Tribunal sets fair rent at £846 for regulated tenancy

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. CHI/00ML/F77/2023/0074

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

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

[NAME] Mr [RESPONDENT] Mr [APPELLANT]

Landlord Prof [APPELLANT]

Tenant Ms [APPELLANT]

1. The fair rent is £846.00 Per Calendar Month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 03 January 2024

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 £1300.00 per Calendar Month.

[NAME] of decision 3 January 2024

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 377.3

PREVIOUS RPI FIGURE Y 314.3

X 377.3 Minus Y 314.3 = (A) 63.0

(A) 63.0 Divided by Y 314.3 = (B) 0.2004

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.2504

Last registered rent* £676.50 Multiplied by (C) = 845.89 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £846.00

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £846.00 Per Calendar Month

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 2024

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : CHI/00ML/F77/2023/0074 Property : [ADDRESS] [POSTCODE]

Applicant Landlord : Prof [COUNSEL] : [APPELLANT] Respondent Tenant : Ms [COUNSEL] : None Type of Application :

Rent Act 1977 (“the Act”) Determination by the First-Tier Tribunal of the fair rent of a property following an objection to the rent registered by the Rent Officer.

Tribunal Members : Mr [NAME] [NAME] [NAME] Mr [NAME] S [NAME] of Inspection : None. Determined on the papers

Date of Decision

:

3rd January 2024

DECISION

CHI/00ML/F77/2023/0073

2 Summary of Decision On 3rd January 2024 the Tribunal determined a fair rent of £846 per month with effect from 3rd January 2024.

Background 1. On 21st August 2023 the [NAME] applied to the Rent Officer for registration of a fair rent of £1,550 per month.

2. The rent was previously registered on the 15th November 2021 at £676.50 per month following a determination by the Rent Officer. This rent was effective from 15th November 2021.

3. A new rent was registered by the Rent Officer on the 4th October 2023 at a figure of £844.50 per month with effect from 15th November 2023.

4. On 31st October 2023 the [NAME] objected to the new rent and the matter was referred to the First-Tier Tribunal Property Chamber (Residential Property) formerly a Rent Assessment Committee.

5. The Tribunal does not routinely consider it necessary and proportionate in cases of this nature to undertake inspections or hold Tribunal hearings unless either are specifically requested by either party or a particular point arises which merits such an inspection and/or hearing.

6. The Tribunal office issued directions on 29th November 2023 which informed the parties that the Tribunal intended to determine the rent on the basis of written representations subject to the parties requesting an oral hearing. No request was made by the parties for a hearing.

7. Both parties were invited to include photographs and video within their representations if they so wished and were informed that the Tribunal might also consider information about the property available on the internet.

8. Both Parties made submissions to the Tribunal, which were copied to the other Party.

9. These reasons address in summary form the key issues raised by the parties. They do not recite each and every point referred to either in submissions or during any hearing. The Tribunal concentrates on those issues which, in its opinion, are fundamental to the application.

The Law 10. When determining a fair rent the Tribunal, in accordance with the Rent Act 1977, section 70, had regard to all the circumstances including the age, location and state of repair of the property. It also disregarded the effect of (a) any relevant tenant's improvements and (b) the effect of any

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3 disrepair or other defect attributable to the tenant or any predecessor in title under the regulated tenancy, on the rental value of the property.

11. 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

(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).

12. The Tribunal also has to have regard to the Rent Acts (Maximum Fair Rent) Order 1999 where applicable. Most objections and determinations of registered rents are now subject to the Order, which limits the amount of rent that can be charged by linking increases to the Retail Price Index. It is the duty of the Property Tribunal to arrive at a fair rent under section 70 of the Act but in addition to calculate the maximum fair rent which can be registered according to the rules of the Order. If that maximum rent is below the fair rent calculated as above, then that (maximum) sum must be registered as the fair rent for the subject property.

The Property

13. From the information provided and available on the internet, the property can be described as a second floor flat within a 5-storey period terraced property in central Brighton. The property is in a Conservation Area and is Grade II listed. All main amenities are available in the city.

14. The accommodation is described as including a Living Room, Kitchen, 2 Bedrooms, Bathroom/WC. There is on-street parking which requires a permit to be purchased from the local authority.

15. There is an Energy Performance Certificate which states that the property measures some 31 square metres and rates the property as ‘E’.

Evidence and Representations 16. The original tenancy began in 1974.

