Tribunal Determines Fair Market Rent for Assured Tenancy

OUTCOME: Allowed

MR22 First-tier Tribunal – Property Chamber File Ref No. CHI/00HB/MNR/2023/0045

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], St. Werburghs, Bristol, [POSTCODE]

[NAME] Mr [RESPONDENT] Mr [RESPONDENT]

[NAME] PO Box 2070, Preston, Lancashire, [POSTCODE]

Tenant Mr [APPELLANT]

1. The rent is: £ 206.25 Per Week (excluding water rates and council tax but including any amounts in paras 3)

2. The date the decision takes effect is: 03 April 2023

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

4. Date assured tenancy commenced 14 May 2018

5. Length of the term or rental period Weekly periodic

6. Allocation of liability for repairs Landlord

7. Furniture provided by landlord or superior landlord None

8. Description of premises Mid-terraced house comprising kitchen and reception room at ground level and two bedrooms and a bathroom at first floor. Pavement frontage. Small rear garden. No allocated parking.

[NAME] of Decision 26 April 2023

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case reference : CHI/00HB/MNR/2023/0045

Property : 9 [ADDRESS], [POSTCODE]

Applicant Tenant : Mr [APPELLANT]

Respondent Landlord : [NAME] of application : Determination of a Market Rent

Sections 13 & 14 Housing Act 1988

Tribunal member(s) : [NAME]

[NAME]

Mr [NAME] of decision : 26 April 2023

DECISION

© CROWN COPYRIGHT

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Decision of the Tribunal

On 26 April 2023 the Tribunal determined a Market Rent of £206.25 per week to take effect from 3 April 2023.

Background

1. By way of an application received by the Tribunal on 9 March 2023, the Applicant tenant of [ADDRESS], St. Werburghs, Bristol, [POSTCODE] (“the property”), referred a Notice of Increase in Rent (“the Notice”) by the Respondent landlord of the property under Section 13 of the Housing Act 1988 (“the Act”) to the Tribunal.

2. The Notice, dated 14 February 2023, proposed a new rent of £111.58 per week, in lieu of the passing rent of £104.28 per week, to take effect from 3 April 2023.

3. The tenant occupies the property under an Assured Shorthold Periodic Tenancy which commenced on 14 May 2018. A copy of the tenancy agreement was provided.

4. On 29 March 2023, the Tribunal issued Directions advising the parties that it considered the matter suitable for determination on papers unless either party objected, in writing, within 7 days. The parties were also advised that no inspection would be undertaken. No objections were received.

5. The Directions required the landlord and tenant to submit their completed statements to the Tribunal by 12 April 2023 and 26 April 2023 respectively, with copies to be sent to the other party. Both parties complied with such directions.

6. Having reviewed the application, the Tribunal concluded that the matter was capable of being determined fairly, justly and efficiently on the papers, consistent with the overriding objective of the Tribunal.

7. These reasons address in summary form the key issues raised by the parties. They do not recite each and every point referred to in submissions. The Tribunal concentrates on those issues which, in its view, go to the heart of the application.

Law 8. In accordance with the terms of Section 14 of the Act, the Tribunal is required to determine the rent at which it considers the subject property might reasonably be expected to let on the open market, by a willing landlord, under an assured tenancy, on the same terms as the actual tenancy.

9. In so doing, and in accordance with the Act, the Tribunal ignores any increase in value attributable to tenants’ improvements and any decrease in value due to the tenants’ failure to comply with any terms of the

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tenancy.

The Property

10. In accord with current Tribunal policy, the Tribunal did not inspect the property, instead relying on the parties’ submissions and viewing the property via online portals.

11. The property is a mid-terraced house constructed circa 1890 – 1918, with pavement frontage. The property is located in a mixed residential and commercial area, close to local amenities and within easy reach of the M32 motorway.

12. The accommodation comprises a reception room and kitchen at ground level, and two bedrooms and a bathroom at first floor level. The property is assumed to have a small area of outside space at the rear. No private parking or garaging is included but unallocated street parking is available.

13. The property has central heating and partial double glazing, both provided by the landlord.

14. White goods are provided by the tenant.

15. Carpets, curtains and furniture are provided by the tenant.

16. No service charges or charges for utilities are included in the rent.

Submissions – Tenant – (summarised)

17. The tenant argued that, as a social housing provider, it is unfair of the landlord to apply the maximum capped rental increase of seven percent and that the following points warrant a lessor increase.

18. The kitchen has not been refurbished by the landlord in over twenty five years.

19. Whilst occupying the property under a previous joint tenancy, the Applicant “had a hand in some of the previous improvements and their costs.” Such improvements included replacement kitchen worktops; fitting of kitchen unit handles; oven installation; laminate floor coverings in the kitchen and hall; wood flooring in the reception room; tiling of bathroom floor; banister installation; garden improvements.

