Tribunal Sets £82.50/Week Fair Rent for Assured Tenancy in Sherborne

OUTCOME: Dismissed

FR24 First-tier Tribunal – Property Chamber File Ref No. CHI/19UH/F77/2019/0029

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 1 [ADDRESS], [POSTCODE]

[NAME] [NAME] [RESPONDENT] [NAME]

Landlord [NAME]

[RESPONDENT] [NAME]

1. The fair rent is £82.50 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 01 July 2019

3. The amount for services is n/a Per n/a

not applicable

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

n/a Per n/a

not applicable

5. The rent 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 £136.08 per week.

[NAME] [NAME] of decision 1 July 2019

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 289.2

PREVIOUS RPI FIGURE Y 141.9

X 289.2 Minus Y 141.9 = (A) 147.3

(A) 147.3 Divided by Y 141.9 = (B) 1.0380

First application for re-registration since 1 February 1999 YES

If yes (B) plus 1.075 = (C) 2.113

If no (B) plus 1.05 = (C)

Last registered rent* £39.00 Multiplied by (C) = 82.40 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £82.50

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £82.50 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.

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Case Reference : CHI/19UH/F77/2019/0029

Property : 1 [ADDRESS] [POSTCODE]

Applicant: [redacted] Surveyor

Respondent: [redacted] Referred to First-tier Tribunal by Valuation Office Agency on 23rd May 2019

Type of Application : Section 70 Rent Act 1977 (the Act)

Tribunal

: [NAME] [NAME] [NAME] [NAME] [NAME] of inspection and Consideration

: 1st July 2019

_______________________________________________

REASONS FOR DECISION ____________________________________

© CROWN COPYRIGHT 2019

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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Background 1. The Tribunal gave formal notice of its decision by a Notice dated 1st July 2019 that the rent would be £82.50 per week with effect from the same date.

2. On the 5th March 2019 the Landlord of the above property applied to the Rent Officer for registration of a fair rent of £114.23 per week (£495.00 per month). The rent having been previously been determined by the Rent Officer at £39.00 per week on 9th December 1993 and effective from the 10th December 1993.

3. On the 3rd May 2019 the Rent Officer registered a fair rent of £81.50 per week effective from 3rd May 2019.

4. The Landlord, on the 15th May 2019, objected to the rent determined by the Rent Officer and the matter was referred to the First-tier Tribunal (Property Chamber) (Residential Property).

5. The tenancy appears to be a statutory protected periodic tenancy. The tenancy (not being for a fixed periodic tenancy of 7 years or more) is subject to Section 11 of the Landlord and [RESPONDENT] 1985 (the landlord's statutory repairing obligations).

Inspection 6. The Tribunal inspected the premises on the 1st July 2019 in the presence of the [RESPONDENT] [NAME] [NAME]. The Landlord was neither present nor represented.

7. The property comprises an immediate post war semi-detached house constructed in brick with a tile roof and upvc windows. It formed part of a farm in a remote rural location, the nearest town being Sherborne where local amenities are available.

8. The accommodation comprises: Ground Floor: Entrance Hallway, Lounge, Dining Room and Kitchen (range of worktops and cupboards with a sink unit), Rear porch with store and w/c off. First Floor: Landing, 2 double and 1 single bedrooms, Bathroom (with bath, w/c and wash basin). Outside: Gardens to front, side and rear. There is parking at the front of the property.

9. Mains electricity is connected to the property. Water is via a bore hole and drainage is to a bio-digester unit (not inspected) installed in 2019. There is no heating apart from the solid fuel burner in the Living room. Water is heated via an immersion heater located in Bedroom 1.

10. The [RESPONDENT] has maintained the property in good decorative order and has fitted all floor coverings.

11. The Tribunal noted during its inspection:

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a) The [RESPONDENT] had carried out significant works during the tenancy including:

1) Living Room and Dining Room relaying the floor 2) Living room re-plastering walls installing a solid fuel stove 3) Bathroom: electric shower, bath, xpelair fan and down flow heater 4) Replaced internal window cills throughout the property 5) Kitchen: Installed fitted units (to replace original belfast sink) Created arch to Dining Room and Utility.

