Tribunal Sets Fair Rent Considering Tenant Improvements

OUTCOME: Allowed

FR27 First-tier Tribunal – Property Chamber File Ref No. LON/00AC/F77/2025/0321

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

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

[NAME] Mr [APPELLANT]

Landlord [APPELLANT] (PRS 3) [APPELLANT].

Tenant Mr [APPELLANT]

1. The fair rent is £742.00 Per month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 23 March 2026

3. The amount for services is - Per -

negligible/not applicable

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

- Per -

negligible/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)/ do not apply because 1st registration/15% exemption.

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 £ ............................ per .................................... including £ ...................... per .................................. for services (variable).

(b) The fair rent to be registered is not limited by the Rent Acts (Maximum Fair Rent) Order 1999, because it is the same as/below the maximum fair rent of £ 819.50 ........ per month ......... including £ 0 ....................................... per month ...................... for services (variable) prescribed by the Order.

[NAME] of decision 23 March 2026

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 406.4

PREVIOUS RPI FIGURE Y 376.6

X 406.4 Minus Y 376.6 = (A) 29.8

(A) 29.8 Divided by Y 376.6 = (B) 0.[PHONE]

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) 1.129129049

Last registered rent* 725.40 Multiplied by (C) = 819.07 *(exclusive of any variable service charge)

Rounded up to nearest 50p = 819.50

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

MAXIMUM FAIR RENT = £819.50 Per 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.

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Case Reference

: LON/00AC/F77/2025/0321

Property : [ADDRESS] [POSTCODE]

Tenant

: Mr [APPELLANT]

Landlord : [APPELLANT] (PRS 3) [RESPONDENT].

Landlord Rep : [RESPONDENT].

Date of Objection : 12 October 2025

Type of Application : Section 70, Rent Act 1977

Tribunal

: Mrs [NAME]

Mr [NAME] of Reasons : 23 March 2026

_______________________________________________

DECISION

The sum of £742.00 per month will be registered as the fair rent with effect from 23 March 2026, being the date, the Tribunal made the Decision.

____________________________________

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

2 © CROWN COPYRIGHT 2023

FULL REASONS

Background

1. On 8 August 2025 the Landlord applied to the Rent Officer for registration of a fair rent of £915 per month for [ADDRESS] [POSTCODE] (the subject property).

2. The rent was previously registered on 17 August 2023 at £725.40 per month with effect from 17 August 2023. On 29 September 2025 the Rent Officer registered a fair rent of £819.00 per month with effect from 29 September 2025. This rent appears to have been the rent determined under section 70 of the Rent Act 1977 and was below the capped rent as provided for by The Rent Acts (Maximum Fair Rent) Order 1999.

3. By letter dated 12 October 2025 the Tenant objected to the rent determined by the Rent Officer and the matter was referred to the First- tier Tribunal.

4. The Tribunal issued Directions on 8 December 2025 setting out the timetable and the steps the parties were required to take in preparation for the determination of this case.

The Law

5. When determining a fair rent the Tribunal, in accordance with section 70 of the Rent Act 1977 (the Act), 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 disrepair or other defect attributable to the tenant or any predecessor in title under the regulated tenancy, on the rental value of the property.

6. 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

3 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).

7. The Rent Acts (Maximum Fair Rent) Order 1999 (the 1999 Order) provides the framework that places a ceiling on the maximum rent that can be registered. The calculation is based upon a formula that applies an increase in the monthly United Kingdom Index of Retail Prices to the previously registered rent.

The Hearing and Evidence

8. The Property is a two-bedroom first floor flat which has been converted from a house into two separate flats. The Property has no central heating or double glazing.

9. The Tenant had requested a hearing for this case. At the hearing the Tenant, Mr [COUNSEL] was present. The Landlord, nor their representative attended the hearing.

Tenant’s Submissions

10. During the hearing the Tenant made submissions that he has been in the property for 50 years and only in an emergency has the Landlord ever done something.

11. The Tenant has decorated the property four times since occupying and if they hadn’t the property would have been highly dilapidated.

12. The Landlord has never inspected or seen the inside of the house. Whilst the Landlord has carried out emergency works, no regular maintenance has been undertaken by them.

