Tribunal sets £112/week rent for assured tenancy in London

OUTCOME: Allowed

First-tier Tribunal – Property Chamber File Ref No. LON/00BA/F77/2019/0156

Notice of the Tribunal [NAME] 1977 Schedule 11

Address of Premises The Tribunal members were 192 [ADDRESS], [POSTCODE]

Mr Robert Latham Mrs [APPELLANT] (Hons) MRICS

Landlord [APPELLANT] UK

Tenant Mr [APPELLANT]

1. The fair [NAME] is 112.00 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 22 November 2019

3. The amount for services is N/A Per

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

N/A Per

5. The [NAME] is not to be registered as variable.

6. The capping provisions of the [NAME] ([NAME]) Order 1999 do not apply because 1st registration.

7. Details (other than [NAME]) where different from [NAME] entry

None

Chairman Mr Robert Latham Date of decision 22nd November 2019

[NAME] FIGURE X

PREVIOUS RPI FIGURE Y

X

Minus Y

= (A)

(A)

Divided by Y

= (B)

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)

Last registered [NAME]*

Multiplied by (C) =

*(exclusive of any variable service charge)

Rounded up to nearest 50p =

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

[NAME] = £ Per

Explanatory Note

1. The calculation of the maximum fair [NAME], in accordance with the formula contained in the Order, is set out above.

2. In summary, the formula provides for the maximum fair [NAME] to be calculated by:

(a) increasing the previous registered [NAME] 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 [NAME] determination was made.

4. The process differs where the tenancy agreement contains a variable service charge and the [NAME] is to be registered as variable under section 71(4) of the [NAME] 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 [NAME].

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : KA/LON/00BA/F77/2019/0156 Property : 192 [ADDRESS], [POSTCODE] Landlord : Berendsen UK Representative : [NAME] Tenant : Mr [COUNSEL] of Application : Assessment of [NAME] Tribunal Members : Judge Robert Latham Mrs [NAME] and venue of Determination : 10 [ADDRESS] [POSTCODE] 22 November 2019 Date of Reasoned Decision : 22 November 2019

EXTENDED REASONS

Background

1. On 9 July 2019, the landlord applied to the [NAME] for the registration of a fair [NAME] of £106 per week for 192 [ADDRESS], [POSTCODE] (“the house”) pursuant to Part IV of the [NAME] 1977 (“the Act”). The existing [NAME] was £57.88 per month. The landlord has paid the water charges.

2. On 14 August, the [NAME] held a consultation at the house. Mr [RESPONDENT], from [NAME], represented the landlord. Mr [RESPONDENT] stated that [NAME] had recently taken over the management of the property and that the

5 landlord was willing to do anything to the property that was necessary. Mr [NAME] and Mr [NAME] both made representations.

3. 28 August 2019, the [NAME] registered a [NAME] of £175 pw. She first assessed the market [NAME] to be £350 pw. She then made adjustments of £155 (44%), having regard to a number of factors: tenants repair/decoration liability; no furniture; no white goods; and no floor coverings/curtains. She finally made a deduction of £20 (10%) for scarcity.

4. As this was a first registration, the [NAME] ([NAME]) Order 1999 (SI 1999 No.6) had no application.

5. On 11 September 2019, the tenant requested the [NAME] to refer the matter to the First-tier Tribunal (Property Chamber) (the “Tribunal”).

6. On 24 September, the Tribunal issued Directions. [NAME] have made written representation on behalf of the landlord. Neither party requested an oral hearing.

The Background

7. The Tribunal inspected the property which is a semi-detached house which was constructed c.1900. Mr [NAME] and his partner, Mr [NAME], were present. Both are in their 80’s.

8. As this is a first registration, the background to the grant of this tenancy is important. Mr [NAME] was able to produce a number of [NAME] going back to 1971.

