Rent Adjustment Due to Property Condition - First-tier Tribunal Decision

OUTCOME: Allowed

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Case Reference : BIR/00CW/MNR/2023/0272

Property : 111 [ADDRESS] [POSTCODE] Tenants : [NAME] & [NAME] Landlords : [NAME] [NAME] Landlords’ agent : [NAME] of Application : An application under section 13(4) of the Housing Act 1988 referring a notice proposing a new rent under an Assured Periodic Tenancy, to the Tribunal. Tribunal Members : V Ward BSc Hons FRICS – Regional Surveyor

Judge David R Salter

Date of Decision : 23 August 2024

_____________________________________________________ DECISION ________________________________________________

FIRST – TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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Introduction

1. By an application received on 22 December 2023, the Tenants of the Property, referred various Notice of increases of rent served by the Landlords to the Tribunal. The original Notices served were as follows:

a) Notice dated 16 November 2023. Increase Date 23 December 2023 Amount £800.00 per calendar month.

b) Notice dated 28 November 2023. Increase Date 23 December 2023 Amount £800.00 per calendar month.

The Tribunal considered these notices to be invalid and issued strike out Directions accordingly.

2. The Landlords then served a further Notice:

c) Notice dated 23 December 2023. Increase Date 23 January 2024 Amount £800.00 per calendar month.

The Tribunal substituted this Notice for the ones that were referred t0 as part of the original appeal and sought to determine the market rent for the Property, unless either party objected. Neither party did.

2. The tenancy agreement provided was for a term of one year from 8 August 2011 although the Tenants have been in occupation since 2007. The Tenants stated that the rent payable at the time of the referral was £438.48 per calendar month.

3. Following receipt of the parties’ submissions, the Tribunal decided to carry out an inspection of the Property on 1 July 2024 and held a hearing by way of video platform later the same day.

4. Participants in the inspection were the Tenants, whilst the Landlords were represented by [NAME]. Members of the Tenants’ family were also present but played no part in the proceedings. The same individuals participated in the hearing. In addition, the Landlords were represented by [NAME] [NAME] of Legal Studio.

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Inspection & Hearing

5. At the inspection, the Tribunal found the Property to comprise a mid-terraced house with the following accommodation:

Ground floor: two reception rooms, a small rear lobby giving access to the back door, kitchen, and bathroom;

First floor: three bedrooms;

Outside: long rear garden.

There is a small forecourt fronting the Property. The Property benefits from gas fired central heating.

6. The Property is located amongst properties of varying age, type and class, approximately one mile to the northeast of the centre of Wednesbury.

Condition

7. At the time of the time of the Tribunal’s inspection, the Property was in a very poor state of repair. Plaster had been removed from many walls and floor coverings were minimal. Kitchen and bathroom fitments were in poor condition and barely usable. The Tenants advised that hot water was available although not all electrical sockets were working, including the cooker outlet. They also reported rodent infestation.

Submissions of the Parties

8. The initial submissions of the parties in writing and at the hearing, were as follows.

The Tenants

9. The Tenants stated that an increase in rental to £800.00 pcm is unfair given that the house is in disrepair and there are no plug sockets working except in the kitchen and one in the lounge. Continuing, the Tenants accepted that over the years, some works had been carried out by the Landlord but, generally, these were carried out, in their opinion, to a poor standard. However, numerous repairs were outstanding and there were constant problems with the electrics. The Tenants said that they had reported the condition of the Property to the Local Authority, after which the Landlord issued a Rent Increase Notice. They cancelled a proposed visit of an Environmental Health officer in December 2023 due to their daughter’s illness. Section 21 Notices have been served by the Landlord.

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The Landlord

10. In response, the Landlords said that during the currency of the tenancy, works have been carried out at the Property, but, over the last few years the relationship with the Tenants has become difficult with aggressive with uncooperative behaviour on the part of the Tenants and failure to allow access to the Property. In the latter respect, the Tenants have frequently refused access to the Property for inspections and have refused access for any works to be carried out despite their complaints about the condition of the Property.

11. Tradesman and contractors have gone to the Property at times agreed and the Tenants have either cancelled arrangements late on or, more often, have not been in attendance to give access to the Property.

