First-tier Tribunal Sets Market Rent at £1,850 per Month

MR22 First-tier Tribunal – Property Chamber File Ref No. CHI/40UC/MNR/2024/0139

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 [ADDRESS], [POSTCODE]

[NAME] Mr [RESPONDENT]

Landlord [RESPONDENT], Bridgwater, Somerset, [POSTCODE]

Tenant Mr [APPELLANT]

1. The rent is: £ 1850.00 Per Calendar Month (excluding water rates and council tax but including any amounts in paras 3)

2. The date the decision takes effect is: 30 May 2024

3. The amount included for services is not applicable n/a Per n/a

4. Date assured tenancy commenced 30 May 2019

5. Length of the term or rental period Monthly

6. Allocation of liability for repairs Landlord

7. Furniture provided by landlord or superior landlord

8. Description of premises Detached former farmhouse

[NAME] of Decision 5 August 2024

© CROWN COPYRIGHT 2024

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : CHI/40UC/MNR/2024/0139 Property : [ADDRESS] [POSTCODE]

Applicant Tenants : Mr [COUNSEL] Mr [COUNSEL] and Mrs [COUNSEL] :

Mr [COUNSEL] Counsel

Respondent Landlord : [COUNSEL] [COMPANY] : Mr [COUNSEL] Solicitor of [COMPANY] of Application :

Determination of a Market Rent sections 13 & 14 of the Housing Act 1988

Tribunal Members : Mr [NAME] Mr [NAME] of Inspection : None. Paper determination Date of Decision :

5th August 2024

DECISION

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2

Summary of Decision

1. On 5th August 2024 the Tribunal determined a market rent of £1,850 per month to take effect from 30th May 2024. Background 2. The case concerned the determination of a market rent for the subject property following a referral of the Landlord’s notice of increase of rent by the Tenant pursuant to sections 13 and 14 Housing Act 1988.

3. On 17th April 2024 the Landlord’s Agent served a notice under Section 13(2) of the Housing Act 1988 which proposed a new rent of £1,850 per month, in place of the existing rent of £1,750 per month, to take effect from 30th May 2024. The notice complied with the legal requirements.

4. On 29th May 2024 Mr [NAME] applied to the Tribunal under Section 13(4) (a) of the Housing Act 1988. Mr [NAME] and Mrs [NAME], the parents of Mr [NAME], were listed in the application as [NAME]. The application form was undated.

5. The Tribunal does not routinely consider it necessary and proportionate in cases of this nature to undertake inspections or hold Tribunal hearings unless either are specifically requested by either party or a particular point arises which merits such an inspection and/or hearing.

6. The Tribunal issued Directions on 11th June 2024 informing the parties that, unless either party objected, the Tribunal intended to determine the rent based on written representations. The parties were invited to make submissions which could include photographs or videos.

7. On 18th June the Landlord’s Agent sent a Rent Appeal Statement to the Tribunal and referred to a substantial number of photos and a survey report which had been submitted to the Tribunal in relation to a similar application made in 2023, CHI/40UC/MNR/2023/0124. The Tribunal office informed the Agent that any documents to be relied upon in this new case must be supplied to the Tribunal and copied to the Tenants.

8. Both parties submitted papers by the specified dates setting out their respective cases. The papers were also copied to the other party.

9. Given the extent of the submissions the Tribunal decided that it should inspect the property and arrange an oral hearing. Both were arranged for Monday 5th August 2024, the hearing would be via video link using the Tribunals’ CVP platform.

10. Neither party objected to the matter being determined this way. The inspection took place at 10.30 on 5th August 2024 followed by a video hearing at 1.30pm the same day.

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3 11. The Tribunal had received extensive papers, including its own directions totalling some 324 pages.

12. On 1st August 2024 the Landlord’s Agent confirmed his attendance at the inspection and hearing and included a document showing photographs of the property taken in July 2024 set alongside photographs taken at the beginning of the tenancy in May 2019.