6) Rear Porch: Opened up fuel store to create a second utility area 7) Laid patio at rear of property 8) Cultivated garden and erected 2 sheds

b) There was evidence of movement in the gable wall and poor pointing.

The Hearing

12. The [RESPONDENT] made no formal submissions to the Tribunal.

13. The Landlord requested a hearing and [NAME] [RESPONDENT] attended.

14. During the preliminary part of the Hearing the Tribunal ascertained that [NAME] [NAME] concern lay not in the Rent Officer's calculation of the Uncapped Fair Rent with which he said he agreed at £136.00 per week but in the calculation of the capping limit.

15. He referred to his letter to the Rent Officer dated the 15th May 2019 which he had resubmitted in accordance with the Tribunal's directions dated 30th May 2019.

16. He proposed 2 alternative methods of calculating the capping.

17. The first was to compound the Retail Prices Index figure (published by the Office for National Statistics) on the basis that the rent would be registered every two years. This produced a figure of £133.06 per week.

18. The second was to apply the most recent RPI figure to the December 1993 figure and adding 5.00% which produced a figure of £119.00 per week.

19. Both figures he said were higher than the Rent Officer's figure of £81.50 per week.

20. The [NAME] asked [NAME] if he was challenging the adopted methodology of the Rent Officer (and of the Tribunal) which, the [NAME] said, had been in use since the making of The Rent Acts (Maximum Fair Rent) Order 1999 on 1st February 1999. [NAME] [NAME] response was that he was not.

21. The Tribunal then explained to [NAME] [NAME] how the Rent Officer and the Tribunal calculated the Maximum Fair Rent.

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22. [NAME] [NAME] at this point accepted the Tribunal's approach and the [NAME] closed the hearing.

The Law

23. When determining a fair rent the Tribunal, in accordance with section 70 of the Rent Act 1977, had regard to all the circumstances including the age, location and state of repair of the property. It disregarded the effect of (a) any relevant [RESPONDENT]’s improvements and (b) the effect of any disrepair or other defect attributable to the [RESPONDENT] or any predecessor in title under the regulated tenancy, on the rental value of the property.

24. In [COMPANY] v [NAME] of the Greater Manchester etc Committee (1995) 28 HLR 107 and [NAME] v [NAME] [1999] QB 92, the Court of Appeal emphasised:

(a) 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

(b) 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).

25. The Rent Acts (Maximum Fair Rent) Order 1999 restricts the amount by which the rent may be increased to a maximum 5.oo% plus RPI since the last registration unless the last registration was before 1st February 1999 in which case the figure is 7.50%.

26. The only exception to this restriction is provided under paragraph 7 of the Order where a landlord carries out repairs or improvements which increase the rent by 15% or more of the previous registered rent.

Tribunal’s deliberations 27. The Tribunal considered the matter with the benefit of its inspection and the submissions of the parties.

28. [NAME] [NAME] acceptance of both the Rent Officer's calculation of the Uncapped Fair Rent and the methodology for calculating the capping the Tribunal did not address the calculation of the Uncapped Fair Rent but did address the capping. The Tribunal's calculation is shown on the reverse of the Decision Notice to which this set of reasons is attached.

Relevant Law 29. The Rent Act 1977.

30. Rent Acts (Maximum Fair Rent) Order 1999. In particular paragraph 7 which states:

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This article does not apply in respect of a dwelling-house if because of a change in the condition of the dwelling-house or the common parts as a result of repairs or improvements (including the replacement of any fixture or fitting) carried out by the landlord or a [NAME], the rent that is determined in response to an application for registration of a new rent under Part IV exceeds by at least 15% the previous rent registered or confirmed.

Rent Acts (Maximum Fair Rent) Order 1999 31. The rent to be registered is limited by the Fair Rent Acts (Maximum Fair Rent) Order 1999 accordingly the sum of £82.50 per week will be registered as the fair rent on and with effect from 1st July 2019 being the date of the Tribunal's decision.

[NAME] [NAME] OF APPEAL

1. A person wishing to appeal this decision (on a point of law only) to the Upper Tribunal (Lands Chamber) must seek permission to do so by making written application to the First-tier Tribunal at the [NAME] 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