12. The aggressive behaviour of the Tenants has caused significant stress to the Landlords.

13. The Landlords presented a timeline of events from September to December 2023 which set out their recent efforts to get contractors into the Property and which, in their opinion, were deliberately thwarted by the Tenants.

14. In support of the proposed rental, the Landlords produced extracts from the Rightmove Property portal which showed rentals for a variety of properties in the vicinity at rentals between £600.00 and £1,100.00 pcm. In their opinion, these comparables endorsed their proposed rental of £800.oo pcm.

Post-hearing – further submissions on the condition of the Property

Condition

15. The salient issue for the Tribunal in this matter is to what extent the condition of the Property can be attributed to the actions of the Tenants, directly or indirectly, through their own actions and by refusing access for contractors to undertake works, and/or to Landlords’ neglect. Following the hearing, the Tribunal issued further Directions which required the parties to address the following matters and to provide the information so specified:

a) Any information as to the condition of the Property at the time of the original letting in 2007, with particular reference to carpets, curtains furniture, white goods i.e., cooker, fridge and washing machine. b) Chronological dealings between the parties in relation to access for maintenance and repairs particularly with any written evidence e.g., letters/emails. c) Details of any works undertaken by landlords.

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d) Details of any works undertaken by Tenants. e) Details of any involvement with the Local Authority during the course of the tenancy, by either party.

16. Responses to these Directions were as follows:

The Tenants

17. The Tenants stated that when they took occupation of the Property, it was unfurnished with no white goods or curtains. There was a carpet in one of the reception rooms which they replaced, subsequently, with laminate flooring. Approximately ten to twelve years ago, the Landlords installed a plastic bath, sink and toilet. The bathroom roof outside was repaired because it was leaking. The bathroom was plastered by the Landlords and re-tiled by the Tenants although the Landlords had provided the materials.

18. The Tenants alleged that around 2013 the Landlords replaced the boiler using an untrained person which led to a gas leak. There were also issues over the production of a Gas Safety certificate. Five to six years ago, the Landlords replaced some kitchen fitments and at some point the kitchen was re-wired. There were recurring problems with the electrics at the Property.

The Landlords

19. In their submission, the Landlords stated that the Property was originally let unfurnished without any white goods in 2007. The Property was in good condition with wallpaper on all walls and was carpeted or had alternative floor coverings throughout. Prior to the current letting, the Property was let to Mr [NAME] sister who left the Property in good condition with all the relevant flooring, wallcovering and doors in place. No issues were raised by the Landlords with the departing Tenant on the cessation of this tenancy indicating it was left in good order.

20. The condition of the Property has deteriorated under the occupation of the current Tenants who have removed wallcoverings, floor coverings and doors. They have also conducted their tenancy and occupation with a general lack of reasonable care and attention, which has led to issues such as rats being attracted to the Property.

21. The Property was/has been occupied by 2 adults and 5 plus children (some of whom have subsequently become adults), and two dogs.

22. The general maintenance of the Property has been considerably difficult over the last few years with the behaviour of the Tenants, who have claimed they want

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works done but have been unreasonable in refusing to grant access to the appropriate trades people.

23. The following works have been carried out by the Landlords:

a) New boiler installed. b) Bathroom roof repairs. c) Bathroom fully fitted (except for tiles which were supplied by Landlords and fitted by the Tenants). d) Veranda roof was replaced due leakage. e) Roof sheeting removed due to conflicting reports from two Corgi registered workman on ventilation requirements for the installed boiler. Rather than challenge the mixed advice, the Landlords removed the roof sheets. f) Kitchen sink and unit and taps replaced. g) Additional electrics plugs in kitchen. h) Updated electric consumer unit. i) Fence panel provided to Tenants to slot in. Access issues prevented the Landlords from repairing the fence. j) General maintenance repairs as requested by Tenants as and when access was provided. k) All works completed for any electrical or gas maintenance were undertaken by professional tradesmen with the appropriate professional registrations in place despite unsubstantiated claims from the Tenants to the contrary.

