Tribunal Sets Fair Rent Considering Property Condition

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. LON/00BJ/F77/2022/0247

Notice of the Tribunal [NAME] 1977 Schedule 11

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

[NAME]

Landlord [APPELLANT]

Tenant Mrs [APPELLANT]

1. The fair [NAME] is £ 185 Per week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 6 February 2023

3. The amount for services is nil Per

negligible/not applicable

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

nil Per

negligible/not applicable

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

6. The capping provisions of the [NAME] ([NAME]) Order 1999 apply.

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

As [NAME] register. Tenant reported no working shower. No landlord representations on this.

Note: The landlord is not obliged to charge this fair [NAME] but, may not charge more.

8. For information only: Part (b) below, applies.

(a) The fair [NAME] to be registered is the maximum fair [NAME] as prescribed by the [NAME] ([NAME]) Order 1999. The [NAME] that would otherwise have been registered was £ per calendar month…… including £ Nil ................... per week…………….. for services (variable).

(b) The fair [NAME] to be registered is not limited by the [NAME] ([NAME]) Order 1999, because it is the same as/below the maximum fair [NAME] of £ 197.50 ........ per week including £ nil ..................................... per ................................. for services (variable) prescribed by the Order.

[NAME] of decision 6 February 2023

FR24 [NAME] FIGURE X 360.4

PREVIOUS RPI FIGURE Y 294.2

X 360.4 Minus Y 294.2 = (A) 66.2

(A) 66.2 Divided by Y 294.2 = (B) 0.225

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) 1.225

Last registered [NAME]* 161 Multiplied by (C) = 197.23 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 197.50 per week

Variable service charge NO If YES add amount for services

[NAME] = £ 197.50 Per Calendar month

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 2013

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : FL/LON/00BJ/F77/2022/0247 Property : Flat First Floor, 42 Tooting High St. Wandsworth London [POSTCODE] Applicant : [redacted] Representative : None Respondent : [redacted] (Landlord) Representative : None Type of Application : S.70 [NAME] 1977 – Determination of a new fair [NAME] Tribunal Member : [NAME] and venue of Meeting : 6 [ADDRESS] [POSTCODE] Date of Decision : 6 February 2023 31 March 2023 (reasons)

REASONS FOR DECISION

Background

1 The landlord applied to the [NAME] for registration of a fair [NAME]. The fair [NAME] registered and passing at the time was £161 pw.

2 Although the [NAME] set a [NAME] in late 2022, subsequently a party (it is unclear from the correspondence available the Tribunal) objected and sought a re-hearing of the application, by the Tribunal.

2

Inspection

3 The Tribunal did not inspect [NAME] owing to the department’s ongoing health restrictions imposed and arising from Covid 19. [NAME] appears from Google Streetview (@July 2022), to be part of a substantial mid Edwardian mid terrace building. Retail on ground level near the busy retail centre and tube line station at Tooting. There are three floors of self contained residential accommodation above. This flat being on the First Floor. Although convenient for many services the flat is in a very busy location and above commercial retail premises.

4 [NAME] has 2 rooms, kitchen, bathroom & WC. It is assumed judging from the exterior appearance and existing records that there is no double glazing to windows, no full gas fired central heating. It appears to have been refurbished some time in 1970’s. The main roof appears to be double pitched tiled but it is not possible to see beyond the eaves from ground level photography. The front elevation of the building within which [NAME] lies, appears in fair condition.

5 The Tribunal made the assumption common in older established tenancies such as this one, that there were no carpets or curtains, or white goods included in the letting by the landlord and that the kitchen and bathroom were functional but basic only. The tenant did not report to the Tribunal any improvements which they had carried out or any items of disrepair which the landlord had not.

Evidence

6 Directions, for the progression of the case were issued. The Tribunal received brief representations. Neither party requested a hearing. The case was determined only on the papers.

Law

7 When determining a fair [NAME] the Committee, in accordance with the [NAME] 1977, section 70, had regard to all the circumstances including the age, location and state of repair of [NAME]. It also disregarded the effect of (a) any relevant tenant's improvements and (b) the effect of any disrepair or other defect attributable to the tenant or any predecessor in title under the regulated tenancy, on the rental value of [NAME].

8 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 emphasized

(a) that ordinarily a fair [NAME] is the market [NAME] for [NAME] discounted for 'scarcity' (i.e. that element, if any, of the market [NAME], that is attributable to there being a significant shortage of similar properties in the wider locality available for letting on

3 similar terms - other than as to [NAME] - to that of the regulated tenancy) and

(b) that 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).

Decision

9. The condition of a property is inferior to that of comparable properties, so that the rents of those comparables are towards twice that proposed [NAME] for the subject property, it calls into question whether or not those transactions are truly comparable. Would prospective tenants of modernized properties in good order consider taking a tenancy of an unmodernised house in poor repair and with only basic facilities or are they in entirely separate lettings markets? The problem for the Tribunal is that the only evidence of value levels available to us is of modernised properties. We therefore have to use this but make appropriate discounts for the differences, rather than ignore it and determine a [NAME] entirely based on our own knowledge and experience, whenever we can.

10. On the evidence of the Tribunal’s general knowledge of market [NAME] levels in this location, the subject property if modernized and in good order would let on normal Assured Shorthold Tenancy (AST) terms, for £385 week.

11. Tribunal makes allowance for the absence of carpet and curtains, for the lack of white goods, only a basic kitchen and bathroom, no central heating and no double glazing, located directly above retail premises at a busy commercial location. These adjustments total a £154 pw deduction, producing a market [NAME] of £231 pw prior to considering scarcity.

12. The Tribunal also has to consider the element of scarcity and whether demand exceeded supply. The Tribunal found that there was a substantial scarcity in the locality of Greater London and therefore makes a further deduction of 20% from the adjusted market [NAME] to reflect this element. This deduction results in an uncapped fair [NAME] of £185 pw.

13. The Tribunal is also required to calculate the [NAME] (MFRCap) which serves to limit the extent of increase in a fair [NAME] on review. The cap is determined by a formula under statutory regulation, which whilst allowing for an element of inflation may serve to prevent excessive increases. The cap as the date of the Tribunal’s determination produces a figure of £197.50 pw. This figure is a combination of the previously registered [NAME] being subject to the change in RPI between registration dates rounded up to the nearest

4 50p. There is no service charge element. In this case the cap did not apply according to the MFRCap regulations as the fair [NAME] is below it.

14. As the cap does not apply, the new [NAME] calculated above is capped. The fair [NAME] is £185 pw. It takes effect from and including the date of determination, 6 February 2023.

[NAME] 31 March 2023