First-tier Tribunal Sets New Market Rent After Tenant Improvements

OUTCOME: Allowed

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FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case Reference BIR/OOCN/MNR/2025/0727

[ADDRESS] [POSTCODE]

Tenant

[NAME] Tenant’s Representative

Landlord

[APPELLANT]

Landlord’s [ADDRESS] [POSTCODE]

Landlord’s Representative

Date of Application 11th May 2025

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

Tribunal Members [NAME] (Chairman) [NAME] of Decision 12th March 2026

Rent Determined

£1,495.00 per calendar month Date the new rent takes effect 29th May 2025

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REASONS FOR THE DECISION

Background

1. On 3rd April 2025, the Landlord served a notice under Section 13(2) of the Housing Act 1988 which proposed a new rent of £1,540.00 per calendar month(pcm) in place of the existing rent of £1,400.00 pcm to take effect from 29th May 2025.

2. On 11th May 2025, under Section 13(4)(a) of the Housing Act 1988, the Tenant referred the Landlord’s notice proposing a new rent to the Tribunal for determination of a market rent.

3. A copy of the Tenancy Agreement was not submitted to the Tribunal but based on the Application Form the Tribunal understands that the assured tenancy commenced on 25th December 2016. The initial term of the tenancy is not known. The rental period is assumed to be monthly.

Allocation of Repairs between Landlord and Tenant.

4. As per section 11 of the Landlord and Tenant Act 1985.

Services Charges or furniture provided by Landlord (other than carpets and curtain and white goods specified below) and the costs relating to the same.

5. None

Liability for Council Tax

6. The Tenant is responsible for the payment of Council Tax in respect of the Property. The rent determined is exclusive of Council Tax.

Any other terms of the tenancy taken into consideration in determining the rent.

7. None

Inspection/Hearing

8. Neither party requested an inspection or an oral hearing. The Tribunal has considered this case on the basis of the papers provided by the parties and its own knowledge and specialist expertise.

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The Property

9. The Tribunal has not carried out an inspection of the Property.

10. Based on the information provided by the parties the Property is understood to comprise a detached house offering the following accommodation:

Ground Floor - Hall, two living rooms and kitchen. Cloakroom with W.C and wash basin.

First Floor – Landing, four bedrooms and bathroom.

Outside: Gardens and garage.

The Property benefits from central heating and double glazing.

The Property is situated in an established suburban residential area of Birmingham.

Evidence

11. Both the Tenant and the Landlord returned the Tribunal’s Reply forms.

The Tenant.

12. The Tenant made the following comments:

a) The Tenant confirmed that they had provided the white goods, carpets and curtains. The Tenant had installed external security lighting and cameras, a ring doorbell camera and an alarm system together with a security post in the gateway as there have been burglaries at the property.

b) The Tenant submitted that she had installed the ground floor W.C. with wash hand basin. She has also renovated the wooden flooring to the hallway, created a new kitchen area and converted the old kitchen to a utility room. In addition to this she has renovated the bathroom.

c) There was an ongoing issue with the heating system which appears to have a leak.

d) The Tenant submitted photographs which showed that the exterior of the property was in need of some ongoing repairs and maintenance.

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13. In terms of rental evidence, the Tenant had provided brief details as follows:

a) A detached house in [ADDRESS], Birmingham with five bedrooms, a fully fitted kitchen and bathroom offered at a rental of £1,800.00 pcm. b) A detached house in [ADDRESS], Birmingham with four bedrooms, one reception room and two bathrooms at a rental of £1,500.00 pcm. c) A semi-detached house in [ADDRESS], Moseley with three bedrooms at a rental of £1,590.00 pcm. d) In addition, further evidence was provided of properties on ‘Rightmove’ where rentals had been ‘reduced’. However, no rental figures were given and the Tribunal therefore determined that they were of no practical assistance to it except that they supported the Tenant’s submission that rental prices were falling in the area.

The Landlord

14. The Landlord submits that although the Tenant states she has replaced kitchen units, bathroom fittings and radiators, it does not follow that these items were missing from the property at the commencement of the tenancy.

15. The Landlord submitted details of ten properties comprising of three- and four- bedroom detached houses from which it had calculated a rental value on a sq metre basis and extrapolated this to the subject property.

16. Based on its calculations the Landlord submitted that the rental value on a sq metre basis of the properties it had looked at (with assistance from third parties) ranged from £12.42 per sq metre to £16.23 per sq metre.

17. Based on this the Landlord submitted that the rental value of the property should be £2,490.00 pcm from which the sum of £600.00 should be deducted (this being the amount the First-tier Tribunal had deducted some twelve months earlier at a previous appeal) to reflect the condition of the property and the Tenant’s improvements. The Landlord provided photographs of the comparable properties for the Tribunal’s information.

Determination and Valuation

18. The Tribunal is not persuaded that the Landlord’s methodology is entirely correct. There are numerous matters which can impact on the value of a property such as location, condition and quality of fittings although it does agree with the Landlord that such an exercise in attributing a rental value to floor area can be useful in determining a general trend in value.

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19. Relying on its own expert, general knowledge of rental values in the area, and the comparables provided by the Landlord, the Tribunal considers that the market rental of the subject Property modernised and in good order would be in the order of £2,000.00 pcm. This is the rent we would expect the property to let for in the open market if it was in the same general condition as the comparable properties including having white goods and curtains provided by the landlord.

20. From this level of rent, the Tribunal has made adjustments in relation to the following:

a) Issues with the condition of the property which reduce its value evident from the photographs provided by the Tenant including problems with the heating system. b) The carpets, curtains and white goods provided by the Tenant. c) Improvements and fittings provided by the Tenant and for which they should not pay: installation of alarm system and security cameras, upgrading of kitchen and bathroom and renovation of hallway flooring. d) Tenant’s liability to decorate.

The full valuation is shown below:

Starting Rent

£2,000.00 pcm

Less a) Items given under a) above £125.00 b) Items given under b) above £100.00 c) Items given under c) above £180.00 d) Items given under d) above £100.00 £505.00 pcm

Market rent

£1,495.00 pcm

Undue hardship

21. The new rent takes effect from the date specified in the Landlord’s Notice of Increase unless that would cause undue hardship to the Tenant. In cases of undue hardship, the Tribunal has a discretion to fix a later starting date up to the date a Tribunal makes its determination.

22. The Tenant has not asked the Tribunal to fix a later starting date in this case.

Decision

23. Therefore, the Tribunal determines the market rent at £1,495.00 per calendar month with effect from 29th May 2025.

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APPEAL PROVISIONS

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 statement of reasons (regulation 52 (2) of The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013) stating the grounds upon which it is intended to rely in the appeal.