First-tier Tribunal Sets Market Rent for Property Condition

OUTCOME: Allowed

Case Reference : CAM/00KA/MNR/2024/0600

HMCTS : Inspection & Face to [NAME] : 27 [ADDRESS] [POSTCODE]

Applicant (Tenant) : Mr [APPELLANT] [NAME]

Respondent (Landlord): Mr [APPELLANT] [RESPONDENT] of Application : Determination of a market rent under

Section 13 of the Housing Act 1988

Tribunal Members : Judge JR [NAME]

Date of Decision : 10th February 2025

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DECISION

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© CROWN COPYRIGHT 2025

DECISION

1. The Tribunal determined that a market rent for [NAME] in its present condition is £1,350.00 per calendar month to take effect from 10th February 2025.

[NAME]

2. [NAME] is a three-bedroom two storey semi-detached house probably built in the 1950s. The house has rendered elevations with a Tyrolean finish under a pitched concrete tile roof. There is a porch over the front door with a pitched roof of concrete tiles. The front and back door are upvc and there are upvc double glazed windows. The facias and soffits are upvc with upvc rainwater goods. There are gardens to the front and rear with a shared path between [NAME] and next-door giving access to the rear garden from the front. There is no off-street parking but street parking is unrestricted.

[NAME] comprises a hallway from which rise stairs to the first floor, a through living room with double door dividing the dining area from the sitting area and a kitchen on the ground floor and three bedrooms and a bathroom on the first floor.

Services

Space and water heating is by a gas fired central heating system. Additional heating was provided in the living room by a flame gas fire. [NAME] has mains electricity, gas, water, and drainage.

[NAME] is let unfurnished. Carpets and an integrated cooker are provided by the Landlord.

[NAME] is situated in a residential street on the edge of Luton town centre.

THE TENANCY

3. The Tenancy commenced as a contractual monthly periodic Assured Shorthold Tenancy on 1st June 2020 for a period of 6 months at a rent of £1,050.00 per calendar month (copy provided) and continued thereafter as a statutory tenancy on the same terms. Section 11 of the Landlord and Tenant Act 1985 applies in respect of the Landlord’s repairing obligations.

THE REFERRAL

4. The current rent is £1,350.00 per calendar month. By a notice in the prescribed form dated 8th May 2024 the Landlord proposed a new rent of £1,650.00 per calendar month from 1st July 2024. On 13th May 2024 the Tenant referred the notice proposing a new rent to the Tribunal. Directions were issued on 9th December 2024 in response to which the parties requested an oral hearing.

THE LAW

5. The relevant law is in section 14 of the Housing Act 1988 which is summarised below.

6. By virtue of section 14 (1) Housing Act 1988 the Tribunal is to determine a rent at which the dwelling-house concerned might reasonably be expected to be let in the open market by a willing landlord under an assured periodic 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 subject Tenancy

7. By virtue of section 14 (2) Housing Act 1988 in making a determination the Tribunal shall 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) Housing Act 1988) carried out by a tenant otherwise than as an obligation; and

(c) any reduction in the value of the dwelling-house due to the failure of the Tenant to comply with any terms of the subject Tenancy.

8. Nothing in section 14 affects the right of the landlord and the tenant under an assured tenancy to vary by agreement any term of the tenancy (including a term relating to rent).

9. By virtue of section 14 (7) Housing Act 1988 Unless otherwise agreed between the Landlord and the Tenant the new rent shall take effect from the new period specified in the notice, if it appears to the 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

10. The parties provided copies of a series of emails. The first exchange related to negotiations in 2022:

7th May 2022, Landlord to Tenant

Landlord states that he is increasing the rent due to inflation and higher interest rates from £1,050 to £1,150 per calendar month from 1st June 2022 although the current minimum rental value for the house is between £1,200 to £1,350.

7th May 2022, Tenant to Landlord

Tenant replies that he is happy to pay an increased rent once a driveway is made and the fencing in the back garden is erected which he says the Landlord agreed to do 2 years ago.

8th May 2022, Landlord to Tenant

Landlord states that the house was let without any conditions and despite another prospective tenant who offered £1,200 per calendar month because of a family connection. The Landlord said he intended to fix a fence.