13. These reasons address in summary form the key issues raised by the parties. They do not recite each and every point referred to either in submissions or during any hearing. However, this does not imply that any points raised, or documents not specifically mentioned were disregarded. If a point or document was referred to in the evidence or submissions that was relevant to a specific issue, then it was considered by the Tribunal. The Tribunal concentrates on those issues which, in its opinion, are fundamental to the application. The Law

S14 Determination of Rent by First-tier Tribunal

(1) Where, under subsection (4) (a) of section 13 above, a tenant refers to a First-tier Tribunal a notice under subsection (2) of that section, the Tribunal shall determine the rent at which, subject to subsections (2) and (4) below, the Tribunal consider that the dwelling-house concerned might reasonably be expected to be let in the open market by a [NAME] under an assured tenancy-

(a) which is a periodic tenancy 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 the rent) are the same as those of the tenancy to which the notice relates; and (d) in respect of which the same notices, if any, have been given under any of Grounds 1 to 5 of Schedule 2 to this Act, as have been given (or have effect as if given) in relation to the tenancy to which the notice relates.

(2) In making a determination under this section, there shall be disregarded-

(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 carried out by a person who at the time it was carried out was the tenant, if the improvement- (i) was carried out oterwise than in pursuance of an obligation to his immediate landlord, or (ii) was carried out pursuant to an obligation to his immediate landlord being an obligation which did not relate to the specific improvement

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4 concerned but arose by reference to consent given to the carrying out of that improvement; and (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.

(3) For the purposes of subsection (2)(b) above, in relation to a notice which is referred by a tenant as mentioned in subsection (1) above, an improvement is a relevant improvement if either it was carried out during the tenancy to which the notice relates, or the following conditions are satisfied, namely-

(a) that it was carried out not more than twenty-one years before the date of service of the notice; and (b) that, at all times during the period beginning when the improvement was carried out and ending on the date of service of the notice, the dwelling- house has been let under an assured tenancy; and (c) that, on the coming to an end of an assured tenancy at any time during that period, the tenant (or, in the case of [NAME], at least one of them) did not quit.

(4) In this section "rent" does not include any service charge, within the meaning of section 18 of the Landlord and Tenant Act 1985, but, subject to that, includes any sums payable by the tenant to the landlord on account of the use of furniture, in respect of council tax or for any of the matters referred to in subsection (1) (a) of that section, whether or not those sums are separate from the sums payable for the occupation.

Inspection and the Property 14. The Tribunal inspected the property on 5th August 2024. It comprises a listed Grade II 3-storey Georgian farmhouse with rendered elevations beneath plain and interlocking clay tiles, approached via a shared lane off [ADDRESS].

15. The internal accommodation is listed by the Tenant in his Application as including a Sitting Room, Living Room, Dining Room, Kitchen, Utility, small Kitchen, Store, 4 Bedrooms, 3 Bathrooms and a Shower Room. The Tribunal noted a ground floor WC, a Dressing Room to the Master Bedroom and a fifth bedroom at second floor level.

16. The Landlord listed the accommodation as comprising 17 rooms including 2 kitchens at ground level, 4 bedrooms and 3 bathrooms at first floor level and 2 bedrooms and a shower room at second floor level.

17. Outside there are good sized gardens including a Garage and space for several vehicles to be parked.

18. The property is situated about 1 ½ miles southwest of the centre of Bridgewater. There is a good range of amenitites within the town.

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5 19. The property is heated from an LPG gas-fired boiler to radiators.

20. The Tribunal was directed by the parties to areas which are referred to as improvements by the Tenant and to areas asserted to be in disrepair.

21. The Tribunal noted various areas of dampness from either penetrating damp, rising damp or condensation, and some areas of black mould growth that is usually associated with condensation issues. A number of bathroom fittings are unusable, some having been disconnected by the Tenants.

22. The Tribunal noted the woodburner installed by the Landlord in the Sitting Room and was informed that a chimney liner has also been fitted. A similar woodburner and liner have been fitted in the Dining Room.

23. Throughout the property there are many storage boxes. It appeared to be the case that a number of rooms are not in daily use.

24. The Tribunal noted that the units had been removed from the main kitchen, and there was clearly a space on the floor where a kitchen island had been. That main kitchen is no longer in use. The Tenants rely on the smaller kitchen.

