Tribunal Adjusts Rent for Property with Unique Conditions

OUTCOME: Allowed

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Case Reference

: LON/00BF/MNR/2023/0477

Property : 14 [ADDRESS], [POSTCODE]

Tenants : [RESPONDENT] and [RESPONDENT] [NAME]

Landlord : [RESPONDENT] [NAME] and [RESPONDENT] [NAME] of Objection : 27 November 2023

Type of [NAME] : Determination of a Market Rent sections 13 & 14 of the Housing Act 1988

Tribunal

: Judge Bernadette MacQueen

Alison Flynn MA, MRICS

Date of Decision : 30 May 2024

Date of Summary Reasons

: 3 June 2024

Date of Full Reasons : 29 July 2024 _______________________________________________

DECISION

The Tribunal determines a rent of £1,520 per calendar month with effect from 30 May 2024. ____________________________________ FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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© CROWN COPYRIGHT 2024

REASONS

Background

1. On 30 October 2023 the Landlord served a notice under Section 13(2) of the Housing Act 1988 which proposed a new rent of £1,950 per calendar month in place of the existing rent of £1,300 per calendar month to take effect from 5 December 2023

2. On 27 November 2023 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. The Tenant’s referral was received by the Tribunal on 27 November 2023.

3. The Tribunal directed that parties complete a pro forma supplying details of the accommodation on a room-by room basis, the features of the Property (central heating, white goods, double glazing, carpets and curtains) and other property attributes and any further comments that they may wish the Tribunal to take into consideration. This could include any repairs and improvements that had been made, and any comments on the condition of the Property.

4. The Tribunal confirmed that they would make their decision based on the written representations from both parties unless either party requested a hearing.

5. The parties returned the pro-forma forms to the Tribunal and a hearing and inspection was requested.

Hearing and Inspection

6. The Tribunal held a short hearing on 30 May 2024 at 10 [ADDRESS], [POSTCODE], where it heard representations from the Tenants and [NAME] on behalf of the Landlords. The Tribunal also carried out an inspection of the Property on the same day.

The Property

7. The Property was a first and second floor flat situated above a parade of shops. It comprised three rooms, a bathroom, kitchen and living room. The Property had double glazing and central heating, both provided by the Landlord, and also had a rear garden. The only access to the Property was via metal steps that led from the garden to the first floor.

Evidence

3 8. The Tribunal considered the written submissions provided by the Tenants and the Landlords and the oral submissions given by both parties at the hearing. The Tenants and the Landlords had both completed the Tribunal’s pro -forma reply form. In addition, the Landlord sent further evidence to the Tribunal by email dated 20 May 2024, which attached eleven documents. Some of these documents had previously been sent to the Tribunal namely a letter dated 19 January 2024, a rental valuation report dated 15 December 2023, and an inspection report dated 29 November 2023. The email also included the following documents which had not previously been sent to the Tribunal namely a rental valuation report dated 17 May 2024, an inspection report dated 17 May 2024, and a certificate of incorporation of change of name for [COMPANY], a one page printout from Gov.UK showing the overview page for [COMPANY], and a change of registered office address to the Property and filleted unaudited financial statements dated 30 September 2022. Additionally, there was a repair invoice dated 3 May 2024.

9. At the hearing, the Landlord sought permission to include these additional documents. The Tenants did not object to this additional evidence being before the Tribunal.

10. The Tribunal considered the overriding objective as set out in rule 3 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, and in particular the need to deal with cases fairly and justly and the need to ensure, so far as practicable, that the parties were able to participate fully in the proceedings. The additional evidence had been sent to the Tenants in advance of the hearing and they had had time to consider it. There was therefore no prejudice to the Tenants by the Tribunal allowing the additional evidence to be included and so the Tribunal allowed this additional evidence.

Tenants’ Representations

11. In addition to the written evidence submitted by the Tenants, the Tenants told the Tribunal that the new rent was too high and that their neighbours, who rented an identical property, were paying less as they had been paying £1,300 per month and were now paying £1,500 per month.