5th November 2022, Tenant to Landlord

Tenant agrees to pay rent increase to £1,100 from 1st June 2022.

11. The second email exchange related to alleged damage to [NAME] and breach of the Tenancy Agreement:

29 December 2024 Landlord to Tenant

Landlord stated that at an inspection of [NAME] on 21st December 2024 he had seen damage caused by the Tenant which he alleged was beyond normal wear and tear which included:

• Crayon markings, drawings, different paint colours, or wallpaper not approved by the landlord.

• Holes in the walls or plasterboard.

• Gouged or chipped hardwood flooring.

• Heavily damaged or ruined wallpaper.

• Broken windows.

• Doors ripped off the hinges.

• Missing fixtures.

27th January 2025, Landlord to Tenant

The Landlord stated he was concerned that [NAME] was being occupied by more individuals than stipulated in the Tenancy Agreement, and that the Tenant was subletting and causing overcrowding and that this was resulting in damage to [NAME].

29th January 2025, Tenant to Landlord

The Tenant replied to say only his wife and children occupy [NAME] and that it is not being sublet or overcrowded. The Tenant also refers to the account into which he pays the rent.

29th January 2025, Landlord to Tenant

The Landlord stated that he disputed the Tenant’s contention that [NAME] is in poor condition and said that [NAME] was fully inspected and deemed to be in good condition by the surveyor at the time of letting and the Landlord had consistently acted quickly and responsibly to maintain [NAME] and address any issues raised. The Landlord submitted that [NAME] is not being properly maintained, ventilated, or cleaned, and heated appropriately by the Tenant which is contributing to ongoing issues. He added that an external walls insulation survey appointment was being planned.

The Landlord said that the Tenant was subletting [NAME] to his brother and his family who was living with the Tenant and that the brother paid the rent. The Landlord also referred to other matters concerning the accounts into which the rent was paid and post for the Landlord that was addressed to [NAME].

1st February 2025 onwards

Exchange between Landlord and Tenant referring to matters mentioned in previous emails above.

Tenant’s Written Representations

12. Regarding the condition of [NAME] the Tenant stated that he had been residing at [NAME] since 1st June 2020. Since then, he had asked the landlord to replace the front garden with a driveway and to erect appropriate rear garden fencing, but he has not provided them. The rent has increased but no repairs have been undertaken undertake.

13. With reference to the properties submitted by the Landlord as being comparable the Tenant said that they all have driveways and gardens with fences.

14. The Tenant provided copies of details of properties to rent from the internet which he said were comparable to [NAME]. All are three-bedroom houses with parking and all appeared to be in good condition externally and internally with floor coverings and some white goods provided:

1. [ADDRESS], 1970s mid terrace £1,550.00 per calendar month

2. [ADDRESS], 1950s mid terrace £1,550.00 per calendar month

3. [ADDRESS], 1930s mid-terrace £1,500.00 per calendar month

4. [ADDRESS], modern semi-detached £1,500.00 per calendar month

5. [ADDRESS],1930s mid terrace £1,450.00 per calendar month

6. [ADDRESS], 1970s semidetached £1,600.00 per calendar month

7. [ADDRESS] modern mid terrace £1,500.00 per calendar month

Fauna Fields modern end of terrace £1,500.00 per calendar month

15. The Tenant included a notice requiring possession let on an assured shorthold tenancy under section 21 Housing Act 1988 in his submission.

Landlord’s Written Representations

16. In written representations the Landlord said that he had kept [NAME] in excellent condition. [NAME] is in a very popular area which commanded high rents being close to the hospital, motorway, and amenities. He said he had only increased the rent after consulting local letting agents and had always asked £100.00 to £200.00 less that rents for comparable properties.

