Tenant Secures Fair Rent Adjustment in First-tier Tribunal Case

OUTCOME: Allowed

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Case Reference

: LON/00AU/F77/2024/0046.

Property : 100A [ADDRESS] [POSTCODE].

Tenant

: Mr. [APPELLANT]. and Mrs. [APPELLANT]. [NAME].

Landlord : [COMPANY].

Date of Objection : 3 December 2023.

Type of Application : Section 70, Rent Act 1977

Tribunal

: Valuer Chair, [NAME].

Date of Summary Reasons

: 3 April 2024

_______________________________________________

DECISION

The sum of £208.00 per week will be registered as the fair rent with effect from 3 April 2024 being the date the Tribunal made the Decision. ____________________________________

© CROWN COPYRIGHT 2023

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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REASONS FOR THE DECISION

Background 1. Following an objection from the Tenant to the determination of a fair rent by the Rent Officer, the Tribunal has determined the rent under the provisions of the Rent Act 1977.

Inspection 2. Tribunal did not inspect the property but considered this case on the basis of the papers provided by the parties.

Evidence 3. The Tribunal has considered the written submissions provided by the Tenant in that the rent registered by the Rent Officer was too high. No representations were received from the respondent landlord.

The Application

4. By an RR1 dated 12 October 2023 the landlord sought an increase in the rent. At the time of the application the registered rent was £156.00 per week inclusive of any service provided. The landlord sought an increase to £7,927.00 per annum (£152.45 per week) in place of the existing rent of £7,322.12 per annum (£140.81 per week). It is important to note that the registered rent at the time of the application was £156.00 per week, and it appears that the landlord, which is a social landlord, has not charged the tenant the registered rent, and was charging a lower amount of £140.81 per week (a difference of £15.29 per week). It may be that the landlord will not charge the tenant the full amount of the rent determined by this tribunal, but that is not a matter for this tribunal.

5. On 22 November 2023 the Rent Officer Service registered a new rent at £207.00 per week with effect from the same date. At that time the Rent Officer considered the uncapped rent to be £385.00 per week.

6. By an email dated 3 December 2023, the tenant objected to the rent set and the matter was referred to this tribunal.

7. The tribunal issued directions on 8 February 2024 that requested the parties provide details of any comparable properties that they wished the tribunal to consider, and any other details of the property that should be taken into consideration. No representations were received from either party, except those made by the tenant as part of the objection.

9. This considers that the rents in this locality have risen since the last registration tribunal and that a market rent for a fully refurbished, modernised property with white goods, carpets and curtains would attract a rent of £440.00 per week.

3 10. However, the subject property is not in the condition, nor has it the same amenities as an open market letting and the tribunal must therefore make adjustments to reflect those differences.

11. First of all the tribunal adjusted the market rent by 5% to reflect the terms of the tenancy, and then a further 15% to reflect the lack of carpet, curtains, white goods and lack of modernisation.

12. The tribunal then had to consider the deduction of ‘scarcity’ as required under the Rent Act 1977, and in this instance deducted 20% to reflect the fact that there is an imbalance in the supply and demand for property in the wide area of Greater London. The calculation of the rent achieved is set out below.

Determination and Valuation

13.

per week Market Rent

£ 435.00

Less

Terms of tenancy and lack of recent Modernisation approx. 15%

(£ 65.25)

£ 369.75

Less Scarcity

approx. 20%

(£ 73.95)

Adjusted market rent: £ 295.80

13. The Tribunal determines that the fully adjusted market rent for the subject property would be £295.80 per week. However, the tribunal must then carry out the calculation using the Maximum Fair Rent Order, a copy of that valuation is attached to the decision. The application of the MFR produced a rental of £208.00 per week.

14. The tribunal is therefore required to register whichever of the two valuations produces the lowest rent. In this case the MFR produces the lowest rent of £252.00 per week. This is therefore the rent that has been registered with effect from 2 April 2024.

Decision 14. The tribunal registers the Fair Rent for the subject property at £208.00 per week with effect from 2 April 2024. This figure is inclusive of service charge.

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Chairman: [NAME]: 2 April 2024.

FR27 First-tier Tribunal – Property Chamber File Ref No. HS/LON/00AU/F77/2024/0046

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 100A [ADDRESS],, [POSTCODE]

[NAME]

Landlord [COMPANY]

Tenant Mr [APPELLANT] & Mrs [APPELLANT]

1. The fair rent is £208.00 Per week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 3 April 2024

3. The amount for services is N/a Per

negligible/not applicable

4. The amount for fuel charges (excluding heating and lighting of common parts) not counting for rent allowance is

N/a Per

negligible/not applicable

5. The rent is not to be registered as variable.

6. The capping provisions of the Rent Acts (Maximum Fair Rent) Order 1999 apply (please see calculation overleaf).

7. Details (other than rent) where different from Rent Register entry

None

8. For information only:

The fair rent to be registered is the maximum fair rent as prescribed by the Rent Acts (Maximum Fair Rent) Order 1999. The rent that would otherwise have been registered was £ 283.25 per week.

[NAME]- [NAME] of decision 3 April 2024

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 381.0

PREVIOUS RPI FIGURE Y 296.9

X 381.0 Minus Y 296.9 = (A) 84.1

(A) 84.1 Divided by Y 296.9 = (B) 0.2832

First application for re-registration since 1 February 1999 YES/NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.3332

Last registered rent* £156.00 Multiplied by (C) = £207.97 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £208.00

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £208.00 Per week

Explanatory Note

1. The calculation of the maximum fair rent, in accordance with the formula contained in the Order, is set out above.

2. In summary, the formula provides for the maximum fair rent to be calculated by:

(a) increasing the previous registered rent by the percentage change in the retail price index (the RPI) since the date of that earlier registration and

(b) adding a further 7.5% (if the present application was the first since 1 February 1999) or 5% (if it is a second or subsequent application since that date).

A 7.5% increase is represented, in the calculation set out above, by the addition of 1.075 to (B) and an increase of 5% is represented by the addition of 1.05 to (B).

The result is rounded up to the nearest 50 pence.

3. For the purposes of the calculation the latest RPI figure (x) is that published in the calendar month immediately before the month in which the Tribunal’s fair rent determination was made.

4. The process differs where the tenancy agreement contains a variable service charge and the rent is to be registered as variable under section 71(4) of the Rent Act 1977. In such a case the variable service charge is removed before applying the formula. When the amount determined by the application of the formula is ascertained the service charge is then added to that sum in order to produce the maximum fair rent.