Tribunal Sets Fair Rent for Property Under Rent Act 1977

OUTCOME: Allowed

FR27 First-tier Tribunal – [NAME] Chamber File Ref No. TR/LON/00AY/F77/2025/0147

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

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

[NAME]

Landlord Mr [APPELLANT]

Tenant Mrs [APPELLANT]

1. The fair rent is £779.50 Per calendar month (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 10 July 2025

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

[NAME] has central heating. [NAME] does not have a garage.

8. For information only:

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 £1,360 per calendar month.

Chairman S [NAME] of decision 10 July 2025

FR27 MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X 409.2

PREVIOUS RPI FIGURE Y 367.2

X 409.2 Minus Y 367.2 = (A) 35.7

(A) 35.7 Divided by Y 367.2 = (B) 0.0972

First application for re-registration since 1 February 1999 NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C) 1.1472

Last registered rent* £679.25 Multiplied by (C) = £779.25 *(exclusive of any variable service charge)

Rounded up to nearest 50p = £779.50

Variable service charge NO If YES add amount for services

MAXIMUM FAIR RENT = £779.50 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.

1

Case Reference

: TR/LON/00AY/F77/2025/0147

[NAME] : [ADDRESS], [POSTCODE]

Tenant

: Mrs [APPELLANT]

Landlord : Mr [APPELLANT] of Objection : 24 February 2025

Type of Application : Section 70, Rent Act 1977

Tribunal Members : Ms [NAME] of decision : 10 July 2025

_______________________________________________

DECISION

The sum of £779.50 per calendar month will be registered as the fair rent with effect from 10 July 2025, being the date the Tribunal made the Decision. ____________________________________

© CROWN COPYRIGHT 2023

FIRST - TIER TRIBUNAL [NAME] CHAMBER ([NAME])

2 REASONS

Background

1. The Landlord applied to the Rent Officer for the registration of a fair rent for this [NAME] on 17 December 2024.

2. A fair rent of £759.50 per calendar month was registered on 14 February 2025 following the application, such rent to have effect from 16 March 2025. The Landlord subsequently challenged the registered rent on 24 February 2025 and the Rent Officer requested the matter be referred to the Tribunal for determination.

3. Directions were issued on 16 May 2025 by the Tribunal. The parties were directed to provide reply forms and invited to submit any relevant information and submissions. The Landlord’s agent returned the reply form. The Tribunal did not receive a completed reply form from the Tenant.

4. The Tribunal’s reply forms asked if the parties required a hearing or wished for the Tribunal to inspect. The directions provided that, if neither party requested a hearing, the Tribunal would consider the matter on the basis of the documents received. Neither party indicated that they required a hearing or inspection, therefore the Tribunal made a decision based on the documents received.

Evidence

5. The Tribunal considered the reply form provided by the Landlord and the documents provided by the Rent Officer, which include the Landlord’s original application form and representations made on behalf of the Tenant. These documents include information about the physical characteristics and condition of the [NAME].

6. The Landlord provided evidence showing that they installed central heating to the [NAME] in 2020.

7. Copies of previous Rent Register entries provided by the Rent Officer show that the rent of this [NAME] had previously been registered effective from 16 March 2023 and 15 January 2021.

The [NAME]

8. The [NAME] is a two-bedroom flat, situated above commercial premises on [ADDRESS], to the south of Brixton Station. There is a kitchen, living room and bathroom. The house has central heating, but no double glazing.

3 9. The Rent Register entry suggests there is a garage, however, the Landlord and Tenant agree that there is not one.

10. The Tenant has provided all white goods, carpets and curtains.

Law

11. When determining the fair rent, in accordance with the Rent Act 1977, section 70, “the Act”, the Tribunal shall have regard to all the circumstances (other than the personal circumstances of the parties) including the age, location and state of repair of the [NAME]. It shall also disregard 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 [NAME].

12. In [COMPANY] v Chairman of the Greater Manchester etc. Committee (1995) and [NAME] v [NAME] [1999] the Court of Appeal emphasised that ordinarily a fair rent is the market rent for the [NAME] discounted for 'scarcity'. This is 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.

13. [NAME] v [NAME] (1999) QB.92 is a relevant authority in registered rent determination. This authority states where good market rental comparable evidence, i.e., assured shorthold tenancies, is available enabling the identification of a market rent as a starting point it is wrong to rely on registered rents. The decision provides that: “If there are market rent comparables from which the fair rent can be derived why bother with fair rent comparables at all”.

14. The market rents charged for assured tenancy lettings often form appropriate comparable transactions from which a scarcity deduction is made.

15. These market rents are also adjusted where appropriate to reflect any relevant differences between those of the subject and comparable rental properties.

16. The Upper Tribunal in Trustees of the Israel Moss Children’s Trust v Bandy [2015] explained the duty of the First Tier Tribunal to present comprehensive and cogent fair rent findings. These directions are applied in this decision.

17. The Rent Acts (Maximum Fair Rent) Order 1999 applies to all dwelling houses where an application for the registration of a new rent is made after the date of the Order and there is an existing registered rent under part IV of the Act. This article restricts any rental increase to 5% above the previously registered rent plus retail price indexation (RPI) since the last

4 registered rent. The relevant registered rent in this matter was registered on 16 March 2023 at £679.25 per calendar month. The rent registered on 14 February 2025 subject to the current objection and subsequent determination by the Tribunal is not relevant to this calculation.