20. Since the Applicant’s sole tenancy commenced on 14 May 2018, the tenant has carpeted the bedrooms; redecorated; installed a mixer tap sink and shower rail; treated surface dampness within the master bedroom.

21. The tenant argued that the bathroom is only in a “decent state” as a consequence of his, or the previous joint-tenant’s, improvements and that the bath remains the “oldest component”.

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22. The tenant stated that the property is showing general wear and tear, evidenced by an undulating and cracked ceiling caused by a previous water leak; marks on the walls and bubbling in the wallpaper; cracked tiles; damaged floor coverings and poorly finished workmanship to the frame of the rear door. Furthermore, the tenant is now undertaking additional works of refurbishment to some of those rooms improved under the previous joint-tenancy.

23. The tenant submitted a number of photographs showing the general condition of the property and areas of alleged disrepair and defect.

24. The tenant did not provide any comparable rental evidence nor did he offer an opinion of rental value.

Submissions – Landlord

25. Landlord’s improvements to the property were listed as follows: a. [NAME] 1990 b. Bathroom 2000 c. Boiler 2009 d. Front and rear doors 2015

26. The landlord is unaware of any current defects or disrepair to the property but accepts that the bathroom was installed 23 years ago and the kitchen 33 years ago. The condition of both is unknown to the landlord.

27. The landlord’s only other comment was that the property is situated within walking distance of the city centre.

28. The landlord did not provide any comparable rental evidence nor did they offer an opinion on rental values.

Determination

29. The Tribunal determines a market rent for a property by reference to rental values generally and, in particular, to the rental values for comparable properties in the immediate locality. The Tribunal has no regard to the prevailing rent and the period of time which that rent has been charged, nor does it take into account the percentage increase which the proposed rent represents to the passing rent. In addition, the legislation makes it clear that the Tribunal is unable to account for the personal circumstances of either the landlord or the tenant.

30. The Tribunal assesses the rent for the property as at the date of the landlord’s Notice and on the terms of the extant tenancy. The Tribunal disregards any improvements made by the tenant but has regard to the impact on rental value of disrepair which is not due to a failure of the tenant to comply with the terms of the tenancy.

31. Having consulted the [NAME] online, the Tribunal noted the property to have an Energy Performance Certificate

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(EPC) Rating of C and a recorded floor area of 81m2.

32. In the first instance, the Tribunal determined what rent the landlord could reasonably be expected to obtain for the property in the open market if it were let today in the condition that is considered usual for such a market letting. Neither party submitted any rental evidence in such regard and the Tribunal therefore relied on its own experience as a specialist expert Tribunal and its knowledge of rental values locally. The Tribunal determined such figure to be £275.00 per week.

33. Once the hypothetical rent, in good condition, was established, it was necessary for the Tribunal to determine whether the property meets the standard of accommodation, repair and amenity of a typical modern letting. In this instance the Tribunal determined that the subject property fell short of the standard required by the market.

34. It is common ground between the parties that the landlord has not undertaken refurbishment to either the kitchen or bathroom for in excess of 23 years, the only improvements being those affected by the tenant either during his current or previous joint-tenancy.

35. The landlord stated that they are not aware of any disrepair or defect. However, they do not appear to have inspected the property for a lengthy period. In contrast, the tenant has stated, and evidenced by way of photographs, some areas of disrepair, although the Tribunal consider these relatively minor.

36. Finally, the parties concur that the floor coverings, curtains and white goods are supplied by the tenant. In the Tribunal’s experience, the rental market will favour those properties which provide such fittings and will downwardly adjust values where these are absent.

37. In reflection of such differences, the Tribunal makes a deduction of 25% from the hypothetical open market rent.

38. The Tribunal makes no deduction for tenant’s redecoration as, it is of the opinion that, such matters are of personal taste.

39. Deducting a total of 25% from the hypothetical rent, the Tribunal arrived at, and hereby determines, an adjusted Market Rent of £206.25 per week.

40. The rental figure determined by the Tribunal exceeds that proposed by the landlord. Such figure is the maximum rent payable however the landlord is under no obligation to charge the full amount.

41. The Tenant made no submissions to the Tribunal in regard to delaying the effective date of the revised rent on grounds of hardship. Accordingly, the rent of £206.25 will take effect from 3 April 2023, that being the date stipulated within landlord’s notice.

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RIGHTS OF APPEAL

1. A person wishing to appeal this decision to the Upper Tribunal (Lands Chamber) must seek permission to do so by making written application by email to [EMAIL] 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.