13. The Landlord carried out some works a few weeks ago as the toilet system stopped flushing. The Landlord sent out plumbers and a new toilet system was required.

4 14. When the Tenants first moved into the Property, the kitchen was in a very poor state. It contained a butlers sink, no cabinets and no white goods. The Tenant installed new units, sink, retiled and repainted the entire room as well as installing flooring.

15. With regards to the bathroom, when the Tenant moved in there was a bath. This has remained but a bath front has been put on together with a unit for basin, a new toilet and redecoration of the room.

16. At the start of the tenancy, there was no heating and the Tenant installed night storage heaters in the property. These have remained in place as of today. The property does not have the benefit of central heating.

17. An electrician has also re-wired the property during the occupation of the Tenants, which the Tenants paid for. This included changing out the fuse board and switching the sockets and switches.

18. The Tenants have carpeted the whole property and provided curtains.

19. The windows are sash wooden framed single glazed windows. The Tenant is nervous to open these as he described the frames as having swollen and are difficult to open.

20. When the Tenant raised the issue of damp in the bedroom with the Landlord, the individual who came on behalf of the Landlord advised that it wasn’t damp, just mould.

21. The garden is maintained by a third party on behalf of the Tenant as he can no longer maintain it and his wife has sadly passed.

22. In addition to the verbal submissions made, the Tenant provided written submissions to the Tribunal via the completed Reply Form.

23. The Tenant commented that the Landlord has failed to repair the windows which are in a dilapidated state, despite reassurances from the Landlord that this work would be undertaken and involvement from Barnet Council.

24. There are further written submissions stating that the bedroom wall has damp and that the wall paper is discoloured because of this.

Landlords’ Submissions

25. The Landlord provided no written submissions to the Tribunal and was not present for the hearing.

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Inspection

26. The Tribunal did not carry out an inspection and none was requested by the parties.

Determination and Valuation

27. The Tribunal initially needs to determine what rent the Landlord could reasonably be expected to obtain for the property in the open market if it were let today in the condition that is considered usual for such an open market letting. In doing this, the Tribunal will consider the rental value of the property and will not consider the personal circumstances of the Tenant, as that is not a factor envisaged by the Act.

28. Having consideration of our own expert, general knowledge of rental values in the area, the Tribunal consider that the open market rent for the property in good tenantable condition would be in the region of £1,750 per month.

29. From this level the Tribunal then adjusts the market rent to reflect the condition of the property as well as adjusting the figure to disregard any tenant improvements to the property. The full valuation with adjustments is shown after paragraph 24.

30. The next aspect to be considered is the issue of scarcity. The Tribunal was not provided with any specific evidence on this issue. However, the issue of scarcity is considered on the basis of the number of properties available to let and considering the demand for such properties and over a really large area. Neither party provided any specific evidence in respect of scarcity. Therefore, using our knowledge and experience we consider that in the wide geographical area of Greater London there is an imbalance between supply and demand and this impacts upon rental values.

Accordingly, we make a deduction for scarcity of approximately 20%. The full valuation is shown below.

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£/month Market Rent

£1,750

Less Tenant decoration liability

) 2% No white goods provided

) 5% No curtains or carpets provided

) 3% No double glazing

) 7% No central heating

) 10% Work undertaken to the bathroom ) 10% Work undertaken to the kitchen ) 10%

Total: £822.50

Leaves: £927.50

Less Scarcity

approx. 20%

£185.50

£742.00

31. The Tribunal determines a sum of £742.00 per month for the open market rent value of the property.

Decision

32. The uncapped fair rent initially determined by the Tribunal, for the purposes of section 70, was £742.00 per month. The capped rent for the property according to the provisions of the Rent Acts (Maximum Fair Rent) Order 1999 is calculated at £819.50 per month. The calculation of the capped rent is shown on the decision form. In this case the lower rent of £742.00 per month is to be registered as the fair rent of this property.

33. Accordingly, the sum of £742.00 per month will be registered as the fair rent with effect from 13 March 2026 being the date of the Tribunal's decision.

Chairman: [NAME]: 23 March 2026

APPEAL PROVISIONS

7 By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the Tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal 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. If the Tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).