Tenant Wins Rent Adjustment Due to Property Disrepair

OUTCOME: Allowed

MR22 First-tier Tribunal – [NAME] No. CHI/00LC/MNR/2019/0073

Notice of the Tribunal Decision and Register of Rents under Assured Periodic Tenancies (Section 14 Determination)

Housing Act 1988 Section 14

Address of Premises The Tribunal members were 447B [ADDRESS], [POSTCODE]

[NAME] [NAME] [NAME] [NAME]

[RESPONDENT] [NAME] c/o [COMPANY], 211-213 [ADDRESS], [POSTCODE]

[APPELLANT] [NAME]

1. The rent is: £ 540.00 Per Calendar Month (excluding water rates and council tax but including any amounts in paras 3)

2. The date the decision takes effect is: 01 January 2020

3. The amount included for services is not applicable n/a Per n/a

4. Date assured tenancy commenced 19 October 2018

5. Length of the term or rental period 6 months – then monthly

6. Allocation of liability for repairs As per agreement

7. Furniture provided by [RESPONDENT] or superior [RESPONDENT]

8. Description of premises Self-contained first floor flat comprising; living room, kitchen, 1 bedroom, bathroom/WC, central heating.

[NAME] [NAME] of Decision 5 February 2020

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Case Reference : CHI/00LC/MNR/2019/0073

Property : 447B [ADDRESS] [POSTCODE]

Applicant: [redacted] : None

Respondent: [redacted]

: [COMPANY] of Application : Housing Act 1988 – Section 13

Appeal of Notice of Rent increase

Tribunal Members : [NAME] [NAME]

[NAME] [NAME] (Lay Member)

Date of Inspection : 5th February 2020

Date of Decision : 5th February 2020

_______________________________________________ DECISION ____________________________________

© CROWN COPYRIGHT 2020

FIRST - TIER TRIBUNAL [NAME] (RESIDENTIAL PROPERTY)

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Background

1. On 26th December 2019 the [APPELLANT] of the above property referred to the Tribunal a notice of increase of rent served by the [RESPONDENT] under section 13 of the Housing Act 1988.

2. The [RESPONDENT]'s notice, which proposed a rent of £623.00 per month with effect from 1st January 2020, is dated 13th November 2019.

3. The tenancy commenced on 19th October 2018 until 30th November 2019 at a rent of £573.00 per month and is a statutory periodic tenancy.

4. The Tribunal were provided with a copy of the tenancy agreement with the application.

Inspection

5. The Tribunal inspected the property on 5th February 2020 in the presence of the [APPELLANT] and Mr [NAME], the [RESPONDENT]’s maintenance man and it appeared to be in poor condition for its age and character. Grass was seen growing out of some of the gutters at the front of the property. Paint was peeling and generally the property was in poor decorative condition both externally and internally. The render to some parts of the fire walls at roof level had broken. The communal hallway was dirty and there was an old fitted carpet here. Within the flat there were several old damp stains at ceiling level. There were also several cracks, in particular to junction of the walls & ceiling in the kitchen.

6. It is a Self-contained first floor flat in what appears to be a converted terraced house in a convenient position close to local facilities and the town.

7. The accommodation comprises landing, living room, kitchen, 1 bedroom and a bathroom/WC. There is gas fired central heating. The front windows are uPVC double glazed units whilst the remainder are single glazed wood casement windows. All main services are connected.

8. There were no [APPELLANT]’s improvements.

9. The [APPELLANT] has provided a washing machine and fridge in the kitchen.

Statements & Evidence

10. The Tribunal issued Standard Directions on 6th January. These gave 10 days for the [RESPONDENT] to make a formal statement setting out the [RESPONDENT]’s case and include comparable evidence. Within 20 days of the Directions the [APPELLANT] was required to state what she felt the rent should be, and include comparable evidence, and list any improvements she has made to the property.

11. The Tribunal received written representations from both parties.

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12. Neither party requested a hearing and so the Tribunal has restricted itself to the written submissions when considering the rental value.

The [RESPONDENT]’s Case

13. The [RESPONDENT] gave evidence of four properties which were considered similar to the subject property. Rents ranged from £650 to £700 pcm.

The [APPELLANT]’s Case

14. The [APPELLANT] gave four comparables. She also stated the average rent in the ME7 postcode is £563 according to the [NAME] website.

15. She felt that some of the [RESPONDENT]’s comparables were not at all similar to her flat and should be discounted.

16. In her submissions Ms [RESPONDENT] listed several items of disrepair which the [RESPONDENT] had attended to, sometimes unsuccessfully or to a poor standard.

17. Although the rear part of the back garden was supposed to be included in her tenancy there was no access to it.

The Law

18. In accordance with the terms of section 14 Housing Act 1988 (The Act) the Tribunal proceeded to determine the rent at which it considered that the subject property might reasonably be expected to be let on the open market by a willing [RESPONDENT] under an assured tenancy exclusive of water rates and/or council tax.