25. Outside the Tribunal was taken to where the drainage is said to overflow. It is unclear whether this is a cesspit or a septic tank. The chamber itself is within an outbuilding that does not form part of the tenancy. On the day of the inspection there was no overflow apparent.

26. The Energy Performance Rating is ‘E’ Submissions 27. The Tribunal was provided with a copy of the original tenancy document dated 30th May 2019. The tenancy was for 6 months at a rent of £1,600. At clause 2.7 of the Tenant’s obligations the agreement provides for the Tenant to be responsible for the reasonable costs of emptying or cleaning any septic tank or cesspit. The parties agree that white goods are not included in the letting.

28. The Landlord states that there is some double glazing, that carpets and curtains are provided, that the boiler was replaced in December 2020 when the chimneys were repointed and the wood burners installed with chimney liners.

29. The Landlord states that the property is an old farmhouse in good condition with some modernisation required.

30. The Landlord provided the Tribunal with details of properties said to be comparable for rental purposes, rents advertised ranged from £2,100 per month to £2,700 per month.

31. The Landlord states that when the Tenants first showed interest in the property they wanted to take the property on an ‘as seen’ basis with a view to decorating the property to their own tastes, and that for this reason a lower rent of £1,600

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6 per month was agreed, on the understanding that the Tenants would carry out some redecoration. The Landlord also states that the Tenants intended to refurbish parts of the property and that an allowance of £1,600 was agreed, to be spent with the Landlords’ suppliers towards the cost of refurbishing the bathrooms. The Landlord understood during negotiations that the Tenants might eventually wish to purchase the property.

32. The Landlord states that he gave permission for the kitchen units and some carpets to be removed for the Tenants to refurbish the kitchen to their own taste and to reveal some parquet floors.

33. The Landlord states that the Tenants have not used the gas-fired [NAME] and that because of this, parts of the [NAME] have corroded so that it is now unusable. He also asserts that the wood burners are not used so that the house has been unheated for much of the time which has contributed to damp and mould.

34. The Landlord included a letter from a [NAME] of the property which stated that when she lived there the kitchen units had new doors and there was an island unit, and a new sink.

35. The Landlord provided a letter from their letting agent to the Tenants date 25th May 2029 noting the rent agreed of £1,600 per month was on the basis that the Tenants were happy to take the property on ‘as seen’, to make their own improvements, that £1,600 plus VAT was available to spend on bathrooms and that the Tenants are responsible for servicing the [NAME], “should they wish to use it”.

36. The Tribunal was provided with a Rent Inspection Report dated 6th November 2022 carried out on behalf of the Landlord. This came with accompanying photographs and included a reference to the fittings in the rear kitchen having been removed and that some of the bathrooms were not being used as the Tenants stated that the bathrooms needed refurbishment.

37. The Tribunal was also supplied with photographs from May 2019 which formed part of the initial inventory. These photographs show the main kitchen units including the island unit.

38. The Landlord also provided a copy of a detailed survey report dated 12th September 2023 prepared by a Chartered Building Surveyor which in turn comments upon a report prepared for the Tenants by [NAME] S [NAME] dated January/February 2023 whose report was also provided to the Tribunal.

39. Mr [NAME] provided a Rent Appeal Statement on behalf of the Tenants in which he lists the property as including 3 Reception Rooms, a WC, Kitchen, Scullery, Store and Laundry all at ground level with 3 Bedrooms and 3 Bathrooms at first floor level and 2 Rooms with a Shower Room at second floor level.

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7 40. He states that the [NAME] has been disconnected by the Landlord and that the Tenants have painted the walls in most rooms, cleaned, oiled and sanded some Parquet flooring and assembled a “Temporary Scullery” following the Landlords removal of the main kitchen units.

41. The Tenant states that some windows are not operational, that double-glazing gas has dissipated, the water supply is erratic and that ventilation in most rooms is non-existent.

42. The Tenant provides a long list of disrepair which mainly focus on the poor state of bathrooms, the lack of kitchen units and general dampness.

43. The Tenant also provides a lengthy statement which includes assertions as to the behaviour of the Landlord, comments on the comparable properties provided by the Landlord, and 2 opinions of rent provided by [NAME] who state that if the house was in good condition a rent of £2,000-£2,200 per month could be achieved.

