Tribunal Adjusts Rent to Account for Tenant Improvements

OUTCOME: Allowed

MR22 First-tier Tribunal – [RESPONDENT] Chamber File Ref No. BIR/00CU/MNR/2024/0008

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 [ADDRESS], [POSTCODE]

[NAME] Mr [RESPONDENT]. [RESPONDENT] Mr [RESPONDENT]. [RESPONDENT]

Landlord [RESPONDENT] [RESPONDENT], March Studios, Peills Yard, Bromley, Kent, [POSTCODE]

Tenant [APPELLANT]

1. The rent is: £700.00 Per Month (excluding water rates and council tax but including any amounts in paras 3)

2. The date the decision takes effect is: 01 March 2024

3. The amount included for services is not applicable N/A Per N/A

4. Date assured tenancy commenced 30.08.1997

5. Length of the term or rental period Monthly

6. Allocation of liability for repairs s.11 Landlord & Tenant Act 1985

7. Furniture provided by landlord or superior landlord None

8. Description of premises Ground floor two bedroom flat in converted house

Chairman

[NAME] B.Sc. (Est. Man.) FRICS Date of Decision 20 May 2024

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Case Reference : BIR/00CU/MNR/2024/0008

[RESPONDENT]

: [ADDRESS], [POSTCODE]

Applicant: [redacted]

Respondent: [redacted] : Appeal against a Notice proposing a new rent under an

Assured Periodic Tenancy under section 13(4) of the Housing

Act 1988

Tribunal Members : I.[NAME]. [NAME] B.Sc.(Est.Man.) [NAME]

[NAME] and Venue of : N/A. Paper determination. Hearing

Date of Decision : 20 May 2024

____________________________________________________________

REASONS FOR DECISION

© CROWN COPYRIGHT 2024

FIRST - TIER TRIBUNAL [RESPONDENT] CHAMBER ([RESPONDENT])

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1 The rent is determined at £700.00 (Seven Hundred Pounds) per calendar month with effect from 1 March 2024.

REASONS

Introduction

2 The tenant, [APPELLANT], has held a tenancy of the subject [RESPONDENT] since 30 August 1997 and remains a statutory periodic assured shorthold tenant.

3 On 28 December 2023 the landlord served notice of increase under section 13(2) of The Housing Act 1988 proposing a rent increase from £500.00 per month to £800.00 per month from 1 March 2024. The rent did not include Council Tax, water charges or service charges.

4 On 11 January 2024 the tenant applied to the First-tier Tribunal ([RESPONDENT] Chamber) to determine the rent.

5 The Tribunal issued Directions on 16 January 2024 and after receipt of submissions the rent was determined at £700.00 per month by paper decision on 20 May 2024, based on information provided to the Tribunal by the parties.

6 On 4 June 2024 the Tribunal received a request from the landlord for Reasons which are set out below.

The Law

7 Section 14 of The Housing Act 1988 ('the Act') states:

'(1) Where, under subsection (4)(a) of section 13 above, a tenant refers to a [NAME] a notice under subsection (2) of that section, the committee shall determine the rent at which, subject to subsections (2) and (4) below, the committee 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;...'

'(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 the

immediate landlord ...

8 The jurisdiction of the [NAME] was transferred to the First-tier Tribunal ([RESPONDENT] Chamber) on 1 July 2013.

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Facts Found

9 The Tribunal did not inspect the [RESPONDENT] and reached its Decision based on the parties' submissions and views of the front elevation on Google Streetview.

10 The [RESPONDENT] is a double fronted Victorian house in a street of terraced and semi-detached houses near Darlaston's [NAME] in the Black Country. It is about 4 miles south east of Wolverhampton city centre.

11 The house is of two storey brick construction with rendered front elevation. It has been converted to two flats and the subject [RESPONDENT] is the ground floor self-contained unit with a living room, kitchen, two bedrooms and bathroom. It has double glazing and gas-fired central heating. The back garden is shared by the two tenants.