17. The Landlord provided a copy of a valuation dated 4th January 2025 carried out by Taylors which stated that a rent of £1,600 to £1,700 could be achieved for [NAME]. This included a report which listed the following three-bedroom semi-detached houses (except two) that were said to be comparable to [NAME], all of which had parking and were probably constructed in the 1930s except one, all appeared to be in good condition externally and internally, with floor coverings and some white goods provided:

1. [ADDRESS], mid terrace £1,700.00 per calendar month

2. [ADDRESS], end of terrace £1,700.00 per calendar month

3. [ADDRESS], detached bungalow £1,650.00 per calendar month

4. [ADDRESS], 1950s £1,650.00 per calendar month

5. [ADDRESS], end of terrace with ensuite £1,650.00 per calendar month

6. [ADDRESS] £1,650.00 per calendar month

7. [ADDRESS] , new build £1,650.00 per calendar month

8. [ADDRESS] 1930s with garage £1,650.00 per calendar month

9. [ADDRESS] £1,600.00 per calendar month

18. A valuation letter dated 30th December 2024 from [NAME] was also provided which stated that [NAME] would be worth between £1,650 - £1,750 per calendar month. If off road parking was created this would increase the rent by £50 per calendar month. It was added that [NAME] would rent reasonable quickly at the rent suggested and attract good quality professional tenants given its location.

CONDITION

19. The Tribunal inspected [NAME] on 10th February 2025 accompanied by the Tenant. At the inspection the Tribunal only viewed [NAME] and no oral evidence was taken.

20. Externally, the road outside the house is very congested with vehicles. [NAME] is in generally fair condition. The walls could do with redecoration. Access to the rear garden is either via a gated side passage or concrete steps with no railings from the kitchen. Access from the dining room patio doors to the garden is not practicable as the distance between the threshold and the ground level is 600 to 7oo mm and there are no steps. The rear garden is unfenced. There is a considerable build up of vegetation in the roof valley at the front of the house.

21. Internally, the Tribunal found that the kitchenette had fitted units although was rather basic and dated. There was a hood over the hob which did not work. It appears that it is a filter rather than an extractor type as it did not vent externally. Only three burners were found to work on the hob and the ignition no longer operated. The oven was electric but did not work. The area around the boiler was water damaged due to a leak from the bathroom. The bathroom was fully tiled with a modern suite. There were two shower units one at each end of the bath. The one was electric and the other was operated via the taps. The seal at this end of the bath has failed as the water from the shower ran down into the kitchen below. There was no extractor in the bathroom.

22. The dining area of the living room has a sliding patio door the glass to which is cracked. The Tribunal is not concerned with the cause of the damage but was concerned that it was apparent from the crack that the door was not fitted with safety glass. The patio door could not be used for access as there was a substantial drop to the garden below. The Tribunal considered these to be Category 1 hazards under the Housing Health and Safety Rating System.

23. The dining room had a large American style fridge freezer, too big for the kitchen, provided by the Landlord. Except for the bathroom and the third bedroom, the rooms could do with re-decoration. Under the Tenancy the Tenant may carry out decoration with the Landlord’s consent.

24. There was a reference in the emails to damp and the need to ventilate and heat [NAME] adequately. The upvc windows were dated and did not have trickle vents, however, each of the bedrooms had an air vent in the ceiling into the roof void and these would alleviate damp problems provided they are kept clear and not covered by roof insulation.

25. The laminate floor and stair carpet were in good to fair condition. Other carpets were fair but now looking rather tired.

HEARING

26. A video hearing was held attended by both the Tenant and the Landlord and Mrs [APPELLANT].

27. The Tribunal went through its notes on the condition of [NAME] and the evidence adduced by the parties of rental values for properties which they submitted were comparable.

28. The Tenant highlighted the lack of drive and enclosed garden.

29. The parties referred to damp and mould that had occurred in the past particularly in the third bedroom which the Tenant said he had decorated. The Tribunal commented that the cause of such damp was likely to be condensation as the bedroom is north facing with two external walls and so susceptible to condensation.

30. The Landlord said that [NAME] was in a very popular part of Luton, being within the catchment area for highly rated schools and convenient for transport and near the hospital and other places of employment.

31. The Landlord also said that not every house in the streets around has space for a parking area and following discussions with the Council it was found that there was insufficient room at [NAME]. It was added that the Tenant had accepted that the garden was unfenced when he took [NAME].

32. The Landlord and Mrs [RESPONDENT] said that they tried to respond to any request for disrepair and did not seek to increase the rent for the sake of doing so but in response to inflation, increased mortgage payments etc.

33. The Tribunal responded to these points and its response is set out in the Determination below.

DETERMINATION

34. The Tribunal only has jurisdiction to determine a market rent. The Tribunal has no jurisdiction regarding the notice requiring possession.

