Tribunal Determines Fair Rent for Property Under Rent Act 1977

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. TR/LON/00AW/F77/2023/0032

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

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

Mr [APPELLANT]

Landlord [RESPONDENT]

Tenant [NAME] [APPELLANT] & [NAME] [APPELLANT]

1. The fair rent is £238 Per week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 28 March 2023

3. The amount for services is

Per

/not applicable

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

Per

not applicable

5. The rent is/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

8. For information only:

(a) 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 £288

[NAME] of decision 28 March 2023

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 360.3

PREVIOUS RPI FIGURE Y 275.3

X 360.3 Minus Y 275.3 = (A) 85

(A) 85 Divided by Y 275.3 = (B) 0.3087

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) 1.3588

Last registered rent* 175 Multiplied by (C) = 237.78 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 238

Variable service charge YES / NO If YES add amount for services

MAXIMUM FAIR RENT = £238 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.

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case reference : TR/ LON/00AW/F77/2023/0032

Property :

[ADDRESS] [POSTCODE]

Applicant: [redacted]

Respondent: [redacted] application : Referral of a re-registration of Fair Rent under the Rent Act 1977.

Tribunal :

[NAME]

Date of Decision : 28 March 2023

Date of Reasons : 28 May 2023

REASONS

2 Background 1. On 31 October 2022, the landlord sent an RR1 application for re- registration of a fair rent to the Rent Officer. The landlord sought a rent of £173.11 per week per week and no services were said to be provided. The previous rent was registered by the Rent Officer on 9 October 2017, effective from 3 November 2017 at £175.00 per week.

2. On 28 December 2022, the Rent Officer registered a Fair Rent of £235.50 per week, with effect from the same date.

3. By a letter dated 11 January 2023 the tenant objected to the registration. The grounds set out very sad personal circumstances, which it is unnecessary to describe in detail, as personal circumstances must be disregarded (see below). The tenants also stated that they had lived in the property since 31 March 1986.

4. On 27 January 2023, the Tribunal issued directions to the parties requiring them to produce any evidence on which they wished to rely in support of their respective cases, by using a Reply Form. Paragraph E directed the parties to request an inspection if they so wished, which neither did. The matter was set down for a determination on the papers unless either party requested a hearing, which neither did. The tenant completed a Reply Form. The landlord did not respond to the appeal.

5. On 8 July, the Tribunal determined, on the papers, the fair rent at £238 per week. Subsequently, the tenant requested Reasons.

The Law (see Appendix)

6. When determining a fair rent the Tribunal, in accordance with the Rent Act 1977, section 70, had regard to all the circumstances (other than personal circumstances) including the age, location and state of repair of the property. Section 70 is set out in the Appendix below.

7. In [COMPANY] v Chairman of the Greater Manchester etc. Tribunal (1995) 28 HLR 107 and [NAME] v [NAME] Tribunal [1999] QB 92 the Court of Appeal emphasised that ordinarily a fair rent is the market rent for the property discounted for 'scarcity' (i.e. that element, if any, of the market rent, that is attributable to there being a significant shortage of similar properties in the wider locality available for letting on similar terms - other than as to rent - to that of the regulated tenancy) and that for the purposes of determining the market rent, assured tenancy (market) rents are usually appropriate comparables. (These rents may have to be adjusted where necessary to reflect any relevant differences between those comparables and the subject property).

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The Tenant’s Reply

8. The tenants stated that the property suffered from a hole in the ceiling of the living room, the heating was always on, secondary glazing in the living room was loose and air ventilation is unsatisfactory.

The Property

9. [ADDRESS], and the Rent Register and the tenants Reply Form, the Tribunal finds that this is a 2 bedroomed first floor flat in Earl’s Court. It is in a converted house. The flat includes a living room, two bedrooms, kitchen, bathroom/WC, further WC. It has central heating and partial double glazing. The tenants have installed white goods carpets and curtains. [ADDRESS] is a very busy four lane highway (A3220) close to the junction with the A4.

Valuation

10. The Tribunal must firstly determine the market rent for a property of this size, in this location and in its current condition. It must also disregard the personal circumstances of either party. Using its own general knowledge of the Greater London property market, the Tribunal found that the market rent for a property of this size and in this location, in good condition, with the usual white goods, carpets and decorated to a good condition would be £1950 per month.

11. However, the property is not in the condition that would be necessary for the landlord to obtain such a rental. All white goods, carpets and curtains are presumed to be the property of the tenant. The Tribunal made a 5% adjustment for this. Further, there was some disrepair to the as referred to in para 5 above. The Tribunal made a 10% adjustment for this. In addition, a tenant of a Rent Act property has more onerous repairing obligations than those under an Assured Shorthold Tenancy. The Tribunal made a 5% adjustment for this. Taking these factors into account, the Tribunal therefore made a deduction of 20% from the market rent of £390 per month leaving £1560 per month as an adjusted rent.