18. The Order is not applied should the Tribunal assess that as a consequence of repairs or improvements carried out by the Landlord the rent that is determined in response to an application for a new rent registration exceeds by at least 15% the previous rent registered. The Landlord has submitted evidence that central heating was installed in the [NAME] in 2020. This was before the previous rent registered was determined in February 2023 (as well as the rent registered before that in January 2021). The provisions of the Order in relation to improvements by the Landlord therefore do not fall to be considered for this determination of the rent. The usual capping provisions of the Order apply.

19. The Upper Tribunal in Peabody Trust v Welstead [2024] UKUT 41 (LC) addressed the reliance upon the experience and knowledge of a tribunal following an application to the Tribunal. Judge Martin Rodger KC, Deputy Chamber President said: “The FTT is a specialist tribunal whose members are appointed because of their experience and professional backgrounds in residential [NAME] matters. Whilst sitting on the FTT its members will acquire further relevant experience and familiarity with general levels of value or costs in a particular area. This is one of the key strengths of the Tribunal system and it is particularly important in dealing with the numerous cases of modest value in which a decision has to be made on very limited information. Rent assessments are typical of those types of cases.” 20. Although this decision was concerned with management charges it also specifically addressed the role of the Expert Tribunal when little or no evidence is provided by the parties. The Deputy Chamber President said: “It was entitled to rely on its general experience of management charges; that is what it was appointed to do and, in the absence of assistance from the parties, there was no other source on which it could rely.” 21. In this matter comparable rental information or scarcity data was not proffered by either party and the Tribunal had to rely upon their general knowledge and expertise. This approach accords with the Upper Tribunal guidance on the appropriate role of the Tribunal in such situations.

Determination and Valuation

22. Neither party provided evidence of comparable transactions. Having consideration of our own expert, general knowledge of rental values in the area, we consider that the open market rent for a similar sized [NAME],

5 in the condition considered usual for such an open market letting, would be in the region of £2,000 per calendar month.

23. From this starting point, the Tribunal adjusts to allow for the differences between the terms and conditions considered usual for such a letting and the condition of the actual [NAME] at the date of the determination. Tenant’s improvements are to be disregarded for the purpose of the valuation, however, there are none in this case.

24. The Tribunal has taken into account these factors:

• The [NAME] does not have modern facilities as would be expected in the open market. • The Tenant has provided all furniture, floor and window coverings and white goods, which would usually be provided by a landlord in the open market. • The terms and conditions of the tenancy are such that the Tenant is responsible for internal decorations.

25. The Tribunal has made a 15% discount to the assumed open market rent to reflect the actual amenities and condition of the [NAME].

26. The provisions of section 70(2) of the Rent Act 1977 in effect require the elimination of what is called “scarcity”. The required assumption is of a neutral market. Where a Tribunal considers that there is, in fact, substantial scarcity, it must make an adjustment to the rent to reflect that circumstance.

27. The decision of the High Court in [COMPANY] v [NAME] [2002] EWHC 835 (Admin) requires us to consider scarcity over a wide area rather than limit it to a particular locality. Greater London is now considered to be an appropriate area to use as a yardstick for measuring scarcity and it is clear that there is a substantial measure of scarcity in Greater London.

28. The Tribunal has relied on its own knowledge and experience of the supply and demand for similar properties on the terms of the regulated tenancy (other than as to rent) and in particular to unfulfilled demand for such accommodation. In doing so, it found that there was substantial scarcity in Greater London and therefore made a further deduction of 20% from the adjusted market rent to reflect this element.

29. The full valuation is shown below:

6

Per calendar month MARKET RENT £2,000 Less Terms of tenancy ) Tenant's provision of white goods, furniture, etc ) approx. 15% £300.00 Dated kitchen/bathroom )

Market rent less deductions £1,700.00 Less scarcity approx. 20% £340.00 Market rent less deductions and scarcity £1,360.00 ADJUSTED MARKET RENT £1,360

30. The Tribunal determines a rent of £1,360 per calendar month.

Decision

31. For the reasons given above, the Tribunal has arrived at an initial fair rent value of £1,360 per calendar month.

32. The capped rent for the [NAME] according to the provisions of the Rent Acts (Maximum Fair Rent) Order 1999 is calculated at £779.50 per calendar month. Details of the maximum fair rent calculations are provided in the notice of our decision.

33. Accordingly, as the lower amount, the sum that will be registered as a fair rent with effect from 10 July 2025 is £779.50 per calendar month.

Chairman: [NAME]: 10 July 2025

7 RIGHTS OF APPEAL

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) ([NAME] 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 should be made on Form RP PTA available at https://www.gov.uk/government/publications/form-rp-pta-application-for- permission-to-appeal-a-decision-to-the-upper-tribunal-lands-chamber

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 [NAME] and the case number), state the grounds of appeal and state the result the party making the application is seeking. Please note that if you are seeking permission to appeal against a decision made by the Tribunal under the Rent Act 1977, the Housing Act 1988 or the Local Government and Housing Act 1989, this can only be on a point of law.

If the First-tier Tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).