44. The Tenant lists what he considers to be repair issues with the property, repair/maintenance works carried out by the Landlord and repairs that the Tenants have made since taking occupation.

45. The Tenant comments on the Landlords case. That the property is not in good condition, that the Tenants had not agreed to refurbish bathrooms or kitchen at their own expense, saying that it would have been absurd to spend the sums required with no security of tenure, that they do report repair issues and that they have no interest in purchasing the property.

46. The Tenant refers to hardship because of health issues relating to his elderly parents.

47. The Tenant provides a letter from two local agents who have inspected the property having been informed that the property is owned by Mr [RESPONDENT] parents.

48. The Landlord includes statements from both these agents who say that they were initially contacted by Mr [NAME] to provide valuations on the basis that the property was owned by members of the [RESPONDENT] family. The Landlord asserts that the Tribunal should consider this deception when considering what weight should be placed on Mr [NAME] evidence.

49. Mr [NAME] also includes quotations in his name from a building material supplier for the cost of supply and fitting bathrooms and a kitchen at a total cost of more than £66,000. The Hearing 50. A hearing was held on 5th August 2024 at 1.30pm using the Tribunal Video Link Platform.

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8 51. Mr [APPELLANT] spoke on behalf of the Tenant and Mr [APPELLANT] spoke on behalf of the Landlord.

52. As a preliminary issue the Tribunal considered whether it should accept the papers provided on 1st August showing photographs of the property taken in July 2024 alongside photographs of the same features taken at the beginning of the tenancy in May 2019. No Case Management Application had been made with the photographs requesting that they be included.

53. When given the opportunity Mr [NAME] did not object to the papers being included. The Tribunal found them to provide an easier comparison between photographs already provided and, as none of these photographs were new, the papers were to be included in the Tribunal’s deliberations.

54. Mr [NAME] helpfully summarised his clients case stating that the comparables provided by the Landlord were the same ones as had been included when this issue was decided in July 2023, but that today’s Tribunal was in a better position to assess the rent having made an inspection, that there is little evidence of comparable properties and that given the state of repair the rent should be much lower than £2,000 per month.

55. Mr [NAME] emphasised that some alterations have been made by his client, including the provision of the small kitchen that is currently used.

56. Mr [NAME] emphasised that there is no written record of what was agreed between the parties except that the initial rent agreed was £200 per month below the asking rent to reflect the condition of the property, and that common sense suggests that it would have been ridiculous for the Tenants to agree to refurbish bathrooms and kitchen at their own cost with no security of tenure.

57. Mr [NAME] emphasised the repair issues affecting the property including inadequate water pressures, damp and mould throughout the house, disrepair to windows and issues with sewage disposal.

58. Mr [RESPONDENT] spoke on behalf of the Landlord and wished it to be noted that the Landlord was not seeking to evict the Tenant by increasing the rent. He stated that his client is a [COMPANY] and is entitled to seek an increase in rent.

59. Mr [APPELLANT] suggested that the Tenant had pressed the Landlord to be allowed to take a tenancy of the property as seen and in poor decorative order, although it was clarified by his client that the property was being advertised at that time as available in its present condition. His client confirmed that he considered the property to have been liveable and was originally advertised on the market at a rent of £1,800 per month.

60. Mr [RESPONDENT] restated that there was a factual dispute between Landlord and Tenant as to the proposed refurbishment of bathrooms and who had removed the kitchen units which left the property with only the small kitchen. He

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9 maintains that the works carried out by the Tenants so far had not added any value.

61. Mr [NAME] suggested that the property has been neglected by the Tenants and his client had wished to obtain possession to avoid further deterioration by neglect. He stated that major works are needed to put the property into good repair which cannot be done whilst the property is occupied. Consideration, Findings and Valuation

62. The Tribunal is required to determine the rent at which the subject property might reasonably be expected to be let in the open market by a [NAME] under an assured tenancy. The personal circumstances of the Parties are not relevant to this issue.

63. Such a letting would normally include carpets, curtains, cooker, fridge and washing machine. In a house of this size a dishwasher and freezer would also be reasonably expected.