9. On 4 October 1971, the [COMPANY] (“[NAME]”) granted Mr [NAME] a tenancy of the first floor flat at a [NAME] of £4.75, inclusive of rates. On 31 July 2013, [NAME] changed its name to [NAME]. The house has been managed by a succession of managing agents.

10. In 1971, The house was not self-contained and the ground floor was let to another tenant. It seems that on 19 August 1975, a fair [NAME] was registered in respect of the first floor flat.

11. In 1977, the ground floor flat became vacant. At the time, Mr [NAME] was paying £6.38 pw (inclusive) for his flat. He was working for [NAME] whose laundry was at the back of the property. He asked [NAME] if he could take over the whole house. This was in a very poor condition at the time. There was considerable noise from the factory. Mr [NAME] told us that the Board had come to inspect the house. He was told that he could do what he liked with it.

12. Mr [NAME] stated that [NAME] agreed to let him have a tenancy of the whole house in 1978. However, a letter from [NAME]’s managing agents, dated 7 October 1981, suggests the new tenancy of the whole house was only granted from 4 January 1982. No additional [NAME] was charged for the ground floor

5 rooms. The total [NAME] was £14.64 pw including rates of £9.39. The net [NAME] was £5.25 pw.

13. Over the subsequent 37 years, there have been a number of modest increases in [NAME], below any fair [NAME] that would be registered. In 2019, the [NAME] was £57.88 per month. The tenant pays council tax, but the [NAME] includes water charges. No notice of increase has been served in accordance with Part III of the Act. It is not for this Tribunal to consider the consequences of this.

14. The works carried out by Mr [APPELLANT] are critical as we must ignore any tenant’s improvements in assessing the fair [NAME]. Mr [APPELLANT] and Mr [NAME] arranged for significant works to be executed.

15. The ground floor flat only had an external toilet. There was a small scullery with a ware sink and a 1950’s cooker. There was no hot water. There was no bathroom. The brickwork of the load bearing wall dividing the two front rooms was crumbling.

16. Mr [NAME] arranged for the external toilet to be bricked up and incorporated with the scullery to create a kitchen. He arranged for the two front rooms to be open plan and installed an RSJ to support the load bearing wall. There had been open fireplaces. Mr [NAME] installed gas fires. He also rewired the whole house providing modern electrical sockets. The windows throughout the house were ill-fitting and draughty. Mr [NAME] repaired them

17. The condition on the first floor were better. There was a bathroom, but it was small and extremely rudimentary. There was a small metal bath. The kitchen was very basic. Hot water was provided by a geezer.

18. Mr [NAME] stripped the bathroom and installed a toilet and wash hand basin. The kitchen was converted into a bathroom, with both a bath and a shower. He provided a cupboard housing a hot water tank and an electric immersion heater. He has provided electric heaters for the two bedrooms.

The Inspection

19. It was apparent that in about 2000, the landlord renewed the roof. It is still in a good condition. It also installed UPVC windows and a rear door. The timber front door was also replaced. The [NAME] closed in the 1990’s and there is now a new housing development to the rear of the property. The house has no central heating.

20. Mr [NAME] complained that the front water gutter was leaking and we saw evidence of this. He has painted the woodwork at the front of the property. Some of the replacement windows were poorly fitting and gaps have been filled. The rear paintwork is poor. There are areas of open pointing. There were loose and missing tiles on the front path, concreted in places by the landlord. These items of disrepair had been noted by the [NAME] when she inspected on 14 August.

5 The Law

21. When determining a fair [NAME] in accordance with section 70 of the Act, the Tribunal:

(1) has regard to all the circumstances (other than personal circumstances) including the age, location and state of repair of the property;

(2) disregards the effect on the rental value of the property of (a) any relevant tenant improvements and (b) any disrepair or other defect attributable to the tenant or any predecessor in title under the regulated tenancy;

(3) assumes (as required by s.70(2)) that, whatever might be the case, the demand for similar rented properties in the locality does not significantly exceed the supply of such properties for [NAME]. In other words that the effect of any such ‘scarcity’ on rental values is not reflected in the fair [NAME] of the subject property.