35. The Tribunal determines a market rent for a [NAME] by reference to rental values in the area generally and to the rental values for comparable properties in the locality, in particular. The Tribunal does not take into account the present rent or the period of time for which that rent has been charged, nor does it take into account the percentage increase which the proposed rent represents to the existing rent. Therefore, the first exchange of emails provided relating to the rent negotiations in 2022 were not relevant to the Tribunal’s determination.

36. The Tribunal cannot take into account the personal circumstances of either a tenant or landlord. Therefore, the Tribunal cannot consider either the affordability of the rent for a particular tenant nor whether the rent reflects a rise in interest rates and its effect on an individual landlord’s mortgage repayments.

37. The Tribunal assesses a rent based upon the condition of [NAME] at the time of the determination. It cannot consider the period for which a [NAME] might have been in disrepair prior to work being carried out by the Landlord. Equally it cannot consider work that is said to be intended or scheduled to take place in the future nor that it has not been possible to carry out work or replace appliances because the Landlord has not been able to obtain access. The Landlord is expected to obtain the necessary access under the express or implied terms of the tenancy agreement.

38. The Tribunal disregards damage caused by wear and tear by the Tenant including damage to wall paper, paintwork, plaster, and flooring and the tidiness of the garden. The Tribunal also disregards any alleged breaches of the tenancy agreement such as subletting. To that extent the Tribunal disregarded the state of the decorations and the alleged breaches referred to in the second exchange of emails provided. However, regarding adequate ventilation it is for the Landlord to ensure that the air vents in the bedrooms are unobstructed in the void as the only other ventilation is by opening the windows which is not always practical in winter.

39. The Tribunal considered the details and rental values of the properties which the parties submitted as being comparable. It did not appear that the agents had viewed [NAME] when making their assessment of the likely rent. The Tribunal found [ADDRESS] as a bungalow and [ADDRESS] as a new build to be of a different type of house to [NAME].

40. The Tribunal found that the rental range of mature (1930s and 1950s) three-bedroom two storey houses similar to [NAME] was between £1,500.00 and £1,700.00 per calendar month. A distinguishing feature of the properties identified by the parties was their size, having an area of 100 metres or more compared with [NAME] which had an area of 80 metres. One fifth or more smaller. They also had larger more modern kitchens and more modern bathrooms and were in good condition. These properties also had off road parking and it was apparent some had enclosed gardens. These are features that prospective tenants look for in addition to school catchment areas and proximity to work.

41. Therefore, taking into account the overall size of [NAME] and its lack of off-street parking, if it were in the same condition as the houses referred to by the parties, the Tribunal determined that a rent in the region of £1,550 might be achieved. However, [NAME] is not in the same condition as the houses referred to by the parties. The kitchen is small, basic, and dated, the extractor, the hob and oven needs replacing and the fridge freezer is in the dining room, the area around the boiler is damaged by the leak from the bathroom, there is a significant risk posed by the lack of railing to the garden steps from the kitchen, the lack of safety glass in the patio door together with a drop from the patio door to the garden making the door unusable, and the garden is unenclosed. To take account of this the Tribunal made a deduction of £200.00 per calendar month. This figure cannot be a simple arithmetical calculation and is not based specifically upon capital cost but is the Tribunal’s estimate of the amount by which the rent would have to be reduced to attract a tenant.

42. Pursuant to secton 14(7) it appeared to the Tribunal that it would cause the Tenant undue hardship for the new rent to commence on the date of specified in the Notice. Therefore, the Tribunal determined that it should take effect from the date of this Decision.

43. The Tribunal determines a market rent of £1,350.00 per calendar month to take effect from 10th February 2025.

Judge JR Morris

Caution: The Tribunal inspected [NAME] for the purposes of reaching this decision. The inspection was not a structural survey and any comments about the condition of [NAME] in this statement must not be relied upon as a guide to the structural or other condition of [NAME].

APPENDIX - RIGHTS OF APPEAL

1. If a party wishes to appeal the 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.

2. 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.

3. 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.

4. The application for permission to appeal must identify the decision of the Tribunal to which it relates (i.e., give the date, [NAME] and the case number), state the grounds of appeal, and state the result the party making the application is seeking.