64. In arriving at a rental figure, the Tribunal is to disregard any increase in value attributable to a relevant improvement carried out by the Tenant and any reduction in value attributable to a failure by the Tenant.

65. There are clearly disputes between the parties as to what was agreed between them at the start of the tenancy and, unwisely, there is no written confirmation on the terms agreed excepting for the initial letter from the Landlord’s Agent stating that a reduced rent was being accepted at the start of the lease in lieu of the Tenant undertaking some improvements. The Landlord was said to be an experienced and reputable Landlord, in which case the Tribunal would have expected any agreement to have been carefully recorded.

66. The facts remain that the Landlord accepted a rent of £1,600 per month at the start of the tenancy in 2019, and this was increased by a Tribunal on 7th July 2023 to £1,750 per month.

67. The property has now been inspected by members of the Tribunal who are both experienced Chartered Surveyors with many years inspecting properties of this age and type.

68. The Tribunal found the property to be an attractive listed building standing in good sized gardens with spacious accommodation including several bathrooms and two kitchens. The property is quietly situated within easy reach of the centre of the town.

69. The property is clearly in fairly poor condition with damp issues and accompanying mould, failing windows and generally dated internal fittings throughout. This was accepted by the Landlord at the hearing who stated that the property needs to be unoccupied to facilitate the required works.

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10 70. Several of the bathroom fittings are beyond use and the Tribunal was informed that there is very poor water pressure. The main kitchen has no internal fittings, and it cannot be established as to who removed the units and with what agreement.

71. Since taking occupation the Tenant has carried out some minor works to floors and stairs and has also carried out some redecoration. The Tribunal does not consider that these works have added any measurable value to the rental value.

72. The Tribunal does not consider that the Tenants are required to heat the property at any level in order to maintain its condition and do not consider that a low level of heating should qualify as a lack of repair or maintenance.

73. The tenancy agreement states that the Tenants may use the [NAME] if they so wished, although they should have it serviced at their expense. The Tribunal does not accept that by not using the [NAME] the Tenants have become responsible for its deterioration due to non-use.

74. It is not firmly established who removed or gave permission to remove the fittings from the main kitchen which leave the property as at today’s date with only a small kitchen.

Accordingly, the Tribunal is left to assess a rent as the property was seen at the date of the inspection.

75. Having carefully considered the representations from the parties and associated correspondence and using its own judgement and knowledge of rental values in Bridgewater and surrounding villages, the Tribunal decided that the market rent for the subject property, if let today in a condition that was usual for such an open market letting, would be £2,500 per month.

76. However, this full open market rent needs to be adjusted to reflect the standard of fittings, white goods provided and general condition.

77. Using its experience the Tribunal decided that the following adjustments should be made: Tenant’s provision of white goods £50 Small kitchen/ lack of main kitchen £200 Poor bathroom fittings £200 General condition and wants of repair £200

TOTAL per month £650

Determination 78. The Tribunal therefore decided that the rent at which the subject property might reasonably be expected to be let in the open market by a [NAME] under the terms of this assured tenancy was £1,850 per month.

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11 79. The Tenant made no representation that the starting date for the new rent specified in the Landlord’s notice would cause the Tenant undue financial hardship. 80. The Tribunal directed that the new rent of £1,850 per month should take effect from 30th May 2024 this being the date specified in the notice.

RIGHTS OF APPEAL

1. A person wishing to appeal this decision to the Upper Tribunal (Lands Chamber) must seek permission to do so by making written application to the First-tier Tribunal at the Regional office which has been dealing with the case. Where possible you should send your application for permission to appeal by email to [EMAIL] as this will enable the First-tier Tribunal Regional office to deal with it more efficiently.

2. The application must arrive at the Tribunal within 28 days after the Tribunal sends to the person making the application written reasons for the decision.

3. If the person wishing to appeal does not comply with the 28-day time limit, the person shall include with the application for permission to appeal a request for an extension of time and the reason for not complying with the 28-day time limit; the Tribunal will then decide whether to extend time or not to allow the application for permission to appeal to proceed.

4. The application for permission to appeal must identify the decision of the Tribunal to which it relates, state the grounds of appeal, and state the result the party making the application is seeking.