12. The Tribunal found that there was substantial scarcity in the locality of Greater London having taken Judicial Notice of long housing association and local authority waiting lists in Greater London. It therefore made a deduction of 20% (£312 per month) from the adjusted market rent to reflect this element. This left an adjusted rent of £1248 per month, which equates to £288.02 per week. This the Tribunal rounded to £288 per week.

4 13. The Tribunal is then required to apply the Rent Acts (Maximum Fair Rent) Order 1999. The calculation was included on the decision sheet and produced a maximum fair rent of £238 per week.

14. The Tribunal must register the lower of the adjusted market rent or Maximum Fair Rent as the fair rent for the property. In this instance the Maximum Fair Rent produces the lower figure, and the Tribunal therefore registered the rent of £238 per week for this property, with effect from 28 March 2023, being the date of the Tribunal’s decision. For Information 15. The Registered Rent is the maximum rent which a landlord may charge but the amount payable may be less depending on that agreed between landlord and tenant. Name: Mr [APPELLANT]: 28 May 2023

ANNEX - RIGHTS OF APPEAL

• The Tribunal is required to set out rights of appeal against its decisions by virtue of the rule 36 (2)(c) of the Tribunal Procedure (First-tier Tribunal)(Property Chamber) Rules 2013 and these are set out below.

• If a party wishes to appeal against this decision to the Upper Tribunal (Lands Chamber) then a written application for permission must be made to the First-tier Tribunal at the Regional office which has been dealing with the case.

• The application for permission to appeal must arrive at the Regional office within 28 days after the Tribunal sends written reasons for the decision to the person making the application.

• If the application is not made within the 28-day time limit, such application 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 application for permission to appeal to proceed despite not being within the time limit.

• The application 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 making the application is seeking.

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Appendix

Rent Act 1977

Section 70 Determination of fair rent.

(1)In determining, for the purposes of this Part of this Act, what rent is or would be a fair rent under a regulated tenancy of a dwelling-house, regard shall be had to all the circumstances (other than personal circumstances) and in particular to—

(a)the age, character, locality, and state of repair of the dwelling-house, . . . F1

(b)if any furniture is provided for use under the tenancy, the quantity, quality and condition of the furniture [F2, and]

[F2(c)any premium, or sum in the nature of a premium, which has been or may be lawfully required or received on the grant, renewal, continuance or assignment of the tenancy.]

(2)For the purposes of the determination it shall be assumed that the number of persons seeking to become tenants of similar dwelling-houses in the locality on the terms (other than those relating to rent) of the regulated tenancy is not substantially greater than the number of such dwelling-houses in the locality which are available for letting on such terms.

(3)There shall be disregarded—

(a)any disrepair or other defect attributable to a failure by the tenant under the regulated tenancy or any [NAME] to comply with any terms thereof;

(b)any improvement carried out, otherwise than in pursuance of the terms of the tenancy, by the tenant under the regulated tenancy or any [NAME];

(c)(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F3

(e)if any furniture is provided for use under the regulated tenancy, any improvement to the furniture by the tenant under the regulated tenancy or any [NAME] or, as the case may be, any deterioration in the condition of the furniture due to any ill-treatment by the tenant, any person residing or lodging with him, or any [NAME] of his.

F4[(3A)In any case where under Part I of the Local Government Finance Act 1992 the landlord or a [NAME] is liable to pay council tax in respect of a hereditament (“the relevant hereditament”) of which the dwelling-house forms part, regard shall also be had to the amount of council tax which, as at

6 the date on which the application to the rent officer was made, was set by the billing authority—

(a)for the financial year in which that application was made, and

(b)for the category of dwellings within which the relevant hereditament fell on that date,

but any discount or other reduction affecting the amount of council tax payable shall be disregarded.

(3B)In subsection (3A) above—

(a)“hereditament” means a dwelling within the meaning of Part I of the Local Government Finance Act 1992,

(b)“billing authority” has the same meaning as in that Part of that Act, and

(c)“category of dwellings” has the same meaning as in section 30(1) and (2) of that Act.]

(4)In this section “improvement” includes the replacement of any fixture or fitting.

[F5(4A)In this section “premium” has the same meaning as in Part IX of this Act, and “sum in the nature of a premium” means—

(a)any such loan as is mentioned in section 119 or 120 of this Act,

(b)any such excess over the reasonable price of furniture as is mentioned in section 123 of this Act, and

(c)any such advance payment of rent as is mentioned in section 126 of this Act.]

(5). . . . . . . . . . . . . . . . . .