Tribunal Sets Fair Rent for Property in Derbyshire

OUTCOME: Dismissed

FR24 First-tier Tribunal – Property Chamber File Ref No. BIR/17UF/F77/2023/0039

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

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

[NAME] Mrs [APPELLANT]

Landlord Mr [APPELLANT]

Tenant Mrs [APPELLANT]

1. The fair rent is £837.33 Per Month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 14 February 2024

3. The amount for services is - Per -

not applicable

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

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 £880.00 per month.

[NAME] of decision 14 February 2024

FR24 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 379.0

PREVIOUS RPI FIGURE Y 308.6

X 379.0 Minus Y 308.6 = (A) 70.4 (A) 70.4 Divided by Y 308.6 = (B) 0.2281

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.2781

Last registered rent* £7,861.50 Multiplied by (C) = £10,047.48 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £10,048.00

Variable service charge YES If YES add amount for services N/A

MAXIMUM FAIR RENT = £10,048.00 Per Annum (£837.33 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.

1

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : BIR/17UF/F77/2023/0039 Property : [ADDRESS] [POSTCODE] Applicant : [redacted] : None Respondent : [redacted] : [NAME] of application : Application under Section 70 of the Rent Act 1977 by the Applicant against the rent assessed for the property by the Rent Officer Tribunal members : [NAME] (Chairman) [NAME]/Hearing : The property was inspected on 14th February 2024. Neither party requested a hearing. The matter was determined by a paper determination Date of original decision : 14th February 2024

DETAILED REASONS

2 BACKGROUND

1. On 26th June 2023, [NAME] applied to the Rent Officer for registration of a fair rent for the property [ADDRESS], [POSTCODE]. The rent payable at the time of the application was stated as being £7,861.50 per annum which the Tribunal calculates to equate to £655.12 per month.

2. The rent was previously registered at a rental of £7,861.50 per annum with effect from 15th September 2021 following a registration by the Rent Officer.

3. The Rent Officer registered a rental of £720.00 per month with effect from 15th September 2023.

4. By letter dated 17th November 2023, the Applicant objected to the rent determined by the Rent Officer and the matter was referred to the Tribunal.

5. The Tribunal made a determination of the rent payable on 14th February 2024 and these Detailed Reasons are given in response to a request for same by the Respondent.

INSPECTION

6. The Tribunal carried out an inspection of the property on 14th February 2024. Neither party requested a hearing and the determination was therefore made based upon the Tribunals inspection and on the submissions received.

7. The property comprises of a detached former farmhouse situated in the small picturesque village of Middleton BY Youlgreave.

8. The accommodation comprises entrance hall, two living rooms, further separate dining room and kitchen on the ground floor. There is also a bathroom having a bath with electric shower over, low flush WC and Wah hand basin. There is a rear hall/porch off the kitchen leading to the outside of the property.

9. On the first floor the landing leads to three double bedrooms, one single bedroom and bathroom being fitted with a three-piece suite with electric shower over the bath, wash hand basin and low flush WC.

10. A staircase from the first-floor landing leads to attic bedroom five having restricted eaves height and a large open store off.

11. The property occupies grounds which are understood to extend to approximately 0.75 acre. There are several outside stores, outbuildings and open garage.

12. The Tribunal noted that the property was in need of ongoing modernisation and some repair. Electric heaters had been fitted to some rooms by the landlord. There was evidence of water ingress to bedroom 3 on the first floor possibly caused by faulty/blocked gutters. There was also evidence of some penetrating and rising damp and damage to some ceilings.

13. The Tribunal was informed that the external walls to most rooms had been dry lined to provide additional thermal insulation. The landlord had fitted a new front door to the hallway.

3 14. The tenant had fitted the electric showers to both bathrooms together with the wash hand basin to the first-floor bathroom, the UPVC door and window to the kitchen and the kitchen fittings although the latter were some 40 years old and noted to be in need of replacement. With the exception of the door and window to the rear of the kitchen all the windows were single glazed.

EVIDENCE

15. The Tribunal received written representations from both parties which were copied to the other party.

16. Neither party requested a hearing and the matter was therefore dealt with by a paper determination.

THE APPLICANT’S SUBMISSIONS

17. [NAME] submitted that he had carried out work to the lead valley and roof over the kitchen and that he understood the tenant was to have carried out some ceiling repairs internally which had never been completed.

18. In addition, extensive repairs had been carried out over a 10-year period but the house and grounds were very untidy. He had cut down a considerable amount of creeper/ivy growing over the walls.