17. The Rent Officer wrote to the Tenant on 11th September 2023 stating that he would not inspect the property as the works done, by the Landlord, had been noted when the rent was assessed in 2018. The Rent Officer assessed

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4 an open market rent for the property of £1,200 per month and made deductions including for Tenant’s decoration liability, unmodernised kitchen, Tenant’s provision of carpets, curtains and white goods and for scarcity, concluding that an uncapped rent would be £950 per month.

18. In her original submission to the Rent officer the Tenant acknowledges that the windows in her flat need painting but explains that when the outside of the property was last decorated, they were painted shut and cannot now be opened. She says that she is willing to decorate them if they can be freed by the Landlord.

19. The Tenant continues that the Kitchen window is also stuck so that there is no ventilation and may have been fitted incorrectly.

20. The Landlords’ Agent’s submission states that the property has a central heating system and partial double glazing, that carpets and a cooker are provided, that the Bathroom fittings and new windows were installed in 2016 and that the repairs and renovations completed in 2016 have “never been taken into account and therefore the rent has remained extremely low.” An invoice for works done in 2016 was included in the submission.

21. The Agent refers to a recent letting of Flat 3 in the same building at £1,545 per month, states that “the maximum fair rent should not apply because the flat is in very good condition with full gas central heating, and a new bathroom was not previously taken into account”.

22. The Agent further states that there are pages of similar properties advertised on Rightmove and questions why the rent for Flat 4 is much lower than the rent for Flat 1 which is also a protected tenancy.

23. The Tenant made a further submission to the Tribunal on 23rd December 2023 in which she says there is no double glazing and that she provided all carpets, curtains and white goods. She also refers to ongoing repair issues caused by damp from water ingress or leaks from the flat above number 4. The Tenant comments that the works referred to by the Landlord as improvements, such as damp and windows, are in fact repairs.

Findings of Fact and Valuation 24. The Tribunal first considered whether it felt able to reasonably and fairly decide this case based on the papers submitted only, with no oral hearing. Having read and considered the papers it decided that it could do so.

25. There was some variance between the evidence provided to the Tribunal with particular regard to the provision or lack of double glazing and the provision of carpets and curtains. Given the long history of occupying the property the Tribunal favoured the comments made by the Tenant and proceeded on the basis that there is no double glazing and that the Tenant had provided the carpets and curtains.

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5

26. The Tribunal noted the [NAME]’s comment that the property was well maintained but the Agent should know that this is not a valid reason to ignore the provisions of the Maximum Fair Rent Order.

27. 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 good condition that is considered usual for such an open market letting. Market rents are usually expressed as a figure per month.

28. In determining an ‘open market rent’ the Tribunal had regard to the evidence supplied by the parties and the Tribunal's own general knowledge of market rent levels in the area of Brighton and Hove. Having done so it concluded that such a likely market rent would be £1,500 per calendar month.

29. However, the property was not let in a condition considered usual for a modern letting at a market rent. Therefore, it was first necessary to adjust that hypothetical rent of £1,500 per calendar month particularly to reflect the fact that the carpets, curtains and white goods were all provided by the Tenant which would not be the case for an open market assured shorthold tenancy.

30. Further adjustments should be made to reflect the Tenant’s decoration responsibilities, the poor energy rating leading to high energy costs and the unmodernised kitchen.

31. The Tribunal therefore considered that this required a total deduction of £200 per month made up as follows:

Tenant’s provision of carpets and curtains £50 Tenant’s provision of white goods £30 Tenant’s liability for internal decoration £50 Unmodernised kitchen £50 Low Energy Performance Rating £20

____ TOTAL per month £200

32. The Tribunal also noted that no major improvements had been carried out by the Landlord since the rent was last registered in 2021. The capping by the Maximum Fair Rents Order would therefore apply.

33. The Tribunal did not consider that there was any substantial scarcity element in the area of Brighton as there is a reasonable selection of 1 and 2-beroom flats available to rent in the city, available on Rightmove.

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6 Decision 34. Having made the adjustments indicated above the fair rent determined by the Tribunal for the purpose of section 70 of the Rent Act 1977 was accordingly £1,300 per calendar month.

35. The Section 70 Fair Rent determined by the Tribunal is above the maximum fair rent of £846 per month permitted by the Rent Acts (Maximum Fair Rent) Order 1999 details of which are shown on the rear of the Decision Notice and accordingly the Tribunal determine that the lower sum of £846 per month is registered as the fair rent with effect from 3rd January 2024.

Accordingly the sum of £846 per month will be registered as the fair rent with effect from the 3rd January 2024 this being the date of the Tribunal’s decision.

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.