22. In [COMPANY] v Chairman of the Greater Manchester etc. Committee (1995) 28 HLR 107 and [NAME] v [NAME] [1999] QB 92 the Court of Appeal emphasised that section 70 means that:

(a) ordinarily a fair [NAME] is the market [NAME] for the subject property discounted for ‘scarcity’ and

(b) for the purposes of determining the market [NAME], 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).

23. Thus, once the market [NAME] for the property has been determined by the exercise in (2) above that [NAME] must be adjusted, where necessary, for any scarcity.

24. The [NAME] ([NAME]) Order 1999 does not apply as this is the first registration. There is no evidence that a fair [NAME] has been registered in respect of the current tenancy of the whole house.

25. In reaching our determination, the Tribunal has taken into account the documents provided by the [NAME], the representations provided by the parties and our findings on viewing the property.

Our Assessment of the [NAME]

(i) The [NAME]

26. The Tribunal first determines the fair [NAME] in accordance with section 70 of the Act. Our starting point is to determine the [NAME] which the landlord could reasonably expect to obtain for the premises in the open market if it were let today in the condition that is considered usual for such an open market letting in this locality.

5

27. The [NAME] assessed a market [NAME] of £350 pw. She has provided details of a number of comparables. Neither party has provided comparables of market rents. The landlord has provided a number of comparables of uncapped fair rents. However, these are not relevant to market rents. We confirm the figure of £350 pw.

(ii) The [NAME]

28. Secondly, this property is not let under the terms or in the condition considered usual for a modern letting at a market [NAME] in this location. Substantial adjustments must be made for this. The landlord has not made any representations on the deductions that should be made.

29. We have decided to make a deduction of 60% in respect of the following and determine an adjusted [NAME] of £210 pw having regard to:

(i) Tenant’s Improvements;

(ii) No Central Heating;

(iii) Terms and Conditions;

(iv) No modern kitchen/white goods;

(v) No modern bathroom;

(vi) No carpets or curtains;

(vii) Disrepair and condition.

30. We considered these factors separately and then considered whether the overall reduction is justified. We are satisfied that it is.

(iii) Scarcity

31. Finally, we must consider the issue of scarcity. The [NAME] made a reduction of 10% in respect of this.

32. In [COMPANY] v [NAME] [2002] All ER (D) 148 (Apr), Ousley J held that scarcity must be considered over a wider area than a particular locality. Greater London is now considered to be an appropriate area to use as a yardstick for measuring scarcity.

33. Applying our own general knowledge, and having regard to the collective knowledge of our expert members on Tribunals in London, we conclude that 20% is the appropriate reduction to make for scarcity in Greater London.

34. We therefore reduce the adjusted [NAME] by £28 pw (20%). This results in our assessment of a fair [NAME] of £112 per week.

5

Decision

35. The Tribunal determines a fair [NAME] of £112 per week. This figure is exclusive of water charges.

36. At our inspection, Mr [NAME] produced a number of [NAME] and clarified some issues which had been discussed with the [NAME] at her consultation. The landlord was not present at the inspection. If the landlord wishes to make any representations on the factual matters raised by Mr [NAME], it may make any written representation to the Tribunal (copied to the tenant) by no later than 16.00 on 6 December. The Tribunal will review our decision in the light of any such representations.

Judge Robert Latham 22 November 2019

Appendix: Calculation of fair [NAME] 1. [NAME] in good condition with modern amenities £350 pw

2. Less adjustments for the following (60%): £210 pw

(i) Tenant’s Improvements;

(ii) No Central Heating;

(iii) Terms and Conditions;

(iv) No modern kitchen/white goods;

(v) No modern bathroom;

(vi) No carpets or curtains;

(vii) Disrepair and condition.

[NAME]: £140 pw

3. Less scarcity in locality (Greater London) (20%): £28

[NAME]: £112 pw