Tribunal Sets Fair Rent for Property Considering Condition and Market Rates

OUTCOME: Allowed

FR24 First-tier Tribunal – Property Chamber File Ref No. CHI/19UH/F77/2019/0009

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 14 [ADDRESS], [POSTCODE]

[NAME] Mrs [APPELLANT]

Landlord [RESPONDENT]

Tenant [APPELLANT]

1. The fair rent is £619.50 Per Calendar Month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 10 April 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 £650.00 per calendar month.

[NAME] of decision 10 April 2019

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 285.0

PREVIOUS RPI FIGURE Y 267.1

X 285.0 Minus Y 267.1 = (A) 17.9

(A) 17.9 Divided by Y 267.1 = (B) 0.0670

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.1170

Last registered rent* £554.50 Multiplied by (C) = 619.38 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £619.50

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £619.50 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.

Case Reference : CHI/19UH/F77/2019/0009

Property : 14 [ADDRESS],

[POSTCODE]

Applicant: [redacted] : None

Respondent: [redacted]

: 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] and venue of : 10th April 2019 Inspection

Date of Decision : 10th April 2019 _______________________________________________

REASONS FOR DECISION ____________________________________

© CROWN COPYRIGHT 2019

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

RPTS – Case Ref CHI/19UH/F77/2019/0009

2

Summary of Decision

On 10th April 2019 the Tribunal determined a fair rent of £619.50 per calendar month with effect from 10th April 2019.

Background

1. On 20th December 2018 the Landlord’s Agent applied to the Rent Officer for registration of a fair rent of £620.50 per calendar month for the above property.

2. The rent was previously registered on the 9th December 2016 at £554.50 per month following a determination by the Rent Officer.

3. The rent was registered by the Rent Officer on the 1st February 2019 at a figure of £621.00 per month with effect from the 1st February 2019.

4. By a letter dated 11th February 2019 the Tenant objected to the rent determined by the Rent Officer and the matter was referred to the First Tier Tribunal Property Chamber (Residential Property) formerly a [NAME].

Inspection 5. The Tribunal inspected the property on the 10th April 2019 accompanied by Mr [APPELLANT]. Neither the Landlord nor Landlord’s Agent was present.

6. The property is semi detached flush fronted house on the main road through the village of Broadmayne. It is built with a stone front elevation and brick rear elevation with some rendering all beneath a pitched tiled roof.

7. There is a small Hall giving access to two Living Rooms at ground level, one of which leads into a small and dated Kitchen. Stairs rise from the Hall to a first floor landing which in turn gives access to two double Bedrooms, one of which is accessed via a small single Bedroom and a bathroom with WC.

8. The property is heated by night storage heaters and electric panel heaters. One small window is double glazed. To the rear is a reasonable sized garden with separate rear access and there is a pedestrian access to the side of the main house.

9. Within the village there is a local shop with main shopping facilities at Dorchester about 3 miles distant.

10. The property is generally in reasonable order although the Bathroom and Kitchen fittings are dated. The tenant provides white goods, carpets and curtains.

RPTS – Case Ref CHI/19UH/F77/2019/0009

3

Evidence and representations

11. Correspondence had been received by the Tribunal from both which had been copied to both parties.

12. Neither party had submitted evidence of comparable properties, therefore the Tribunal could only rely on its own knowledge of rental prices in the area when determining the rent.

The Law

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

14. 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).

15. 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.

Valuation

16. 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 condition that is considered usual for such an open

RPTS – Case Ref CHI/19UH/F77/2019/0009

4 market letting. It did this by having regard to the evidence supplied by the parties and the Tribunal's own general knowledge of market rent levels in the area of South Dorset. Having done so it concluded that such a likely market rent would be £750.00 per calendar month.

17. 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 £750.00 per calendar month particularly to reflect the dated Bathroom and Kitchen and 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.

18. The Tribunal therefore considered that this required a total deduction of £100 per month made up as follows:

Dated kitchen

£50 Dated bathroom

£20 Provision of carpets and curtains

£20 Provision of white goods in kitchen

£10

____ TOTAL

£100

19. The Tribunal did not consider that there was any substantial scarcity element in the area of South Dorset.

Decision

20. Having made the adjustments indicated above the fair rent initially determined by the Tribunal for the purpose of section 70 of the Rent Act 1977 was accordingly £650.00 per calendar month.

21. The Section 70 Fair Rent determined by the Committee is above the maximum fair rent permitted by the Rent Acts (Maximum Fair Rent) Order 1999 details of which are shown on the rear of the Decision Notice and accordingly we determine that the lower sum of £619.50 per month is registered as the fair rent with effect from 10th April 2019.

Accordingly the sum of £619.50 per month will be registered as the fair rent with effect from the 10th April 2019 being the date of the Tribunal’s decision.

Chairman: …………………………………………… Dated: .................................... [NAME] Ref CHI/19UH/F77/2019/0009

5 Appeals

22. A person wishing to appeal this decision to the Upper Tribunal ([NAME]) must seek permission to do so by making a written application to the First-tier Tribunal at the Regional office which has been dealing with the case.

23. 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.

24. 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 the time limit, or not to allow the application for permission to appeal to proceed.

25. 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.

If the First-tier Tribunal refuses permission to appeal in accordance with section 11 of the Tribunals, Courts and Enforcement Act 2007, and Rule 21 of the Tribunal Procedure (Upper Tribunal) ([NAME]) Rules 2010, the [NAME] may take a further application for permission to appeal to the Upper Tribunal ([NAME]). Such application must be made in writing and received by the Upper Tribunal ([NAME]) no later than 14 days after the date on which the First-tier Tribunal sent notice of this refusal to the party applying for the permission.