First-tier Tribunal Sets New Fair Rent for Property

OUTCOME: Dismissed

© CROWN COPYRIGHT 2013 FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : CAM/26UK/F77/2023/0054 Property : 221 [ADDRESS] [POSTCODE] Applicant : [redacted] Representative : None Respondent : [redacted] Representative : [RESPONDENT]. (Agent) Type of Application : S.70 Rent Act 1977 – Determination of a new fair rent Tribunal Members : Mr [NAME]. [NAME] Tribunal : First Tier Tribunal (Eastern) HMCTS Cambridge [POSTCODE] Date of Decision : 9 May 2024

REASONS FOR

DECISION Background 1 By an application dated 14 September 2023 the landlord applied to the Rent Officer for registration of a fair rent of £239.50 per week for the Property. The rent payable at the time of the application was £199.50 per week registered on 4 November 2021. 2 On 24 October 2023 the Rent Officer registered a fair rent of £253.50 per week with effect from 4 November 2023. By an email dated 4 November 2023 to the Rent Officer and then forwarded to the First Tier Tribunal, the tenant objected to the rent determined by the Rent Officer

2 and the matter was referred to the First Tier Tribunal Property Chamber for a fresh determination of the rent. Directions 3 Directions dated 16 November 2023 were issued for case progression. The landlord did not request a hearing. The tenant did not request a hearing. Both parties completed the standard Tribunal Reply Form giving background to the Property and the circumstances surrounding the letting. The Tribunal is grateful to both parties for their representations and has taken them into account in making its decision. Hearing 4 As neither party requested one and the case did not otherwise require a hearing, the application was decided on the papers alone. Inspection 5 There was no inspection owing to current Tribunal practice. Neither party specifically requested one. The Tribunal was referred to a recent leak to the main roof to which at the time of completion of the Form, no repair had been effected, according to the tenant. 6 From the two Forms submitted by the parties and from the existing entry in the Rent Register the Tribunal found the Property to be a small 3 bedroom mid terraced house from the late C19th. Accommodation was on 2 levels, ground and first but the loft had not been converted. 7 The house was an established residential street with many terraced houses of a similar age size, construction and condition. There appeared to be no off street parking at the Property but, there was an on street parking permit arrangement according to road signage. There were small private, front and rear gardens. 8 From Google Streetview of September 2020 the Property appears to be of traditional brick main walls and with a double pitched slated main roof covering. The windows to the front elevation appear to be the original double hung sash windows in timber. They do not appear as double glazed. 9 The Property was described in their Form by the tenant as having 1 bedroom and 2 reception rooms, with a kitchen. There was a bathroom/WC, though the floor in which it was located was unclear. The tenant marked down that the central heating had been provided by him. The tenant confirmed that there was no double glazing and that carpets curtains and white goods whilst present, had all been provided by him and not by the landlord.

3 10 The Property was described by the landlords agent in their Form as having 1 living room and 2 bedrooms with a kitchen and bathroom. By contrast to the tenant’s representations the landlords agent stated that the central heating was provided by the landlord. They also stated that there was double glazing, carpets and curtains and white goods again all marked down as from the landlord. The agent also referred to off street parking as being present but there being no on-street permit parking. 11 The Tribunal noted from the existing Register that the tenant had historically funded 50% of the cost of installation of central heating at the Property. It was also evident from the Register from the 2021 and from the earlier VOA 2023 review, that there was no double glazing. The 2020 Streetview image confirmed this at that date at least. 12 The Tribunal noted that the tenancy had been running from December 1976. In the Tribunal’s experience even if the letting had originally included white goods, carpets and curtains (though unusual from that period) such an original provision would by now be entirely worthless. The Tribunal preferred the evidence that the tenant had provided that they had provided these items. It also preferred its account of a minor roof leak to the main roof that had not been repaired at time of completion of their Reply Form. 13 The landlord’s agent asserted that there was no permit parking but, rather, some off road parking; and that windows were double glazed, even though the current Register and Google Streetview clearly showed neither was present at the Property. The representations on these points from the landlord’s agent, were unreliable in the Tribunal’s view. The Tribunal therefore preferred the tenants representations on carpets curtains, white goods, roof repairs, a of its contribution to central heating from the Register. The Tribunal also noted the “box room” nature of the 3rd bedroom of what is a small 3 bedroom mid terraced house. 14 The Tribunal took the view that the internal fittings to kitchen, bathroom and WC whilst functional, would from a tenancy of this age, by now be dated and basic. Law 11 When determining a fair rent the Committee, in accordance with the Rent Act 1977, section 70, had regard to all the circumstances including the age, location and state of repair of the property. It also disregarded the effect of (a) any relevant tenant's improvements and (b) the effect of any disrepair or other defect attributable to the tenant or any predecessor in title under the regulated tenancy, on the rental value of the property.

4 12 In [COMPANY] v Chairman of the [NAME] (1995) 28 HLR 107 and [NAME] v [NAME] [1999] QB 92 the Court of Appeal emphasized (a) 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 (b) 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). Decision 13 Where the condition of a property is poorer than that of comparable properties, so that the rents of those comparables are towards twice that proposed rent for the subject property, it calls into question whether or not those transactions are truly comparable. Would prospective tenants of modernized properties in good order consider taking a tenancy of an unmodernised house in poor repair and with only basic facilities or are they in entirely separate lettings markets? The problem for the Tribunal is that the only evidence of value levels available to us is of modernised properties. We therefore have to use this but make appropriate discounts for the differences, rather than ignore it and determine a rent entirely based on our own knowledge and experience, whenever we can. 14 On the evidence of the comparable lettings and our own general knowledge of market rent levels in Watford, the Tribunal would accept that the subject property if modernized and in good order would let on normal Assured Shorthold Tenancy (AST) terms, for £450 per week. This then, is the appropriate starting point from which to determine the rent of the property as it falls to be valued. 15 A normal open market letting would include carpets, curtains and “white goods”, but they are absent here. The Property has 3 bedrooms but the third is of limited size. It was assumed to have basic kitchen and bathroom fittings, no double glazing, partial central heating (of the landlord) and has one notable item of disrepair in the roof. To reflect these several factors the Tribunal deducts £150 per week, leaving the adjusted market rent at £300 per week. 16 The Tribunal also has to consider the element of scarcity and whether demand exceeded supply. The Tribunal found that there was no scarcity in the locality of Watford and therefore makes no further deduction from the adjusted market rent to reflect this element. The

5 fair rent to be registered would therefore be £300 per week but, this figure is subject to the Market Fair Rent Cap. 17 The Tribunal is also required to calculate the Maximum Fair Rent Cap (MFR). This is determined by a formula under statutory regulation, which whilst allowing for an element of inflation may serve to prevent excessive increases. The capped rent here would be £258 per week. 18 As this cap is below the fair rent determined by the Tribunal for the purposes of S.70, the new fair rent is capped at that figure of £258 per week and is effective from and including the date of determination, 9 May 2024. Whilst the landlord need not charge this figure, it must not charge a figure in excess of this. [NAME] 9 May 2024 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 either party is dissatisfied with this decision, they may apply for permission to appeal to the Upper Tribunal (Lands Chamber) on any point of law arising from this Decision. Prior to making such an appeal, an application must be made, in writing, to this Tribunal for permission to appeal. Any such application must be made within 28 days of the issue of this decision to the person making the application (regulation 52 (2) of The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rule 2013). 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).