24. The Local Authority arranged for a visit to the Property on 19 December 2023 and advised [COUNSEL] (the authorised representative of the Landlords), as well as the Tenants on 14 December 2023, of the need for access. The Local Authority representative subsequently advised the Landlords that the Tenants cancelled on 18 December 2023 and no subsequent dates had been agreed.

25. The cancellation of dates for workman or any other representatives is a recurring pattern. Whilst the Local Authority acknowledged that the Landlords’ representative was having challenges with access to the Property this has been left with the Landlords to resolve as the Local Authority has not wanted to engage in the resolution of the ongoing issues.

26. Access was granted on 8 July 2024 to [NAME] and [NAME] [NAME] to enter the Property and points to be addressed were noted. The Tenants were asked to confirm dates when they could temporarily vacate the Property for works to be completed, specifically electrics and also to allow investigation of rodent issues.

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27. The Landlords offered to put the Tenants in a hotel during this time so that the works could be completed with unhindered access. The Tenants were asked to consider and come back by 15 July 2024 so that arrangements could be made. However, this proposal foundered as the Tenants could not find alternate arrangements for the dogs.

28. The Landlords also provided a timeline of attempts to gain access from November 2022 to October 2023 and also from January 2023 when they sought to arrange accommodation for the Tenants.

The Law

29. In accordance with the terms of section 14 of the Housing Act 1988, the Tribunal must determine the rent at which it considers that the subject Property might reasonably be expected to let on the open market by a willing landlord under an assured tenancy.

30. Relevant sections of the Housing Act 1988 are as follows:

14Determination of rent by tribunal (1)Where, under subsection (4)(a) of section 13 …, a tenant refers to the appropriate tribunal a notice under subsection (2) of that section, the appropriate tribunal shall determine the rent at which, subject to subsections (2) and (4) …, the appropriate tribunal consider that the dwelling-house concerned might reasonably be expected to be let in the open market by a willing landlord 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 otherwise than in pursuance of an obligation to his immediate landlord, or

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(ii)was carried out pursuant to an obligation to his immediate landlord being an obligation which did not relate to the specific improvement 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)………

Determination

31. Initially, the Tribunal determined what rent the Landlord could reasonably be expected to obtain for the Property if it were let today in a condition usual for such lettings. It did this by using its own general knowledge of the market rent levels in the Wolverhampton area and by considering the evidence provided by the Landlords.

32. If recently refurbished and modernised, the Tribunal concluded that a likely market rental for the Property in such condition would be approximately £900.00 pcm.

33. However, as indicated above, the Tribunal has to take into account the condition of the Property and to determine to what extent responsibility lies for it with the parties. In this respect, the Tribunal considers that on, the balance of probabilities, the Landlords and their agents e.g. contractors were prevented in recent years from gaining access to the Property for the purposes of inspection and carrying out necessary works respectively. The Tribunal also notes that the Tenants cancelled a proposed inspection by the Environmental Health officer, and failed, thereafter, to make a new appointment.

34. Again, from the evidence adduced, the Tribunal considers it likely that the Tenants for whatever reason removed wall coverings, such floor covering and some doors and as such were at least partially responsible for the degradation of fitments and of the Property generally.

35. It follows that the Tribunal must consider what rental the Property would achieve if the Landlords had been able to carry out routine and regular maintenance. In doing so, it must also ignore any impact on the condition of the Property caused by the Tenants’ occupation. Clearly, such rental would not be at the market rent specified in paragraph 32 above (£900.oo pcm) as the Property has been let to the Tenants for 17 years. To achieve a rent comparable to that market rent, significant modernisation would be required. Hence, the Tribunal finds, using its own knowledge and experience, that the condition of the Property and the absence of such modernisation requires a downward adjustment of that market rent by £250.00 pcm.

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36. Accordingly, the rent determined by the Tribunal for the purposes of Section 14 is £650.00 per calendar month with effect from 23 January 2024.

37. In making this determination, the Tribunal had regard to the evidence and submissions of the parties, the relevant law and their own knowledge and experience as an expert Tribunal but not any special or secret knowledge.

Section 21 Notices

38. Section 21 Notices not the concern of the Tribunal and, therefore, are not material to its determination.

Appeal

39. 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 (Rule 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.