19. To determine a [NAME] the Applicant referred in particular to:

1) Alport, Bakewell – a 4-bedroom house with 2 living rooms to let at £1,900.00 per month.

2) [ADDRESS], Stanton-In-The-Peak – A 4 bedroom detached house with 2 bathrooms and 2 living rooms to let at £2,000.00 per month.

3) Great Longstone A 4 bedroom detached house with 3 living rooms and 2 bathrooms to let at £1,850.00 per month.

THE RESPONDENT’S SUBMISSIONS

20. The Respondent tenant acknowledged that the landlord had carried out some repairs but no improvements that would justify a higher rent than that set by the Rent Officer.

21. The Respondent referred to the following comparable properties which were registered by the Rent Officer.

1) [ADDRESS], [ADDRESS], Rowsley - the rent was assessed in 2017 at £448.50 per month.

2) [COMPANY] - the rent had was assessed in 2014 at £450.00 per month.

3) [NAME], Rowsley - the present registered rent, fixed in 2021 was £586.66 per month.

22. The Tribunal noted that all the registered rentals as quoted above were somewhat historic.

4 THE LAW

23. 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.

24. In [COMPANY] v Chairman of the Greater Manchester, etc. Committee [1995] 28HLR107 and [NAME] v [NAME] [1999] QB92 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 were usually appropriate comparables. (These rents may have to be adjusted where necessary to reflect any relevant differences between those comparables and the subject property).

VALUATION

25. In the first instance, the Tribunal determined what rent the Applicant 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 open market lettings. It did this by having regard to the Tribunal’s own general knowledge of market rent levels in the area of Derbyshire.

26. Having taken the various matters into consideration it determined that the open market value of the property in good condition would be the sum of £1,600.00 per month.

27. However, the actual property is not in the condition considered usual for a modern letting at a market rent. Therefore, it was first necessary to adjust the hypothetical rent of £1,600.00 per month to allow for the differences between the condition considered usual for such a letting and the condition of the actual property as described by the parties and the Rent Officer (disregarding the effect of any disrepair or other defects attributable to the tenant or any predecessor in title).

28. The Tribunal determined that the following monthly deductions were appropriate: a) Replastering/rising damp 50.00 b) Damp penetration/roof & gutter repairs 50.00 c) Central Heating 80.00 d) Double Glazing 70.00 e) Refitted Kitchen 65.00 f) Carpets and curtains 50.00 g) Fridge/freezer 9.00 h) Washing Machine 6.00 i) Bathroom upgrades 60.00 j) Decorating liability 60.00 Total £500.00

5 29. The Tribunal then considered the question of scarcity. This is done by considering whether the number of persons genuinely seeking to become tenants of similar properties in the wider area of Derbyshire on the same terms other than rent is substantially greater than the availability of such dwellings as required by section 70(2) of the Rent Act 1977.

30. The Tribunal finds that many Landlords dispute that scarcity exists because they are of the opinion that the market is ‘in balance’. Although Tenants do not in all cases have difficulty in finding accommodation this ignores the fact that it is the price of such accommodation which creates a balance in the market. Section 70(2) specifically excludes the price of accommodation from consideration in determining whether there are more persons genuinely seeking to become Tenants of similar properties than there are properties available. Although the rental market for Assured Shorthold properties may be in balance many potential Tenants may be excluded from it for various reasons such as age, poor credit history or because they are on housing benefit.

31. In this case the Tribunal, having carried out appropriate research, is satisfied that it is appropriate to make a deduction for scarcity which the Tribunal assesses at £220.00 per month. This leaves a fair rent for the subject property of £880.00 per month (£1,600.00 - £500.00 - £220.00)

32. However, the Section 70 fair rent determined by the Tribunal is above the level of the maximum fair rent permitted by the Rent Acts (Maximum Fair Rent) Order 1999 and accordingly the rent is therefore determined at £837.33 per month being the maximum rental permitted by the Order.

DECISION

33. The fair rent determined by the Tribunal for the purposes of Section 70 was accordingly £837.33 per month.

APPEAL

34. If either of the parties is dissatisfied with this decision, they may apply to this Tribunal for permission to appeal to the upper Tribunal (Lands Chamber), on a point of law only. Any such application must be received within 28 days after these written reasons have been sent to them (Rule 52 of The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013).

[NAME] First-tier Tribunal Property Chamber (Residential Property)