12 Neither party requested a Hearing.

Submissions

13 The Applicant's Submission

Miss [APPELLANT] said the rent had previously been agreed at £500 per month in 2022 but was concerned by the landlord's proposed figure of £800 per month which represented a 60% increase in two years. She listed all the improvements she had made to the [RESPONDENT] over the last 27 years.

14 The Respondent's Submission

RMB Lettings' ('RMB') submission confirmed details of the accommodation and that the central heating and double glazing were included. They also said there was off-street parking.

15 RMB bought the [RESPONDENT] in 2022. Since purchase, they have screeded the kitchen floor, replaced two extractor fans, repaired the toilet and a leaking roof. Their case was that Miss [APPELLANT] was paying a concessionary rent prior to their purchase as it had been owned by a family friend and that since purchase, they had compromised at £500 per month as a gesture to maintaining a good landlord and tenant relationship. They provided photographs and summary details of 14 two bedroom flats to let in the area printed from Rightmove, summarised below:

Address

Asking Rent per month £

[ADDRESS], Wednesbury

900.[ADDRESS], Wednesbury

900.[ADDRESS], Wednesbury

900.[ADDRESS], Wednesbury

895.[ADDRESS], Wednesbury

875.00

Wards Keep, Darlaston

850.[ADDRESS], Wednesbury

750.[ADDRESS]., Wednesbury 895.[ADDRESS]., Walsall

1,095.00

Little Station St., Walsall

785.00

Providence St., Darlaston

800.[ADDRESS]., Wednesbury

825.00

Wolverhampton St., Darlaston

650.00

Russell St., Willenhall

825.00

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16 Based on this evidence and advice from a letting agent, RMB considered the rental value to be £800 per month.

Decision

17 From the photographs supplied, the interior of the flat had been well maintained and decorated by Miss [APPELLANT] during the 27 years of her tenancy. In that time she had landscaped the garden, fitted new kitchen and bathroom suites, fitted new tiling, a shower, new internal doors and ironmongery, all of which were tenant's improvements to be disregarded from the rental value under section 14(2)(b) of the Act.

18 The landlord accepted that the tenant had carried out improvements but drew attention to the asking rents of two bedroom flats to let in the area, some of which were in older [RESPONDENT] and some more modern.

19 Based on its own general knowledge and professional expertise, the Tribunal accepted that rents had increased substantially in recent years and while not commenting on the rate of increase since 2022 which is not strictly relevant to the market rent today, found that the full market rental value at 1 March 2024 would have been £800 per month. However, the Tribunal deducted £100 per month to reflect the value of the tenant's improvements to leave a rent on the statutory basis of £700 per month.

20 In summary, bearing in mind the location, condition of the [RESPONDENT] and general levels of asking rents in the area, the Tribunal considered the rent based on the definition in section 14 of the Housing Act 1988 to have been £700.00 (Seven Hundred Pounds) per calendar month at the effective date of the Notice, 1 March 2024.

[NAME] B.Sc.(Est.Man.) FRICS

Chairman

Appeal

In accordance with section 11 of the Tribunals, Courts and Enforcement Act 2007 and rule 21 of the Tribunal Procedure (Upper Tribunal) ([NAME]) Rules 2010, the [NAME] may make further application for permission to appeal to the Upper Tribunal ([NAME]) on a point of law only. Such application must be made in writing and received by the Upper Tribunal ([NAME]) no later than 28 days after the date on which the First-tier Tribunal sent notice of this refusal to the party applying for permission to appeal. Where possible, you should send your further application for permission to appeal by email to [EMAIL], as this will enable the Upper Tribunal ([NAME]) to deal with it more efficiently.

Alternatively, the Upper Tribunal ([NAME]) may be contacted at: 5th [ADDRESS] [POSTCODE] (tel: [PHONE]).