19. In so doing the Tribunal, as required by section 14(1), ignored the effect on the rental value of the property of any relevant [APPELLANT]'s improvements as defined in section 14(2) of that Act. The Tribunal cites the relevant section below: 20. “14.—(1) Where, under subsection (4)(a) of section 13 above, a [APPELLANT] refers to a [NAME] a notice under subsection (2) of that section, the [NAME] shall determine the rent at which, subject to subsections (2) and (4) below, the [NAME] consider that the dwelling- house concerned might reasonably be expected to be let in the open market by a willing [RESPONDENT] 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.

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(2) In making a determination under this section, there shall be disregarded— (e) ………………… (f) 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 [APPELLANT],………….”

21. On 1st July 2013 the [NAME] became part of the First Tier Tribunal ([NAME]) and all references in this decision refer to this Tribunal.

Valuation

22. In the first instance and in accordance with Section 14 of the Act (see above), the Tribunal determined what rent the [RESPONDENT] could reasonably be expected to obtain for the property in the open market if it were let today on an Assured Tenancy in the condition that is considered usual for such an open market letting exclusive of water rates and council tax.

23. The letting market has grown substantially in recent years and there is now ample evidence of open market rents for Assured Shorthold Tenancies. In the competitive market that now exists, such properties need to be in first class structural and decorative order and be equipped with all amenities such as full modern central heating, double glazing and other energy-saving facilities along with white goods, carpets and curtains to ensure the property attains its full rental income potential. Where such items and facilities are missing the Tribunal has noted that the rent is found to be correspondingly lower.

24. The tribunal took note of the comparables submitted by the parties and their comments made. From this it concluded that an appropriate open market rent for the property let in first class condition as outlined above on a modern open market letting of an [NAME] where the [APPELLANT] has no liability to carry out repairs or decorations and the [RESPONDENT] supplies white goods, carpets and curtains would be £600.00 per month.

25. However, the Tribunal noted at its inspection (and from the representations made) the actual property is not in the condition considered usual for a modern letting at a market rent, and it was necessary to adjust that hypothetical rent of £600 per month to allow for the differences between the condition considered usual for such a letting and the condition of the actual property.

26. The Tribunal takes into account several items to arrive at the rent that it decides is the market rent.

27. In a tenancy of this nature the [APPELLANT] is not liable for internal decorations, but should keep the flat in a [APPELLANT] like manner.

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28. Central Heating/Double Glazing/Insulation – It is considered essential that all homes have central heating of some form and that the property should also go some way to meet the modern requirements for energy conservation. Failure to have these facilities will result in the property being difficult to maintain an even temperature to comply with modern living standards. The normal form of central heating will usually be from a ‘wet radiator’ type of system with a central heating source such as a gas or oil fired boiler. Where this is not the case the Tribunal has, from its own knowledge and experience, noted that rents achieved are less. Where these facilities are not provided the rent is considerably less than would otherwise be the case.

29. In this instance the only windows that are of a good insulating standard are those to the living room. The remainder are old, single glazed units. Consequently, there is a substantial heat loss here.

30. Disrepair - The [RESPONDENT] has a duty to keep the property in repair in accordance with Sections 11 to 16 of the [RESPONDENT] & [APPELLANT] 1985. This is set out in Schedule 2 of the Tenancy Agreement along with other responsibilities.

31. Consequently, if a property is not kept in good condition it will soon start to deteriorate. As mentioned above, where the property is kept in good decorative repair and condition it is likely to achieve the full rental value when it is let. Correspondingly, if it not maintained it will soon begin to look unattractive and this will have an adverse effect on its rental value. The Tribunal will take these factors into account when assessing the rent.

32. In this case the exterior appears to have been neglected and is in need of external repairs and redecoration. Failure to regularly maintain the building has resulted in water leaking into the property and reducing the living standards to the [APPELLANT].

33. Whilst there is no laid down formula for arriving at deductions to be made towards these items, the Tribunal has used its own knowledge and experience and decided to make a deduction of 10% from the market rent for these factors, and by deducting this from the open market rental value the Tribunal arrives at its Decision.

The Decision

34. The Tribunal’s decision is the rent at which the property might reasonably be expected to be let on the open market is £540.00 per month.

35. This rent will take effect from 1st January 2020 being the date specified by the [RESPONDENT] in the notice of increase.

[NAME] [NAME] 5th February 2020

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Appeals

1. A person wishing to appeal this decision to the Upper Tribunal (Lands Chamber), which may be on a point of law only, must seek permission to do so by making written application to the First-tier Tribunal at the Regional office which has been dealing with the case.

2. The application must arrive at the Tribunal within 28 days after the Tribunal sends to the person making the application written reasons for the decision.

3. If the person wishing to appeal does not comply with the 28-day time limit, the person shall include with the application for permission to appeal a request for an extension of time and the reason for not complying with the 28- day time limit; the Tribunal will then decide whether to extend time or not to allow the application for permission to appeal to proceed.

4. The application for permission to appeal must identify the decision of the Tribunal to which it relates, state the grounds of appeal, and state the result the party making the application is seeking.