

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

The [NAME] for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the [NAME].

If the [NAME] is not made within the 28-day time limit, such [NAME] 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 [NAME] for permission to appeal to proceed, despite not being within the time limit.

The [NAME] 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 [NAME] the [NAME] is seeking.

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