12. The Tenants also confirmed that they had completed work to the Property, such as erecting a new fence and a partial roof-terrace. The arrangement they had with the Landlord was that the Landlord supplied the materials and [RESPONDENT] [NAME] completed the work.

Landlord’s Representations

13. The Landlord told the Tribunal that the reason for the increase in rent was because of the economic climate. The valuations they had obtained from local estate agents gave a rent of £2,000 per calendar month, and

4 so the Landlord believed that the rent that was being charged for the Property was below market value.

14. Additionally, the Landlord confirmed that they allowed the Tenants to have full access to the garden, which was not part of the tenancy agreement.

The Law

15. By virtue of section 14 (1) Housing Act 1988 the Tribunal is to determine a rent at which the dwelling-house concerned might reasonably be expected to be let in the open market by a willing landlord under an assured periodic tenancy- (a) 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 rent) are the same as those of the subject tenancy

16. By virtue of section 14 (2) Housing Act 1988 in [NAME] a determination the Tribunal shall disregard – (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 (as defined by section 14(3) Housing Act 1988) carried out by a tenant otherwise than as an obligation; and (c) any reduction in the value of the dwelling-house due to the failure of the tenant to comply with any terms of the subject tenancy.

Determination and Valuation

17. Having considered the comparable evidence provided by the Landlord and using the Tribunal’s own expert knowledge of rental values in the area, the Tribunal considered that the open market rent for the Property in good tenantable condition would be in the region of £1,600 per calendar month.

18. From this level of rent the Tribunal made a 5% adjustment to reflect the fact that the only entrance to the Property was via an external metal staircase to first floor level. The metal staircase had a step that had been repaired and required care. The Tribunal found that this was not very satisfactory as the only means to access the property. The Tribunal also made an adjustment for the mould that was visible in the bathroom and the lack of an extractor fan in the bathroom.

19. The full valuation is shown below:

Market Rent

£1,600

5 per calendar month

Less 5% deduction for:

Condition of Staircase to Property Mould in bathroom and lack of extractor fan

Total Deduction: 5% (£80)

The Tribunal determined a rent of £1,520 per calendar month.

Hardship

20. Section 14(7) of the Housing Act 1988 gives the Tribunal discretion to backdate the commencement of the new rent to the date of its decision rather than the date specified in the notice to increase rent where this would cause undue hardship.

21. The Tribunal considered the financial information that the Landlords had provided regarding [COMPANY] which was said by the Landlords to be the Tenants’ company. The Tenants stated that the money shown did not belong to them and that if the rent was backdated to 5 December 2023 this would cause them hardship.

22. The Tribunal accepted the evidence of the Tenants and, in particular, that they had a young family and would suffer hardship if the rent was backdated to 5 December 2023. The Tribunal therefore found that the rent of £1,520 per calendar month would take effect from the date of this determination namely 30 May 2024.

Decision

23. The Tribunal determined that the rent at which the Property might reasonably be expected to be let in the open market by a willing Landlord under an assured tenancy was £1,600 per calendar month. A 5% deduction for the reasons set out above was made, meaning that the Tribunal determined the rent at £1,520 per calendar month.

24. The Tribunal directed that the new rent of £1,520 per calendar month take effect on 30 May 2024 as the Tribunal was satisfied that a starting date of that specified in the Landlord’s notice would cause the Tenants undue hardship.

Judge Bernadette MacQueen Date: 29 July 2024

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APPEAL PROVISIONS

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 a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written [NAME] for permission must be made to the First- tier Tribunal at the Regional Office which has been dealing with the case. The [NAME] should be made on Form RP PTA available at https://www.gov.uk/government/publications/form-rp-pta-[NAME]-for- permission-to-appeal-a-decision-to-the-upper-tribunal-lands-chamber The [NAME] for permission to appeal must arrive at the Regional Office within 28 days after the Tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28-day time limit, such [NAME] 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 [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] 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 [NAME] the [NAME] is seeking. Please note that if you are seeking permission to appeal against a decision made by the Tribunal under the Rent Act 1977, the Housing Act 1988 or the Local Government and Housing Act 1989, this can only be on a point of law. If the Tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).